Good Evening! On Thursday, there was a slight increase in stock prices, coinciding with the release of recent data indicating a rise in inflation on a yearly basis, marking the first occurrence in over a year. However, it is worth noting that disinflationary patterns continued to exhibit positive trends.
All three indexes barely finished the day in the green with the Dow Jones increasing the most by 0.15%, the S&P 500 nudging above by 0.03%, and the Nasdaq Composite rising by 0.12%.
UNEXPECTED ACQUISITION
Tapestry (TPR) surprised the world of finance on Thursday with the announcement to acquire competitor Capri Holdings (CPRI) for a total enterprise value of $8.5 billion, equivalent to $57 per share. The proposed transaction will result in Tapestry, the parent company of Coach, Kate Spade, and Stuart Weitzman, acquiring ownership of Versace, Michael Kors, and Jimmy Choo.
The deal details! The acquisition cost comes with a significant 39% premium over Wednesday’s closing price of Capri, and the finalization of the deal is expected to yield $200 million in cost synergies over three years. Remarkably, this transaction doesn’t impede the approval of a 17% quarterly dividend. The projected closure of the deal is slated for 2024, with financing secured through a combination of fresh debt and the company’s existing cash reserves.
How did the market react? The stock of Capri experienced a significant increase of 55.74% to reach a value of $53.90. The stock price of Tapestry however experienced a decline of 15.93%, reaching a value of $34.67, causing certain individuals in the financial industry to raise doubts regarding the need of taking action.
FOLLOWING IN NETFLIX FOOTSTEPS
The time has come… Disney (DIS) announced its intention to tackle the issue of password sharing. This move aligns with the approach taken by Netflix, which implemented measures to curb password sharing among its US subscribers in May, following the initial announcement of this initiative in October 2022.
What is the reason? The CEO, who expressed that the amount of subscribers sharing accounts is significant, identified that the company intends to enhance subscriber agreements by incorporating additional rules related to its sharing policies. These updates are anticipated to be implemented at an unspecified point in 2024. Hence, given the remarkable success of Netflix, Disney’s strategic decision seems reasonable, particularly as the media conglomerate aims to attain streaming profitability by the end of the fiscal year 2024.
On top of that… In addition to the disclosure of password sharing, Disney also made public its second price hike of the year. Starting on October 12th, there will be a 27% increase in the cost of the ad-free subscription plan for Disney+, resulting in a monthly fee of $13.99 in the U.S., as opposed to the previous rate of $10.99. The current price of the Disney service is twice the initial monthly cost of $6.99 when it was first introduced in 2019.