FOGO Takes Hold While Dealmakers Debate Impact of Blue Wave on M&A
A mostly positive market on Wednesday was followed by a stock plunge on Thursday, and the red ink on the stock ticker might vindicate Elliott Management’s “October surprise” letter. In the activist fund’s recent investor letter, Elliott gave investors a new acronym to worry about, FOGO or “fear of getting obliterated.” The October letter flagged debt-fueled risk taking, AI exuberance and other potential issues as threats for a possible substantial bear market. As the Nasdaq entered correction territory, investors are now positioning for a slowdown in data center build-out.
History tells companies to be patient and despite the sellout there are blue skies ahead. J.P. Morgan expects the AI boom to continue under the divided government, while Morgan Stanley maintained its preference for global equities. Morgan Stanley also emphasized that since 1982, “large-company U.S. stocks have gained about 15% to 16% in the six months after midterms and 22% over the following year.”
Ned Davis Research notes that the President’s party losing control of the House is another good sign for the market and found that the S&P 500 “posted a median gain of 1.4% from Election Day through year-end, slightly less than the 1.9% posted across all post-Election Day midterm years.”
What does this mean for the deal business? For sure, advisors have already been telling clients to move dealmaking ahead of Dems taking Congress even though it has no specific veto over M&A. Perhaps fewer legislative surprises will offer a more predictable backdrop for deals and long-term investments.
Jeffrey Goldfarb at Reuters Breakingviews builds on the idea that this is a good thing for dealmakers, even saying that “Wall Street investment bankers just won a US election referendum.” He argues that since a potential shift in D.C. could lead to more regulation, now is the time to accelerate M&A activity before the winds change.
Have a great weekend,
GPP Team
ACTIVISM
The Wall Street Journal: Ethan Allen Shareholders Hand Board Control to Activist Investor Doug Bergeron
In one of the few recent proxy fights to have gone the distance, the interior-design company announced that three of activist DGB Investment’s nominees, including the firm’s founder Doug Bergeron, were elected to the board. The elections give control of the five-person board to the activist. Read More
Reuters: Activist Investor Oasis Cuts its Slate of Director Nominees at Vail in Half
After settlement talks didn’t fully pan out, 9.6% shareholder activist Oasis Management reduced its proposed director slate from four to two. This comes after Baron Capital, Vail’s largest investor (18%), publicly confirmed it would support all of the company’s nominees at next month’s AGM. Read More
CNBC: Wendy’s Rejects $1.4 Billion Takeover Proposal from Nelson Peltz’s Trian
The fast-food chain board has rejected a takeover bid from a consortium of Trian, Sixth Street, and Flynn Group (large Wendy’s franchisee) while implementing a poison pill in an attempt to stave off the takeover attempt. Read More
M&A
The Wall Street Journal: Chip Maker Marvell Agrees to Buy Lumentum in $80 Billion Deal
In a move that could create a “category leader in artificial-intelligence connectivity,” Marvell is acquiring Lumentum in an all-stock deal that will combine Marvell’s chip expertise with Lumentum’s optical technology, catering to the mounting demand for faster and energy-efficient data centers. Read More
Salesforce Continues Dealmaking with $2.7 Billion Cresta Buy
Axios reports that Salesforce will acquire AI call-center company Cresta, fortifying its commitment to leveraging AI to enhance customer interactions. Cresta will add voice AI capabilities to Salesforce’s platform, enabling it to resolve complex customer calls and guide human representatives in real time. Read More
CORPORATE GOVERNANCE
The Financial Times: CVS Health To Break Up $117 Billion Healthcare Empire
Almost 8 years after its mega acquisition of Aetna closed, CVS announced that it will be separating its retail pharmacy chain from its insurance business. The move, which will be one of the largest corporate splits of all time and is scheduled to be completed in the first half of 2028, comes as the industry is facing pressure to separate ownership of pharmacies and PBMs. Read More
Fortune: Corporate Boards’ Loss of Faith in Delaware’s Elusive New ‘Good Faith’ Contrivance
Jeff Sonnenfeld and Steven Tian argue that the controversial decision by the Delaware Chancery Court to block Cloudflare’s dual-class recapitalization may lead to an acceleration of corporates leaving the state. Read More
