What You Need To Know for March 27th

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Welcome back!

Stocks had a rough Wednesday after more AI capex-related worries and as President Trump announced he’d unveil new tariffs on auto imports. We’re a little under a week away from the April 2nd “Liberation Day”. Futures are down slightly as of Wednesday evening.

Let’s get into it.

Earnings Corner 📜 

Trending Up 📈 

Dollar Tree (DLTR): The discount retailer announced plans to sell its struggling Family Dollar chain to private equity buyers for around $1B. Dollar Tree purchased the business in 2015 for $9B, but its discretionary-focused strategy faltered amid consumer weakness and heightened competition. For the remaining Dollar Tree chain, mgmt. projects 3%-5% comparable growth in 2025. The stock was up 3.1%

GameStop (GME): GameStop beat earnings while missing on revenue and announced plans to invest in Bitcoin as a treasury asset.  Revenue of $1.28B was down 28% y/y (vs. $1.48B expected), and EPS was $0.30 (vs. $0.08 expected). The stock jumped on the news but was up only 3% Wednesday evening, following mgmt.’s announcement of a $1.3B convertible raise to purchase Bitcoin

Paychex (PAYX): Paychex reported earnings that beat estimates, with the stock up 4.2%

Trending Down 📉 

Chewy (CHWY): Chewy reported earnings that beat estimates, driven by strong active customer growth. Projected EPS of $0.30-$0.35 was in line with expectations of $0.34. The stock was down 1.1%

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More Headlines 🍿 

• Trump announced 25% tariffs on all cars and light trucks not made in the U.S. - this is in addition to the 25% tariffs that may go in place on April 2nd. Trump estimates >$100B in new tariff related revenue. However, Trump has previously said “there’ll be flexibility” on the non-auto tariffs, with room to pre-negotiate before the April 2nd deadline

• OpenAI’s newest disruption: OpenAI launched images, quickly flooding people’s X feeds with anime enabled photos. This exciting feature announcement comes as OpenAI is reportedly expecting to triple revenue to $12.7B this year.

• TD Cowen continues to report that Microsoft is abandoning more data center projects. TD Cowen has been early to this theme, and reported that Microsoft cancelled new data center projects in the US and Europe which would’ve consumed 2 gigawatts of electricity. Nvidia was -5.7% yesterday, with other tech and energy players also impacted. It’s worth noting though, this may just be Microsoft specific, and tied to less work with OpenAI as opposed to a broader problem

• Wall Street Bonuses were $244.7k in 2024, up 32% y/y due to a rebound in dealmaking. However, NYC’s comptroller is already worried about 2025 due to economic uncertainty

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• Samsung co-CEO passes away: Head of the firm’s digital devices and experiences business Han Jong-hee, 63, died of a heart attack this week. Samsung shared that Jun Young-Hyun, appointed as co-CEO in November, will step up as sole chief executive

• Trump backs Waltz: The President stood by his national security adviser after news broke that The Atlantic’s editor-in-chief was added to a private Signal chat planning military engagement. "Michael Waltz has learned a lesson, and he’s a good man," Trump said

• Janet Yellen is joining the Pimco Global Advisory Board - sounds like a sweet gig

• PE Fund sizes are getting smaller: Madison Dearborn is seeking $3B for its latest fund, their smallest since 1999 and lower than their normal $4B+ fund. This comps to back in December, when American Securities closed $2.7B on its 9th fund, significantly below its $7B target

• PE fights for D&A. Sponsors are arming legions of lobbyists to push Washington to allow portfolio companies to use EBITDA, rather than EBIT, in determining the tax deductibility of debt payments. If successful, sponsors could see their tax deductions jump by as much as 15%

• Atlanta Fed projects one cut in 2025. Driven by tariff-induced price hikes inflation will be stickier than expected, President Raphael Bostic shared this week. Bostic had previously projected two rate cuts this year

• Patterson Companies Inc. preps for an LBO. The supplier of everything from dental equipment to livestock vaccines is working with banks to arrange $2.35B in debt to support a proposed buyout. Patient Square agreed to buy Patterson in December

• Canadian travelers launch a boycott. After Trump’s announcement of tariffs on the country, then-Prime Minister Justin Trudeau urged Canadians to vacation domestically instead of traveling abroad. The push worked — the number of Canadian residents returning from U.S. trips by air in February dropped by 13% YoY

• Jon Gray warns against “knee-jerk” decision-making. The Blackstone President urged investors to wait to see how tariff negotiations unfold before making any major moves. Gray explained, “I think the danger in a period like this is you do something short term and you lose opportunity”

