Latest / What the Flux / Bapcor's lost its Midas touch | Paramount's new owner | LVMH battles against the economy

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Bapcor's lost its Midas touch | Paramount's new owner | LVMH battles against the economy · What the Flux

• 0:05
  Speaker 1: This is what the Flux. I'm Brett and I'm Justin
• 0:07
  Speaker 1: and it's Monday, the twenty.
• 0:09
  Speaker 2: Eighth of July. Does it wait? We spoke last week
• 0:11
  Speaker 2: about the battle between Employment Hero and its investor Slash
• 0:14
  Speaker 2: Friends Slash now Fox Seek. The Federal court has decided
• 0:17
  Speaker 2: that Seek cannot block Employment Hero from its APIs at
• 0:21
  Speaker 2: least until further court orders are issued, which could take
• 0:24
  Speaker 2: months or even years.
• 0:25
  Speaker 1: Buys Employment Hero even more time, b Man, it does flexa.
• 0:28
  Speaker 1: As we come to the end of the month, it
• 0:29
  Speaker 1: is the perfect time to be checking your credit score.
• 0:31
  Speaker 2: Did it go up this month?
• 0:32
  Speaker 1: Did it go down?
• 0:33
  Speaker 2: Because it can be updated every single month.
• 0:35
  Speaker 1: So if you want to know how your credit card behavior,
• 0:38
  Speaker 1: how your loans, how your utilities might be impacting your
• 0:40
  Speaker 1: credit score, make sure you download the Flux app and
• 0:42
  Speaker 1: check it out.
• 0:43
  Speaker 2: Three gigantic stories today, jus boy, let's do it for
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  Speaker 2: our first. BAPCOORPS, the company behind autobarn Person and Miters,
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  Speaker 2: has issued a major profit warning and three directors have
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  Speaker 2: quit and its share price has nose dived.
• 0:55
  Speaker 1: It must have been a very busy day at babcoor
• 0:57
  Speaker 1: hqb Man, So tell me more.
• 0:59
  Speaker 2: All right? So Bapcoorp is a major Australian auto parts
• 1:02
  Speaker 2: retailer that's been around since nineteen seventy one and operates
• 1:06
  Speaker 2: over eleven hundred stores.
• 1:07
  Speaker 1: We'd been talking at Autobarn and Berson and minors stores as well.
• 1:10
  Speaker 1: But Ben Man, you may remember back in March this year,
• 1:13
  Speaker 1: Bunnings announced plans to aggressively expand into auto parts. I
• 1:17
  Speaker 1: do three hundred new products across the three hundred stores.
• 1:19
  Speaker 2: Huh. And at the time Bapcourt didn't seem to phase
• 1:22
  Speaker 2: by Bunning stepping on their toes. But now babcour has
• 1:25
  Speaker 2: warned of multiple hits all at once. Yep.
• 1:27
  Speaker 1: The retail sales have dropped three and a half percent
• 1:29
  Speaker 1: due to competitor activity ahem Bunnings. Yep number two. They
• 1:34
  Speaker 1: suffered major contract disputes up to forty five million bucks
• 1:37
  Speaker 1: and also suffered losses on some businesses that they sold
• 1:40
  Speaker 1: over Man And if this wasn't bad enough, three of
• 1:42
  Speaker 1: the Bapcourt directors that dropped the mic and just walked
• 1:44
  Speaker 1: out the door.
• 1:45
  Speaker 2: Next minute, that COR's share price dropped thirty percent, reducing
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  Speaker 2: their market cap to just over one point two billion dollars.
• 1:51
  Speaker 1: And be Man, that one point eighty three billion dollar
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  Speaker 1: acquisition offer they received last year is looking quite good
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  Speaker 1: right now?
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  Speaker 2: Oh it is too, So what is the key learning here?
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  Speaker 1: Rejected takeover bid can come to haunt aboard, especially when
• 2:03
  Speaker 1: things take a turn for the worst.
• 2:04
  Speaker 2: Last year, Bapcoor's board knocked back at one point eight
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  Speaker 2: three billion dollar bid from Bain Capital be Man.
