Thursday is a day of deals, with a bevy of various mergers, acquisitions, closures and negotiations making their way around Wall Street. Unfortunately, a trade deal isn’t one of them, but that didn’t weigh on equities too much in the stock market today.
Instead, most indices finished near flat in what was a choppy but ultimately uneventful day.
Day of Deals
The biggie of the day comes in the brokerage space, after reports say Charles Schwab (NYSE:SCHW) wants to acquire TD Ameritrade (NASDAQ:AMTD). Further reports suggest the company is willing to pay $26 billion in the deal.
This whole thing is crazy. As we entered the fourth quarter, Schwab did the unthinkable by axing its trading commissions down to zero. It forced others like E*Trade (NASDAQ:ETFC) and TD Ameritrade to cut their commissions down to zero too. While the online brokerages have other sources of revenue, this put a severe crimp on sales in an obvious way.
To no surprise, the move crushed the stocks in this industry. And now less than two months later, SCHW wants to swoop in and buy AMTD? Nuts. TD Ameritrade saw its enterprise value drop from $28 billion near the start of the year to sub-$16 billion at its recent lows. Before these reports surfaced, that figure stood near $19 billion. Can SCHW now pull off a deal, buying it for $26 billion?
The other biggie of the day comes from Bristol-Myers Squibb (NYSE:BMY) closing its $74 billion deal on Celgene. Remember, BMY agreed to pay $50 per share in cash, exchange one share of BMY for every share of CELG and assign one Contingent Value Right share — which is tradable, by the way — worth $9 should the combined company achieve certain regulatory milestones.
Shifting from drugs to diamonds, LVMH has reportedly upped its offer to acquire Tiffany (NYSE:TIF) to $130 per share or almost $16 billion. That’s $10 higher than the original offer from LVMH. In response, Tiffany will provide LVMH with “confidential due diligence.”
On Sunday, HP (NYSE:HPQ) officially rejected Xerox’s (NYSE:XRX) $22 per share buyout offer. However, management for the latter says they are “very surprised” HP rejected the offer and while they prefer a “friendly” agreement, they don’t mind going after HP in what appears to imply a hostile-takeover manner.
Movers in the Stock Market Today
Cannabis stocks remain red hot. While many didn’t finish at their highs of the day, Hexo (NYSE:HEXO), Aphria (NYSE:APHA), Canopy Growth (NYSE:CGC), Cronos Group (NASDAQ:CRON) and Aurora Cannabis (NYSE:ACB) all tacked on near double-digit gains. The space is rebounding after a brutal couple of days, following an equally brutal couple of quarters.
Let’s see if this space can gain momentum or if it’s simply a dead-cat bounce.
Ford (NYSE:F) has previously said it will work on an electric version of its best-selling F-Series pickup and Tesla (NASDAQ:TSLA) has its all-electric pickup truck introduction scheduled for Thursday night. So is it really surprising at all to hear of General Motors’ (NYSE:GM) electric truck news on Thursday?
CEO Mary Barra stated that the new model is set to go on sale in the fall of 2021. The release date puts it in competition with Tesla, who many believe may release its EV pickup around that same timeframe.
L Brands (NYSE:LB) rallied 10% on Thursday, surprising some investors given its third-quarter results. Earnings of 2 cents per share were in line with expectations, while revenue of $2.7 billion missed estimates by $10 million and slumped 2.3% year-over-year. Helping matters may be Q4 guidance, which came in slightly ahead of expectations.
Like LB, Macy’s (NYSE:M) also beat on earnings and missed on revenue. However, unlike LB, guidance came up short of analysts’ expectations, which allowed shares to fall over 2% on the day. Management expects full-year earnings in the range of $2.57 to $2.77 per share, down from a prior range of $2.85 to $3.05 per share and below consensus expectations of $2.80 per share.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long CELG.