Top US stocks to watch: Square, Parker Hannifin and Foot Locker

Square to buy Afterpay, Parker Hannifin to buy UK-listed Meggitt, Foot Locker splashes out $1.1 billion on two acquisitions, News Corp to buy the Oil Price Information Service, Discovery eyes up Channel 4 in the UK, and Pfizer and Moderna hike the price of their coronavirus jabs.

USA (1)

Square

Square announced yesterday that it plans to purchase ‘buy now, pay later’ firm Afterpay in an all-stock deal worth $29 billion, as it also posted second-quarter results.

Square plans to integrate Afterpay into its Seller and Cash App ecosystems, allowing all merchants to offer the BNPL service to their customers. Afterpay serves some 16 million people and 100,000 merchants around the world.

Square also reported second quarter results yesterday, revealing gross profit jumped 91% year-on-year to $1.14 billion. Its Cash App profit rose 94% and its Seller ecosystem booked an 85% increase. Net income at the bottom-line of $204 million turned from an $11 million loss the year before. It warned growth could slow as it comes up against tougher comparatives in the coming quarters.

Parker Hannifin

Motion and control technology firm Parker Hannifin has announced it has struck a deal to buy UK-listed peer Meggitt for 800 pence per share, valuing the firm at some £6.3 billion.

Meggitt, which focuses on similar technologies for the aerospace and defence industries, is recommending the offer. The price is at over a 70% premium to the closing Meggitt share price on Friday. Parker Hannifin is expecting the acquisition to boost earnings in the first full year.

The acquisition will need to be approved by shareholders but is expected to complete before the end of the third quarter of 2021.

Foot Locker

Foot Locker has announced it has made two acquisitions for over $1.1 billion to help it grow in Asia and the US.  

The company said it has agreed to buy Text Trading Co, the owner and licenser of Japanese brand atmos, for $360 million in cash. There are currently 49 atmos stores globally, 38 of which are in Japan. It said it will immediately boost earnings in the current financial year as it helps propel growth for its premium and top-tier ranges while giving it access to the large Japanese market. The deal is expected to close in the third quarter.

The second and larger deal is to buy US outfit Eurostar for $750 million. The company operates 93 off-mall sites in California, Texas, Arizona and Nevada and the brand is particularly popular with the ‘growing Hispanic consumer demographic’. The firm, also known as WSS, generated $425 million in annual revenue in the last financial year and is also expected to immediately boost earnings.

News Corp

News Corp announced today that it has agreed to buy Oil Price Information Service, also known as OPIS, from S&P Global and IHS Markit for $1.15 billion in cash.

The company said OPIS will become part of Dow Jones’ Professional Information Business. OPIS generates virtually all of its revenue digitally, 95% of its revenue is recurring and it boasts an adjusted Ebitda margin of over 50%. Plus, News Corp said it expects to receive a $180 million tax benefit from the deal. The current owners starting exploring a possible sale of OPIS back in May in order to gain approval for their merger. OPIS is expected to make $129 million in revenue in the current financial year to the end of November and earnings are growing at a faster rate than the topline.

‘With this acquisition, Dow Jones will also be providing pricing and news and analytics for the Coal, Mining and Metals end markets through McCloskey, among other brands. In addition, Dow Jones will be well poised to leverage the global transition to renewables and the growth opportunities resulting from emerging energy categories like hydrogen, carbon credits, biofuels, LNG, solar, water and electric vehicles,’ said News Corp.

Pfizer and Moderna

Pfizer and Moderna have both hiked the cost of future doses of their coronavirus vaccine sold to the European Union in order to capitalise on the strong demand for the pair’s jabs, according to a report in the Financial Times.

Pfizer is reported to have raised its price to EUR19.50 per jab from EUR15.50 beforehand, while Moderna’s jab is thought to have increased to around EUR25.50 per dose from around EUR19. The report said the prices have been raised after trials showed their jabs proved more effective than cheaper ones produced by AstraZeneca and Johnson & Johnson.

Notably, both companies have raised the amount they expect to make in coronavirus vaccine sales this year thanks to increased demand and higher prices.

Discovery

Discovery is reported to be lining up a potential bid for the UK’s Channel 4, according to The Telegraph yesterday.

The report said Discovery is looking to bolster its presence in the UK market and provide competition to the likes of the BBC and ITV by adding Channel 4 to its suite of pay-TV channels in the country, spanning Eurosport to the food network. The report also touted ITV and Comcast’s Sky as potential rival bidders.

Channel 4 is owned by the state and has a public mandate to broadcast, but ministers launched a consultation last month to look at the potential of a possible sale. Any deal, if successful, is not expected to happen until well into next year.

Robinhood

Over 300,000 Robinhood customers snapped up shares in the company’s IPO last week, according to a report from the Wall Street Journal.

Citing a post on the Robinhood app, the WSJ said 301,573 users participated in the IPO. That means just a fraction, roughly 1.3%, of its user base were wooed by the listing. The IPO was priced at the low end of its range at $38 and shares ended Friday at just over $35.

Notably, Robinhood said it has reserved 20% to 35% of its shares for customers.

General Electric

General Electric completed its one-for-eight stock split last week and will start trading on a split-adjusted basis when markets open today.

Every eight shares in GE are being converted into one new share, slashing the number of shares in issue to 1.1 billion from 8.8 billion previously. This impacts the individual price of each share but not the underlying value of the business as a whole.

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