• 2:10
  Speaker 1: They rejected the offer, arguing it undervalued the company.
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  Speaker 2: Fast forward and the share price has tanked nearly thirty percent.
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  Speaker 1: Not only that, be Man, but the business is under
• 2:18
  Speaker 1: enormous pressure from Buddings.
• 2:20
  Speaker 2: So juzzy boy. It's a reminder that when you reject
• 2:22
  Speaker 2: a takeover offer, you need to prove that you can
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  Speaker 2: deliver more value independently.
• 2:26
  Speaker 1: And be Man is that the only company to reject
• 2:28
  Speaker 1: a takeover offer and suffer the consequences?
• 2:30
  Speaker 2: Well, I remember when Premier Investments tried to acquire Maya
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  Speaker 2: back in twenty seventeen.
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  Speaker 1: Yep Meyer rejected it and tried to execute on its
• 2:38
  Speaker 1: turnaround strategy alone and failed.
• 2:40
  Speaker 2: Now not only do Premier Investments have board seats at Maya,
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  Speaker 2: they just sold their apparel brand's portfolio to Maya for
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  Speaker 2: nine hundred million bucks. So be man.
• 2:47
  Speaker 1: Sometimes an acquisition. Bird in the hand is worth two
• 2:50
  Speaker 1: in the bush.
• 2:51
  Speaker 2: For our second story, Paramount has finally merged with sky
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  Speaker 2: Dance in an eight billion US dollar deal after almost
• 2:58
  Speaker 2: two years of negotiation.
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  Speaker 1: So what I feel like this deal could be turned
• 3:01
  Speaker 1: into a movie itself?
• 3:02
  Speaker 2: Be man? What is going on here all right, juziboy?
• 3:05
  Speaker 2: Some background. Paramount Global is the media and entertainment behamoth
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  Speaker 2: that owns a heap of global entertainment brands.
• 3:11
  Speaker 1: We'd be talking Paramount plus, streaming service, CBS, MTV, Nickelodeon,
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  Speaker 1: Showtime and Pman even Network ten here in Australia.
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  Speaker 2: On the other hand, sky Dance has produced Mission Impossible,
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  Speaker 2: Top Gun, Maverick, and plenty of other Hollywood blockbusters and
• 3:25
  Speaker 2: The Man.
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  Speaker 1: Back in twenty twenty three, the owners of Paramount expressed
• 3:28
  Speaker 1: interest in selling the biz.
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  Speaker 2: So this potential merger has been on and off and
• 3:32
  Speaker 2: on and off the cards since about December, between twenty
• 3:35
  Speaker 2: three when it all first started.
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  Speaker 1: And the negotiations collapsed in June twenty twenty four.
• 3:39
  Speaker 2: They resumed in July twenty twenty.
• 3:41
  Speaker 1: Four, and now finally in July twenty twenty five. The
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  Speaker 1: eight billion US dollar merger has been approved by the
• 3:47
  Speaker 1: US Federal Communications Commission.
• 3:49
  Speaker 2: Despite many hiccups along the way that were overcome. But juziway,
• 3:52
  Speaker 2: before you think about all the eight billion US dollars
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  Speaker 2: of cash in a suitcase changing hands, there was actually none?
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  Speaker 2: And why is that? Because it was an all star
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  Speaker 2: our merger? Juzzy boy?
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  Speaker 1: Interesting? So what is the key learning here?
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  Speaker 2: An all stock merger is when one company acquires another
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  Speaker 2: by offering shares instead of cash.
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  Speaker 1: Meaning ownership changes hands that no money does.
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  Speaker 2: In this case, the acquiring company, Skydance, pays for the
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  Speaker 2: deal using stock.
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  Speaker 1: They issue new stock in exchange for control of Paramount.
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  Speaker 2: Meaning Paramount's existing shareholders will end up owning a chunk
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  Speaker 2: of the new combined company.
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  Speaker 1: And the man Why do companies do this well.
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  Speaker 2: Firstly, and probably the main reason, it's a lot cheaper
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  Speaker 2: because there's no need to borrow money or exchange cash
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  Speaker 2: to get it done.
