BI Weekend: Mars, Kellanova Deal, New Starbucks CEO
Aug 16, 2024
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This week, Jennifer Bartashus, a retail staples analyst, discusses Mars' $36 billion acquisition of Kellanova, highlighting shifts in consumer behavior amid rising food costs. Redd Brown reviews Home Depot's earnings and their pivot to contractors. Jody Lurie observes challenges for Starbucks with a new CEO amid activist pressures. Yayoi Sekine explores advancements in battery technology, linking it to energy storage's future. They also touch on potential antitrust actions against Google and the transformation strategy at Victoria's Secret.
Mars' acquisition of Kellanova for nearly $36 billion aims to diversify its portfolio and reduce reliance on chocolate amid rising costs.
Starbucks' new CEO faces challenges from activist investors and changing consumer behaviors, necessitating a strategic brand revitalization.
Deep dives
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Mars and Kelanova Merger Insights
The significant merger between Mars and Kelanova for nearly $36 billion highlights the strategic aim to diversify Mars' portfolio, particularly in the snacking segment. The acquisition allows Mars to mitigate risks associated with its heavy reliance on chocolate, especially amid rising commodity costs and changing consumer demand. By expanding into Kelanova's strengths in salty snacks and emerging markets, Mars seeks to consolidate its market position globally. This merger may also spark similar M&A activities in the packaged food industry as companies look for growth amid economic challenges.
Home Depot's Earnings and Future Outlook
Home Depot reported earnings that exceeded analyst expectations, although future sales are projected to be weaker due to high interest rates and economic uncertainties. The company indicates that it may have reached a period of stabilization after previous declines in earnings. Analysts note concerns about consumer spending habits, as many are deferring large purchases in anticipation of better economic conditions. Home Depot's focus on contractor services and inventory management is expected to play a crucial role in navigating these market challenges.
Starbucks' Leadership Change and Market Challenges
Starbucks' recent ousting of its CEO and appointment of Brian Nichol from Chipotle signals a strategic pivot aimed at revitalizing the brand amid increasing competition and poor sales performance. The company faces challenges from activist investors pushing for aggressive changes to enhance shareholder value. There's an undercurrent of consumer slowdowns affecting foot traffic, particularly in international markets such as China, impacting forward-looking growth strategies. The new leadership must address these hurdles while undertaking steps to re-engage customers and restore the brand's image.
On this week’s podcast: Jennifer Bartashus, Bloomberg Intelligence Senior Analyst, Retail Staples & Packaged Food, discusses Mars agreeing to buy Kellanova for nearly $36 billion. Redd Brown, Bloomberg News Earnings Reporter, discusses Home Depot earnings. Jody Lurie, Bloomberg Intelligence Credit Analyst, talks about Starbucks replacing its’ CEO. Yayoi Sekine, Head of Energy Storage Research at BloombergNEF, discusses battery storage and the energy space. Jennifer Rie, Bloomberg Intelligence Senior Litigation Analyst, discusses the U.S Justice Department considering breaking up Alphabet’s Google. Herman Chan, Bloomberg Intelligence Senior Analyst for US Regional Banks, talks about Bank of Nova Scotia agreeing to buy a minority stake in ‘KeyCorp’ for about $2.8 billion. Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses Victoria’s Secret poaching the top executive from Rihanna’s lingerie brand to lead the retailer’s turnaround.
The Bloomberg Intelligence radio show with Paul Sweeney and Alix Steel podcasts through Apple’s iTunes, Spotify and Luminary. It broadcasts on Saturdays and Sundays at noon on Bloomberg’s flagship station WBBR (1130 AM) in New York, 106.1 FM/1330 AM in Boston, 99.1 FM in Washington, 960 AM in the San Francisco area, channel 121 on SiriusXM, www.bloombergradio.com, and iPhone and Android mobile apps. Bloomberg Intelligence, the research arm of Bloomberg L.P., has more than 400 professionals who provide in-depth analysis on more than 2,000 companies and 135 industries while considering strategic, equity and credit perspectives. BI also provides interactive data from over 500 independent contributors. It is available exclusively for Bloomberg Terminal subscribers.