The Deal: Merrill to Reduce Proxy Adviser Use
Following in the footsteps of J.P. Morgan Asset Management and Wells Fargo’s wealth and investment management, Bank of America’s Merrill Investment Advisory Program announced that clients will no longer be able to use external proxy advisers due to the company bringing proxy voting in-house. Read More
IPO
CNBC: Marc Lore’s Wonder Confidentially Files for IPO
Food technology startup Wonder confidentially filed for its IPO a week after announcing its next phase of growth, including plans to introduce more dining options through Wonder Create. Read More
Axios: OPay Priced its IPO, but Isn’t Going Public
In a rare move, the Africa-focused payments company decided not to complete its listing. Axios called it “an unprecedented loss” for an IPO market that is still facing headwinds. Read More
The Financial Times: Battle-Tested European Drone Maker Takes Step Towards €7 Billion IPO
Early-stage defense technology startup WB Electronics is asking banks to submit pitches as it considers an IPO, possibly in Warsaw. Read More
FROM OUR DESK TO YOURS
The GPP team continued our tour of the Village’s best restaurants at one of our favorites, The Noortwyck. From Eleven Madison Park alumnae Andy Quinn (who is also the chef) and Cedric Nicaise, an elegant yet intimate atmosphere welcomed us in as we settled into our sepia-toned velvet booth with beautiful wooden walls behind us. Even the restaurant’s name had plenty to offer as Noortwyck is Dutch for ‘‘North District,” an apt description considering its location on what was once the northern tract of New Amsterdam.
As we mulled over the food selections, we began with cocktails including the Big Apple’s Finest martini, Vanguard Old Fashioned, and The Cage Margarita. The martini was delightful, with the apple brandy giving it the perfect fall flavor, although we knew it was only one cocktail before exploring the restaurant’s fantastic wine list.
While the wine list certainly lived up to the billing, The Noortwyck is special for the spectacular sommelier who was willing to walk us through what we were looking for. After a lively and in-depth conversation about the table’s preferences, the food order and matching flavor profiles, the sommelier handpicked his favorites that set the tone for a great meal.
We began with a chardonnay, a 2023 Pierre Girardin Éclat de Calcaire that was full of complex citrus flavors. We started appetizers with seeded parker house rolls that laid the groundwork for deliciously fresh trout tartare, oysters, a kale salad, and perfectly done crispy duck hash. A table-favorite was the chicken liver parfait that sat atop a pond of candy snap grapes with a side of toast cased with honey cardamom glaze.
Our culinary guide and sommelier then returned with two pieces of good news: the entrees were ready and he had some red wine options for us. After a minor debate, our wine adventure moved from Burgundy, France to America. Specifically, Oregon where we had a 2019 Hundred Suns Syrah that took our breath away. The entrees then followed with an agnolotti, swimming in a light herbal sauce and hiding under a canopy of truffle, and bucatini, cocooned over an ’nduja and crab sauce. We also had short rib, halibut, charred hispi cabbage, and a perfectly done BBQ duck breast, although the star of the mains might have been the roasted chicken for two, which glistened with a rich Albuféra glaze.
Of course, we would never say no to dessert, and that decision was vindicated with a twice-baked chocolate cake with a crème anglaise, creamsicle panna cotta sweetened even more with amaretto cherries, and a warm apple crumble with a healthy scoop of fig leaf ice cream perched on top. Not to mention, the experience was only heightened with our sommelier taking us on an expedition through chartreuse with a trio of options that have forever changed the post-dinner drinks circuit.
The food brings you in, and the staff makes you want to stay, a combination that we cannot wait to return to and hope you can visit soon.
OPEN TABS
- The New York Times: He’s the Top Snake Catcher, and Business Is Booming. There’s Just One Problem.
- The New York Times: Who Measures the New York City Marathon?
- The Athletic: Como Equal Champions League Record Win with 9-1 Victory Against Lens
UPCOMING EVENTS
- November 10: Sportico Invest New York, New York, NY
- November 18: DealBook Summit, New York, NY
- November 20: Columbia Law School Millstein Center Conference on M&A and Corporate Governance, New York, NY
- December 8: Bloomberg Activism Forum, New York, NY
