What You Need To Know For July 25th

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Welcome Back!

Hope everyone is hanging in there after the ugly day in the markets yesterday….the S&P and Nasdaq had their worst days since 2022, ending down -2.31% and -3.64% respectively.

The Main Stories 🔍

An experiment on Universal Basic Income (UBI) in the U.S. shows that UBI didn’t do much: A recent U.S. study on UBI gave 1,000 lower-income participants $1,000 per month for three years. The full report is out here, and of course Sam Altman was the main guy leading the program. The study, which consisted of a group of TX and IL residents, found in general that labor hours went down as a result by ~1.3-1.4 hours/week and leisure subsequentially time went up. There was also a minimal effect on schooling (excluding the group in their 20s), improving job quality, health, or other human capital investment. On the bright side, the extra $ did help with food and stress, albeit on a somewhat short term basis.

Private Equity Has Their Hands In The Cookie Jar: Krispy Kreme has sold a majority stake of Insomnia Cookies to Verlinvest and Mistral Equity Partners for $172.4 million. Insomnia had over $220 million in revenue in 2023 from 265 locations!

Speaking of Private Equity….Could Mattel go Private? On Monday, Consumer focused Private Equity firm L Catterton has approached Mattel on a take private. However, Mattel is confident as a standalone company following this offer. However, this may bring Mattel’s toy making rival Hasbro into the fray. It’s unclear if a Hasbro & Mattel merger would gain regulatory approval, but Mattel was up 9.8% yesterday on the prospects that someone may eventually table a bid for the toy maker.

Wiz walked away from a potential $23 Billion buyout from Google: Wiz, the 4-year old cybersecurity company shockingly ended talks with Google. In a letter to 1,200 employees, Wiz’s CEO noted that they believe an IPO and reaching $1 Billion in Annual Recurring Revenue (ARR) is the best path forward instead. There could be two potential drivers of this change in tone. The first may be the tough regulatory environment by the FTC, who are constantly challenging mergers in court. The second may be driven by the Crowdstrike debacle. Cybersecurity upstarts like SentinelOne and Wiz may be licking their chops at the potential pipeline opportunity following all the chaos caused by the CrowdStrike error.

There was some chaos with Bausch Health on Wednesday: On Wednesday, Reorg reported that Bausch is negotiating a potential prepackaged chapter 11 bankruptcy filing. However, Bausch came out to refute these sources, noting the Company is not considering bankruptcy or insolvency. While some sort of restructuring appears to be in the works, there’s clearly some differing statements about what’s going on. Bausch shares hit a low of -45% during the day, before recovering to end the day down -23%.

More Headlines 🍿 

• Diameter’s bet on FTX was a homerun once FTX claims surpassed par, well above their initial thesis of a 20 cent recovery

• Ares and HPS are leading a group of direct lenders in providing a $3 billion credit facility to finance Carlyle’s potential leveraged buyout of Baxter’s kidney-care division. Unitranche terms are discussed at S+500 with 4.2x leverage

• AMC will leverage its theater chains as collateral in a new debt restructuring deal. Marathon led the term loan talks

• Meta unveiled Llama 3.1, their most capable AI model to date

• Alphabet, the owner of Google, saw shares fall on Wednesday after lower than expected YouTube ad revenue

• The rally couldn’t last forever … after climbing 84% through April, Tesla disappointed the street, reporting a second quarter of weakening EV demand and further pushing back the unveiling of its robotaxi program. Amidst multiple analyst downgrades, Tesla closed down over -12%

• Verizon earnings disappointed the street and they called out some interesting commentary: Consumers are holding onto their phones for longer, increasingly price-conscious and aware of slowing innovation cycles. Verizon and others are hoping that Apple’s next generation of AI-enabled iPhones could reverse this trend. Meanwhile, AT&T reported solid earnings on Wednesday

• Chipotle continues to post revenue and earnings that beat estimates, with solid traffic and market share data. Consumers continue to gravitate to Chipotle despite regular price increases. After the infamous Wells Fargo report and widespread criticism for skimpy scoops of chicken (often ~10-15% less than promised), the company also announced that it’s recommitting to ensuring proper portions

• The NBA announced that TNT did not match the terms of Amazon Prime, so the NBA will be working with Amazon in a $1.8 Billion/year deal. However, TNT is looking into taking action against the NBA…so this saga may not be over yet

• Spotify shares jumped to a new record amid record profits and double-digit user growth. The music giant has paired a cost-cutting campaign (including a retreat from aggressive podcast spend) with a push to enhance the service’s stickiness with greater fan-artist interaction and improved automated playlist creation

• Lamb Weston shares were down over -28% yesterday on soft demand for frozen potatoes….shareholders lost this game of hot potato

• UPS shares fell -12% on Tuesday after a weak earnings report and poor guidance - the company is struggling to manage the fallout from last years union negotiations and customers smaller (less profitable) orders in lower volumes

• Spot Ethereum ETFs generated over $1 billion in trading volume on first day of trading. Though less than ¼ of the volume generated in January during the Bitcoin launch, strong demand for Ethereum indicates widening confidence and interest in the crypto market, especially among institutional investors

• Apple is planning their first foldable iPhone for 2026. Reportedly now out of the “concept stage” and into talks with suppliers, Cupertino appears to be trying to match Samsung’s Galaxy Fold. If successful, the launch would be a major milestone of the post-Jobs era

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Wall Street Comp Survey Findings 🤑 

We’re back with the conclusion of our Wall Street Compensation findings - let’s focus on Investment Banking today. We had 143 submissions from U.S. IB professionals. Hours are down from 2020/2021 levels due to lower deal flow, but Analysts are still cranking out 80+ hour weeks on the high end. Meanwhile, bonuses are in the gutter relative to the crazy hours.

