Key Events
👉 March Non-farm Payroll (NFP) ahead of expectations +300k jobs added and unemployment rate falling.
Labor market is strong, and we see Fed is comfortable remaining patient before pulling back rates. They need more confidence that inflation will ease. 2 rate cuts are now priced for 2024, down from 3 cuts.
👉 Blackstone is in talks to buyout Jersey Mike’s Sub in a deal valued at ~$8 billion.
Private equity likes cash flowing businesses. Quick-service restaurants fit that mold well.
What’s even more attractive? IP-heavy businesses. That is companies that own the franchise rights. Attractive because private equity firms do not need to deploy more capital to generate attractive returns.
This comes after Roark Capital’s $9.6 billion buyout of Subway about a year ago (August 2023). The private equity firm also own Jimmy Johns, McAlister’s, Schlotzsky’s, Dunkin Brands, Arby’s, and Sonic Drive-In.
This raised concerns amongst regulators because of the restrictions in Subway’s franchise agreement that prevented franchise owners from opening competing businesses within 3 miles of a Subway location.
👉 Paramount Global down -7.6%.
Weakness stems from concerns about a potentially dilutive acquisition with Skydance Media given the all-stock deal proposed.
Mergers and Acquisitions
Vista Equity to acquire Model N (MODN), a revenue management provider for high-tech and life sciences industries, at a valuation of about $1.25 billion.
Arch Insurance’s North American business to acquire Allianz’s U.S. insurance business units for $450m.
Initial Public Offerings
Two notable IPOs the market is eyeing this week:
UL Solutions, a product testing and certification firm, to raise ~$770m at a $5.6b valuation.
PACS Group, a post-acute care provider, to raise $400m at a $3.2b valuation.
Private Equity
Blackstone to take private AIR Communities, an apartment REIT, for around $10 billion valuation.
Venture Capital
Varda Space, an in-space manufacturing company, raised $90m in Series B round.
