On Thursday, PepsiCo released its results for the 3rd quarter, with the group surpassing analysts’ expectations for both revenue and earnings. During the quarter, the group saw revenue decline by 1.9% to $16.03bn, down from $16.33bn a year ago, but better than expectations of a drop to $15.8bn. The decline in revenue was mainly attributable to weaker foreign currencies as well as the Venezuelan deconsolidation. Furthermore, the group saw its 3rd quarter profit triple to $1.99bn, higher than the $533mn reported a year ago. On a per share basis, PepsiCo reported adjusted earnings of $1.40 per share, surpassing estimates of $1.32 per share.
According to Christo Wiese, in an interview with Reuters, it would be a “natural development” for international retail group Steinhoff to take over Shoprite, Africa’s biggest supermarket chain. Dr Wiese is the largest shareholder in both Shoprite and Steinhoff. Bringing the two together would allow him to add groceries to his sprawling discount empire. The merger, if it happens, would also pull together Wiese’s retail assets under one roof following Steinhoff’s nearly $6 billion acquisition in 2014 of the magnate’s budget clothing retailer Pepkor and create a global retail giant worth at least R400 billion rand. Steinhoff also released a SENS announcement yesterday, whereby it confirmed that the group would undertake a capital raising. See the full details in today’s note.
Nike added 1.73% on Tuesday, but traded sharply lower in after-hours trade following the release of its results for the 1st fiscal quarter. On the one side, the Nike surpassed expectations for both revenue and earnings, but missed analysts’ estimates for the 3rd time in a row when it comes to future orders. During the quarter, the group reported a 7.7% increase in revenue to $9.06bn, above estimates of an increase to $8.87bn. In addition, the group saw earnings come in at 73 cents per share, sharply higher than expectations of 56 cents per share. Nike announced that it expects future orders to increase by only 7% on a constant currency basis, the lowest figure in five quarters and lower than estimates of an 8% increase.
On Friday, Twitter surged 21.42% following reports that the group has initiated talks with a number of technology companies in order to explore selling itself. This comes after a sustained period of stagnant user growth and large losses amid soft advertising sales. This is also not the 1st time these rumours have surfaced, as the 10-year old service continues to battle with the commercial side of the business, despite it transforming itself into a global source of news and entertainment. Friday’s increase was the group’s largest 1-day uptick since its 1st day of trading in 2013, with the group now valued at around $16bn.
On Thursday, Yahoo confirmed the account information of at least 500mn users had been stolen two years ago. This is now considered to be the largest intrusion of one company’s user network in history. Following the announcement, security experts said the breach could lead to class action lawsuits, as well as other costs. The hack could also have a number of far reaching implications, specifically for Verizon who is in the process of acquiring Yahoo for $4.8bn. Verizon released a statement after the news became public, whereby it confirmed it was monitoring the investigation and would evaluate the matter in order to ensure that Verizon’s interests were protected.
On Wednesday, Apple shed 0.02% to close at $113.55 per share, after declining more than 1% earlier in the session. It proved to be an eventful day for the group, after rumours broke it was looking at a potential strategic takeover of McLaren, the Formula One team owner and supercar maker. This comes after Apple hired dozens of automotive experts over the last few years, indicating it may be working on a self-driving car. However, following the speculation, McLaren released a statement whereby they announced that the group was definitely not in discussions with Apple regarding a potential investment.
BHP Billiton ended higher on Tuesday, up 0.03% at R186.00 per share, despite news of a dispute with Australian’s tax authority. As it stands, Australia’s tax office has reportedly asked Billiton for 1.06bn Australian dollars, or $756mn, in additional taxes, as well as interest and penalties. This stems from a dispute over the price at which the group sold commodities to its Singapore-based marketing business over the course of more than 10 years. BHP Billiton has stated it does not agree with the authority’s decision and will continue to defend its position, even taking the matter to court if needed.
On Monday, Tesla added 0.46% despite news its proposed acquisition of SolarCity could be delayed. As it stands, four lawsuits have been filed by two individuals, which allege board members have breached their fiduciary duty. Ownership connections between the companies have raised concerns about Tesla’s motivation in acquiring SolarCity. Elon Musk is the largest shareholder in both companies. As a result, both Tesla and SolarCity have acknowledged the inherent conflict of interests in the merger and have taken steps to avoid them. If a judge grants any of the plaintiffs an injunction, the finalization of the deal could be delayed until 2017. A hearing has been scheduled for the 18th of October.
On Friday, Abbott gained 1.82%, boosted by news the group had agreed to sell its eye care business to Johnson & Johnson for $4.33bn. This comes as Abbott begins to focus on its cardiovascular devices and diagnostics business, while for Johnson & Johnson, the acquisition is set to expand its current eye care portfolio. As it stands, the deal is expected to close during the 1st quarter of 2017 and is expected to provide a modest increase to Johnson & Johnson’s earnings. Abbott Medical Optics, which Abbott acquired for around $1.4bn in 2009, reported sales of $1.1bn in 2015. This is far lower than Johnson and Johnson’s vision care unit, which generated sales of $685mn in the 2nd quarter.
On Thursday, BTI announced it was looking to acquire the tobacco assets of Bosnian holding firm Fabrika Duhana Sarajevo (FDS). The deal, which will be completed indirectly via a fund, CID Adriatic Investment, has already seen CID acquire the government’s 39.9% stake in the company. This was done using finance provided by BTI. BTI will once again assist with financing in order to acquire the remaining shares of FDS. The tobacco group will then enter exclusive negotiations with CID in order to extract the tobacco interests of FDS, while leaving behind the non-tobacco assets.