Basis Points – November 7, 2019

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Above the Fold


Consolidating for Survival

A healthy M&A (mergers and acquisitions) market generally equates to a broader healthy economy, but some deals are born out of necessity or simply to get out of the public eye and away from the ebbs and flows of Wall Street. 

Nearly seven years ago, Michael Dell struck a $24.4 billion LBO (leveraged buyout) deal to take his struggling company private. Assisted by Microsoft and Silver Lake private equity group, Dell was successful and pulled off the largest LBO since the Great Recession. The hardware maker went on to multiply its worth several fold and through other acquisitions, secured its turnaround and returned to the public market in 2018.

2019 has already been full of mega-deals like Bristol-Myers Squibb and Celgene, United Technologies and Raytheon, Anadarko and Occidental, and more. It’s safe to say that a fair number of these deals are done to unlock growth or efficiencies, but on some level, future survival in an increasingly competitive and changing landscape is likely considered. 

Just yesterday, it was announced that international drugstore chain Walgreens Boots Alliance is seeking advice on taking its shares (worth roughly $55 billion) from the stock exchange and into the private sector. With the stock having been under pressure over the last year, a move away from public scrutiny would give the company time to regroup. And regardless of whether or not a deal is made, look for big changes to come from Walgreens (and others) as they seek out “creative” ways to get ahead of less favorable trends. 


Three Things

  1. Xerox and HP Forever? – Shares of Dell-rival and printer/hardware maker HP Inc. were up substantially yesterday as news broke of a $27 billion takeover bid by printing giant, Xerox. Ironically, both companies are seeking ways to retool as the world moves to the cloud and becomes increasingly paperless. Experts see merit in the deal, but worry about dealing with the size and complexity of the new entity.  
  2. “Hitching” is Back in China – Uber competitor Didi Chuxing Technology Corp is restarting its “Hitch” carpooling service after halting it back in 2018 after the murder of two female passengers by their drivers. Didi dominates the Chinese market with 550 million global users and is looking to raise additional capital. 
  3. Virtual Cops and Artificial Intelligence (AI) Could Help Solve America’s Crime Problem – Like it or not, more and more devices are “watching” us. According to the Wall Street Journal, several police departments across the U.S. are deploying different forms of AI not just to monitor, but to solve crimes automatically. The technologies use facial recognition, algorithms, augmented reality and more to identify and track criminals or alert their human counterparts when laws are broken. 

Did You Know?

Safe, but…

Despite the recent incidents directly related to the 737 MAX aircraft, commercial airplane travel remains extremely safe. Dutch aviation consultants at To70 estimate just one fatal accident for every 16 million flights. Comparatively, 3,287 people die in car crashes every day globally!

Most frequent fliers are more concerned with delays than danger — and for good reason! According to the U.S. Department of Transportation, less than 78% of flights have been on time this year. Unfortunately, there is one little known danger of flying commercial… and most people have no idea just how real this risk is.

A recent study by and the Hunter College NYC Food Policy Center revealed that the water on some airlines is not only undrinkable, but unfit even for handwashing. Alaska Airlines, Allegiant and Hawaiian Airlines held the top spots for water quality, while JetBlue, Spirit and most regional airlines had extremely low scores. And even though the relative humidity is extremely low in an airplane, experts suggest never drinking any water onboard unless it’s bottled and bringing hand sanitizer as opposed to washing your hands onboard.

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