• AT&T is in talks to acquire Lumen’s non-core consumer broadband assets: Lumen shares fell -5% while AT&T shares rose 1% as the street viewed the potential transaction as an accretive deal from a distressed seller

• BASF is potentially selling its coating business, with Bofa and JP Morgan advising. Financing may be around $2.7B

• PAI Partners, Bain Capital, CD&R, and KKR are among PE shops considering bids for Nestle’s water business, which may be worth $5.4B

• Kraken is raising up to $1B in debt. Ahead of a planned IPO, the crypto exchange has tapped Goldman Sachs and JPMorgan to help finance growth. In January, Kraken shared that revenue was up 128% YoY to $1.5B

• IBM is cutting 9,000 American jobs. Focused on trimming costs over the past several years, the company has been shifting its workforce to India. Cuts have been confirmed in Raleigh, North Carolina; New York City; Dallas, Texas; and California

• Main street’s bullish, Wall Street’s bearish: Retail investors have poured nearly $70 billion into U.S. stocks in 2025, even as professional fund managers reduce their market exposure due to concerns over Trump’s tariff policies. Net inflows into U.S. equities and ETFs have reached $67 billion so far this year, only slightly below the $71 billion recorded in late 2024

• Sweden is increasing defense spending to 3.5% of GDP by 2030, funded through borrowing and up for current levels of 2.4%

• NPR and PBS may be on the chopping block - Trump has said he would “love” to defund the public broadcasting services. Meanwhile NPR and PBS’s CEOs appeared before a subcommittee yesterday to defend the institutions

• Engine Capital has taken an activist stake (1% of shares) in Lyft and is pushing for a strategic review

• Searchlight Capital Partners is exploring the sale of Survitec’s aerospace and defense unit. The firm, which provides safety and survival equipment, including for F-35 pilots, has enlisted Houlihan Lokey to assess buyer interest from companies and financial investors. This potential sale comes amid increased investment in defense assets, driven by the EU’s commitment to strengthening its defense industry and reducing reliance on the U.S.

• Insight Partners is exploring a sale of PDI Technologies, a software provider for grocery stores at a $4.5B+ valuation

• 23andMe has filed for bankruptcy. Approaching Chapter 11, the genetic testing provider is now planning to sell 15mm user DNA records. Currently, there are little to no federal regulations surrounding such data lawfully acquired and held by a tech company

• Climate crisis pumps up global energy demand. Last year demand rose 2.2 per cent compared with a rate of 1.3 per cent over the previous decade and a 1.8 per cent rise the previous year. The IEA reports that record-breaking temperatures in 2024 are responsible for half of the rise in energy-related emissions

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M&A Transactions💭 

Tietoevry Tech Services, provider of IT services, has entered into a definitive agreement to be acquired for $321.09M by Agilitas Private Equity. EV/EBIT was 4.9x and EV/Revenue was 0.3x. Bank of America advised on the sale.

The AZEK Company (NYS: AZEK), a designer and manufacturer of beautiful, low maintenance, and environmentally sustainable products, has reached a definitive agreement to be acquired for $3.14B by James Hardie Industries (ASX: JHX). The transaction values the company at $4.24B. EV/EBITDA was 12.11x and EV/Revenue was 2.85x. Goldman Sachs advised on the sale.

Stride Climate Investments, a portfolio of Stride Climate based in India, was acquired for $500.0M by Actis.

OpenBet Technologies, developer of integrated gaming and betting software, was acquired for $450.0M by OB Global Holdings. The Raine Group advised on the sale.

Lensar (NAS: LNSR), a clinical stage medical device company, has reached a definitive agreement to be acquired for $430.0M by Alcon (SWX: ALC). EV/Revenue was 8.04x. Wells Fargo advised on the sale.

Endeavor, an entertainment and sports company, was acquired for $13.0B by Silver Lake, Lexington Partners, DFO Management, Goldman Sachs Asset Management, CPP Investments, Mubadala Investment Company, and Mr. Mark Shapiro, Mr. Patrick Whitesell, and Mr. Ariel Emanuel. The transaction values the company at $25.0B. EV/EBITDA was 66.4x and EV/Revenue was 3.52x. Centerview Partners advised on the sale.

Dun & Bradstreet (NYS: DNB), a provider of business decisioning data and analytics, has entered into a definitive agreement to be acquired for $7.7B by Clearlake Capital Group. EV/EBITDA was 9.97x and EV/Revenue was 3.23x. Bank of America advised on the sale.

Cold Storage Singapore, retailer of fresh meats and dairy products, has reached a definitive agreement to be acquired for $125.0M by Macrovalue. Morgan Stanley advised on the sale.