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  Speaker 1: Secondly, it aligns incentives because everyone now wants the new
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  Speaker 1: company to succeed.
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  Speaker 2: And finally, it really signals confidence because Skydance is betting
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  Speaker 2: that the future of the company will be worth more
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  Speaker 2: than the two were worth separately. But be man, it
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  Speaker 2: is not a risk free nop. If the new company stumbles,
• 4:45
  Speaker 2: those Skydance shares won't be so valuable.
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  Speaker 1: For our third and final story, LVMH has seen it's
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  Speaker 1: share price for more than eight percent after investors got
• 4:54
  Speaker 1: major tariff and performance anxiety.
• 4:56
  Speaker 2: Well, has LVMHOR lost its luxury crown? Juzzy boy, go on?
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  Speaker 1: So we know Elvi mahe the French a luxury conglomerate
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  Speaker 1: that stands for Louis Vuitton, MUA Hennessy.
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  Speaker 2: And within this huge conglomerate there are more than seventy
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  Speaker 2: luxury brands or Maissons as they like to call them.
• 5:12
  Speaker 1: Love your French. We'd be talking Louis Vuitton, Dior, Givonci, Fendi, Celine, Kenzo,
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  Speaker 1: tag Koya, and also luxury drinks like moe Verve Hennessy.
• 5:20
  Speaker 2: The big man.
• 5:21
  Speaker 1: ELVI maschis warned that its first quarter earnings were ugly.
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  Speaker 2: We're talking a first half net profit fall of twenty
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  Speaker 2: two percent. And how did this happen? Well, sales of
• 5:29
  Speaker 2: their wine and spirits business will hit hardest.
• 5:31
  Speaker 1: YEP suffered a nine percent drop, apparently because of weakening
• 5:34
  Speaker 1: cognac demands.
• 5:35
  Speaker 2: Who knew so many people like KGNAC in the first place,
• 5:37
  Speaker 2: doesn't boy yep.
• 5:38
  Speaker 1: They also claimed that the tourists were a reason for
• 5:40
  Speaker 1: the drop in that revenue, but their fashion and leather
• 5:43
  Speaker 1: goods also fell by five percent. Next minute, investors hitting
• 5:45
  Speaker 1: the cell button and Elvi Major share price fill more
• 5:48
  Speaker 1: than eight percent. And here's the thing.
• 5:49
  Speaker 2: Elvia Major CEO seems to think that its brands are
• 5:52
  Speaker 2: actually still performing very well, relatively speaking relative to the
• 5:56
  Speaker 2: poor economy. Interesting, So what is the key learning here?
• 5:58
  Speaker 1: Luxury brands like we Mage don't live quarter to quarter.
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  Speaker 1: They play the long game.
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  Speaker 2: While this latest earnings dip did spook some investors, lvmhor
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  Speaker 2: reckons this isn't a sign of a collapse, more of
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  Speaker 2: a global pause. Luxury consumers are not abandoning luxury, they reckon,
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  Speaker 2: They're just being more selective.
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  Speaker 1: For example, b Men, during the two thousand and eight
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  Speaker 1: two thousand and nine global financial crisis, a personal luxury
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  Speaker 1: goods market declined eight percent, according to Baine.
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  Speaker 2: And then between twenty ten and twenty nineteen, the luxury
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  Speaker 2: market sector grew at a compound and your growth rate
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  Speaker 2: of about seven percent.
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  Speaker 1: So be man in a luxury market, the smart move
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  Speaker 1: isn't to chase every dip like a typical retailer.
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  Speaker 2: No, it's to stay aspirational and wait for your customers
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  Speaker 2: to come crawling back when the economy comes back. Floxam.
• 6:38
  Speaker 1: With only a few days left of July, now is
• 6:41
  Speaker 1: the time to check the credit score this month.
• 6:42
  Speaker 2: Did it go up?
• 6:43
  Speaker 1: Did it go down?
• 6:44
  Speaker 2: Have you been spending and repaying?
• 6:45
  Speaker 1: It's all in the Flux app in our credit health toll.
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  Speaker 2: Thanks for listening and we'll see you on Wednesday.