Merger Monday: Three major deals and one that could turn hostile
Posted November 25, 2019 6:56 a.m. EST
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It's official: LVMH has cut one of the biggest deals in the history of the luxury sector.
The French luxury group will pay $135 per share for Tiffany & Co., valuing the New York jeweler at $16.2 billion, both companies said Monday. That's a sweeter deal than LVMH's initial unsolicited offer of $14.5 billion last month, which already included a hefty premium over Tiffany's stock price at the time.
Investors like the tie-up and clearly saw it coming. Shares of Tiffany closed Friday above $125, a 27% bounce since the companies confirmed they were talking. They're up another 6% in premarket trading Monday.
The big picture: LVMH is the world's biggest luxury group and home to 75 different brands, including Louis Vuitton, Christian Dior and Bulgari. So why does CEO Bernaud Arnault, Europe's richest man, want Tiffany?
For LVMH, Tiffany — which has struggled in recent years — makes sense as a turnaround project, my CNN Business colleague Michelle Toh reports. The company would boost LVMH's jewelry and watch lineup, allowing it to better compete with players like Cartier owner Richemont. Tiffany has a large footprint in the United States, which accounts for about a quarter of LVMH's revenue. And it is a strong global brand. (Think: Audrey Hepburn and those little blue boxes.)
That's not all: Charles Schwab and TD Ameritrade announced their $26 billion deal to combine, creating a giant in the discount brokerage industry they hope can better withstand a race to the bottom on fees.
And Swiss drugmaker Novartis said this weekend that it would buy The Medicines Company, which makes cholesterol medication, for $9.7 billion.
But the dealmaking wins haven't been universal. HP has once again rejected Xerox's $33.5 billion takeover bid, claiming it "significantly undervalues" the company. Its message to Xerox: We don't need you.
"We believe it is important to emphasize that we are not dependent on a Xerox combination," the HP board wrote in a letter to the company.
Xerox is threatening to approach HP shareholders directly.
Uber loses its license to operate in London
In a shock decision, the city of London has stripped Uber of its license to operate in the city — dealing the company a serious setback in one of its largest markets.
The announcement: The city's transportation agency said Monday that it had concluded that Uber is not "fit and proper" to hold the license, citing "a pattern of failures by the company including several breaches that placed passengers and their safety at risk."
London Mayor Sadiq Khan pointed to 14,000 Uber journeys completed by drivers who had fraudulently uploaded their photos to other drivers' accounts, circumventing the screening process.
Uber called the decision "extraordinary and wrong," and said it would appeal. The company said it had audited every driver in London in the last two months and strengthened its processes.
Key point: The company will continue operating as normal while the appeal process takes place. And it's been here before. The city first declined to renew its license in 2017, citing several concerns including how Uber responded to serious crimes. Uber appealed that decision and was later granted permission to operate for 15 months. In late September, the regulator granted Uber a two-month extension.
But it's a blow to Uber at a time when competition is heating up. Bolt, which used to be called Taxify, returned to London this year. Kapten, a French startup backed by BMW and Daimler, has also been generating buzz.
Shares are down 6%.
China extends an olive branch on trade
Asian stocks advanced Monday after China unveiled new guidelines about the protection of intellectual property. That move could mark a big step toward appeasing the United States, and may even help pave the way for a long-awaited trade truce, my CNN Business colleague Laura He reports.
Beijing's announcement Sunday was short on detail, though the country did indicate that it could introduce stronger IP protections and toughen punishments on those who infringe them. Such measures could address a longtime Washington concern.
"China is definitely offering up some pretty attractive olive branches," said Stephen Innes, chief Asia market strategist for AxiTrader.
Hong Kong's Hang Seng also advanced 1.5% after pro-democracy candidates made major gains in local elections. The race has been framed as a de facto referendum on the almost six months of ongoing protests in the city.
The Dallas Fed manufacturing survey arrives at 10:30 a.m. ET.Federal Reserve Chair Jerome Powell gives a speech at 7 p.m. ET in Rhode Island.
Coming tomorrow: Alibaba shares begin trading in Hong Kong.