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Macy’s shares up on billionaire buyout bid

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Last Week’s Highlights

Macy’s soared on buyout bid

A consortium of investors led by Arkhouse Management and Brigade Capital has made a $5.8 billion takeover offer for Macy’s, the department store chain. The proposal, submitted Dec. 1 for $21 per share, represents a 20.76% premium over Friday’s closing price. Macy’s, whose shares experienced a 16% increase to $20.13, has discussed the offer with the investor group, although it is not yet clear how the company perceives it. Investors express particular interest in Macy’s vast real estate portfolio, valued by analysts at about $8.5 billion. Analyst firm J.P. Morgan estimates the total value at $31 per share. Despite the retailer’s positive results in the last quarter, with profits above expectations, the takeover bid raises uncertainties about the viability and resources of the consortium, which already attempted a significant acquisition two years ago without success. 

Cigna plans a $10 billion share buyback

Cigna has decided to end negotiations to acquire competitor Humana due to a lack of agreement on price, according to close sources. The potential merger would have created a company worth more than $140 billion but faced antitrust scrutiny. Despite the breakdown in talks, the possibility of a union in the future remains. As part of its new strategy, Cigna plans to repurchase shares totaling $10 billion, bringing total buybacks to $11.3 billion. This decision generated a 12.1% increase in Cigna shares. The company is also considering the sale of its Medicare Advantage operations. Although antitrust challenges persist in the industry, Cigna’s divestiture could improve the prospects for a future combination with Humana, whose Medicare business is larger and more profitable. However, antitrust concerns have plagued similar deals in the past, such as Anthem and Cigna, as well as Aetna and Humana. Experts suggest that the sale of Cigna’s Medicare Advantage business could influence the outcome of a potential merger. 

Coming Up This Week

McDonald’s launches new beverage chain

McDonald’s has announced the launch of a new beverage chain called CosMc’s as part of its strategy to capitalize on the afternoon beverage market. The first CosMc’s location will open in Bolingbrook, Illinois, this month, with plans to expand to other locations in the coming months. The chain, which will compete with brands such as Starbucks and Dunkin’ Donuts, will offer customizable drinks and snacks. The initiative was announced alongside ambitious growth targets at McDonald’s Investor Day, which include increased capital investment through 2027, accelerated new restaurant openings, and the addition of 100 million loyalty program members. By 2024, the company aims to increase the number of restaurants by 4%, followed by annual growth of 4% to 5% to reach 50,000 locations worldwide by 2027. To support these goals, McDonald’s plans capital spending of $2.5 billion in 2024, with projections to increase that spending sequentially through 2027. Despite these expansionary plans, analysts maintain an optimistic outlook on McDonald’s stock, with a consensus rating of Strong Buy, supported by a 10% increase in share price this year and a median price target that suggests an upside potential of 9.8% from current levels. 

Paramount up on rumors of company sale

Shares of Paramount Global experienced a remarkable 14% increase in the media services stock market, triggering speculation about a possible sale of the company. According to Matthew Belloni of Puck News, Skydance Media, headed by David Ellison, has expressed interest in acquiring Paramount’s assets. Given Skydance’s strong financial position and perceived lower regulatory risk compared to other media companies, the potential transaction is generating considerable attention. Although Skydance has played a key role in previous Paramount projects, a formal sale process has not yet been initiated, and there is a possibility that Skydance and RedBird Capital will partner to acquire a majority stake in the parent company, National Amusements. On Wall Street, analysts maintain a consensus “hold” assessment for Paramount Global, with five buy, six hold, and eight sell recommendations over the past three months. Despite the 5% drop in stock value over the past year, the median price target of $14.41 per share implies a downside risk of 16.2%. 

MARKET NEWS

U.S. indices closed positively on Friday, with the S&P 500 and Nasdaq reaching their highest closing levels since early 2022. The strong U.S. jobs report generated widespread optimism among investors, fueling belief in a soft landing for the economy.

During the session, the S&P 500 rose 0.41%, closing at 4,604.37 points, its highest level since March 2022, while the Nasdaq gained 0.45%, reaching 14,403.97 points, its highest close since April 2022.

Meanwhile, the S&P 500 posted its sixth consecutive gain for the week, rising 0.21%, marking its longest streak since November 2019. Similarly, the Dow Jones experienced its sixth consecutive week of gains, up 0.01%, representing its longest streak of positive weeks since February 2019.
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