CentralReach, provider of electronic health records, has reached a definitive agreement to be acquired for $1.65B by Roper Technologies (NAS: ROP). The transaction includes $200.0M of tax benefits from the transaction.

CB Group Management, a Japanese company engaged in trading of daily necessities, was acquired for $118.07M by C Holdings. EV/EBITDA was 3.9x and EV/Revenue was 0.11x. Daiwa Securities Group advised on the sale.

Akuo Energy, developer of renewable energy production, has entered into a definitive agreement to be acquired for $1.02B by Ardian. The transaction values the company at $2.14B. Nomura Holdings and Rothschild & Co. advised on the sale.

Napster, provider of subscription digital music services, was acquired for $207.0M by Infinite Reality.

JAPEX UK E&P, operator of an oil and gas exploration company, has reached a definitive agreement to be acquired for $140.0M by Ithaca Energy (LON: ITH).

Invesis, operator of a global investor and developer company, was acquired for $112.51M by PGGM. The transaction values the company at $225.02M.

Dipsol Chemicals, manufacturer of industrial chemicals, reached a definitive agreement to be acquired for $154.36M by Quaker Houghton (NYS: KWR). EV/EBITDA was 10.29x and EV/Revenue was 1.88x.

Channell Commercial, manufacturer of fiber optic solutions, has reached a definitive agreement to be acquired for $1.5B by Prysmain (MIL: PRY). The company will receive a contingent payout of $200.0M upon achievement of certain EBITDA targets for calendar year 2025. Goldman Sachs advised on the sale.

3Gtms, developer of transportation management software, was acquired for $115.0M by Descartes Systems Group (DSG). Lincoln International advised on the sale.

Bain is a majority stake in Namirial, an Italian software developer, at a $1.2B valuation. Ambienta is exiting its majority stake.

Tirupati Group, manufacturer of nutraceutical supplements, was acquired for $122.6M by Kotak Alternate Assets Manager. EV/Revenue was 9.77x.

Family Dollar, a subsidiary of Dollar Tree, has entered into a definitive agreement to be acquired for $1.01B by Macellum Private Capital and Brigade Capital Management. J.P. Morgan advised on the sale.

Altair Engineering, a provider of enterprise-class engineering software, was acquired for $10.6B by Siemens (ETR: SIE). EV/EBITDA was 183.92x and EV/Revenue was 15.92x. Citigroup, J.P. Morgan, and Goldman Sachs advised on the sale.

Chita Kogyo Company, engaged in the manufacture of various wire springs, was acquired for $108.82M by KYB (TKS: 7242).

Private Placement Transactions💭 

Underdog, a Brooklyn-based fantasy sports and betting app, has raised $70M in Series C financing led by Spark Capital at a $1.23B valuation.

The Bot Company, developer of AI-based robotic platform, raised $150.0M of venture funding led by Greenoaks Capital Partners at a pre-money valuation of $1.85B.

Level, operator of a family and private client litigation funder platform, raised $134.69M of venture funding through a combination of debt and equity. The equity was raised from Capricorn Capital Partners. The debt was provided by Pollen Street Capital.

Aura, developer of digital security software, raised $140.0M of Series G venture funding through a combination of debt and equity. The equity portion was led by Madrone Capital Partners and Ten Eleven Ventures. The transaction puts the company at a $1.46B pre-money valuation.

SEGRO Pure Premier Park Data Centre, operator of an under-construction 56-megawatt data centre in London, was formed as a $1.28B joint venture between Segro and Pure Data Centres Group.

Nexthop.ai, developer of an AI infrastructure, raised $110.0M of venture funding led by Lightspeed Venture Partners.

Fleetio, developer of fleet management software, raised $450.0M of Series D venture funding led by Elephant Partners and Goldman Sachs Asset Management at a pre-money valuation of $1.05B.

Amboss, developer of a learning application, raised $257.17M of venture funding led by KIRKBI, M&G, and other undisclosed investors.

Mercury, operator of a financial technology company, raised $300.0M of venture funding led by Sequoia Capital at a pre-money valuation of $3.2B.

Odds of the Day 🍒 

Kalshi traders are pricing in a 31% chance of Duke winning March Madness

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Noteworthy Chart 🧭

Meme Cleanser 😆 

Finance Merch Referrals ☕️ 

Until next time!

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Autopilot disclosure: Investment advice provided by Autopilot Advisers, LLC (“Autopilot”), an SEC-registered investment adviser. Past performance does not guarantee future results. Investing carries risks, including loss of principal. As always be smart out there.