Investment Banking (U.S.): 

IB NYC:

IB U.S. (excluding NYC):

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M&A Transactions💭 

Applied Avionics, manufacturer of highly engineered avionics, has reached a definitive agreement to be acquired for $385.0M by Loar Group (NYS: LOAR).

Hamilton Thorne (TSE: HTL), provides precision instruments, has entered into definitive agreement to be acquired for $283.67M by Astorg. Jefferies advised on the sale.

Genuone Sciences, provider of pharmaceutical manufacturing services, was acquired for $447.57M by Macquarie Asset Management.

Valinor Pharma, manufacturer of medicine, was acquired for $250.0M by NovaQuest Capital Management. Wells Fargo advised on the sale.

Total Operations and Production Services, provider of gas compression systems, has reached a definitive agreement to be acquired for $983.0M by Archrock (NYS: AROC). Evercore advised on the sale.

Stemmer Imaging (FAR: S9I), a provider of image processing technology, has entered a definitive agreement to be acquired for $337.21M by MiddleGround Capital. ParkView Partners advised on the sale.

Frias Nutricion, manufacturer and distributor of plant-based food, has entered into a definitive agreement to be acquired for $216.16M Refresco Group.

Sleep Country Canada (TSE: ZZZ), is engaged in the retail mattress business, has reached a definitive agreement to be acquired for $1.7B by Fairfax Financial Holdings (TSE: FFH).

The High-End Projector Manufacturing Business of Panasonic (TKS: 6752) was acquired for $626.55M by ORIX Corporation (TKS: 8591).

Marshall Excelsior Company, manufacturer of liquefied petroleum gas, was acquired for $395.0M by OPW.

Yokohama Rubber Company (TKS: 5101) reached a definitive agreement to acquire The Off-the-Road Tire Operation of The Goodyear Tire & Rubber (NAS: GT) for $905.0M. Evercore advised on the sale.

Environmental Solutions Group, provider of collection vehicles, has reached a definitive agreement to be acquired for $2.0B by Terex (NYS: TEX). Centerview advised on the sale.

NCAB Group (STO: NCAB) reached a definitive agreement to acquire The PCB Division of DVS Global for $200.0M.

Sofidel America has reached a definitive agreement to acquire The Tissue Business Unit of Clearwater Paper (NYS: CLW) for $1.06B. Goldman Sachs advised on the sale.

BioVectra, provider of contract development and manufacturing services, has reached a definitive agreement to be acquired for $925.0M by Agilent Technologies (NYS: A). Moran Stanley advised on the sale.

Mott, manufacturer of filtration and flow control products, has reached a definitive agreement to be acquired by IDEX (NYS: IEX).

L&Q Estates, provider of real estate services, has reached a definitive agreement to be acquired for $200.0M by Urban&Civic.

Johnson Controls-Hitachi Air Conditioning, manufacturing of air conditioning systems, has reached a definitive agreement to be acquired for $8.0B by Bosch.

ConnectiCare, provider of managed care services, has reached a definitive agreement to be acquired for $350.0M by Molina Healthcare (NYS: MOH).

Weener Plastics Group, manufacturer of plastic packaging, has reached a definitive agreement to be acquired for $906.24M by Silgan Holdings (NYS: SLGN).

Gram Car Carries, is a tonnage provider, was acquired by MSC Mediterranean Shipping Company. Fearnley Securities and Jefferies advised on the sale.

Private Placement Transactions💭 

Monarch Tractor, developer of electric, automated, smart tractors, has raised $133.0M of Series C venture funding led by CTBC Venture Capital and Astanor Ventures at a pre-money valuation of $385.0M.

Cohere, developer of a natural language processing software, has raised $500.0M of Series D venture funding led by Public Sector Pension Investment Board at a pre-money valuation of $5.0B.

Waymo, developer of a self-driving technology, raised $5.0B of venture funding from Alphabet (NAS: GOOGL).

Magenta Medical, developer of medical devices, has raised $105.0M of venture funding led by Novo Holdings.

Harvey, developer of a generative AI legal technology, has raised $100.0M of Series C venture funding led by GV at a pre-money valuation of $1.4B.

Colossal Laboratories & Biosciences, operator of a bioscience and genetic engineering company, has raised $162.6M of Series B venture funding led by Animoca Brands, Builder VC, and MarketX.

Clio, developer of a cloud-based practice management platform, raised $900.0M of Series F venture funding led by New Enterprise Associates at a pre-money valuation of $2.1B.

Vanta, developer of a compliance and security automation software, has raised $150.0M of Series C venture funding led by Sequoia Capital at a pre-money valuation of $2.3B.

Noteworthy Chart 🧭

Uber’s Rise to NYC Dominance:

Best of YouTube ⌚️

Why Outlet Malls in the U.S. are struggling:

Meme Cleanser 😆