Wednesday's Headlines: Zendesk Finally Goes Private

Wednesday's Headlines: Zendesk Finally Goes Private

There will be no Market Headlines tomorrow, Thursday the 24th of November, due to the markets being closed for Thanksgiving. The headlines will return on Friday the 25th of November. Happy Thanksgiving!

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Nordstrom (JWN) +6.5%

Redfin (RDFN) +5.0%

Intuit (INTU) +4.6%

Vail Resorts (MTN) +4.4%

THOR Industries (THO) +4.3%

Moving Down ⬇️

2U (TWOU) -8.7%

Zoom Communications (ZM) -3.9% Group (TCOM) -2.7%

Chuy's (CHUY) -2.6%

Hain Celestial (HAIN) -2.6%

Zendesk Goes Private 🔐

The sale of Zendesk (ZEN) was closed yesterday for $10.2 billion dollars to a collection of private equity firms led by Hellman & Friedman and Permira. The acquisition of the company was approved by shareholders back in September.

The deal was precipitated by long-term pressure from activist investors Jana Partners after a disastrous attempt by the company to acquire Momentive Global — the parent company of Survey Monkey — for $3.9 billion. The proposed acquisition was scrapped after Zendesk shareholders voted against it earlier this year, opening a path for Zendesk itself to be acquired.

Just two weeks previous, the company announced it would be cutting 5% of its workforce, focused primarily on its European headquarters in Dublin.

Owners of Zendesk stock will be paid out $77.50 in cash for each share, a price well below what it was trading at for most of the year and more than 50% below its all-time highs set in early 2021. Zendesk will henceforth cease trading on the New York Stock Exchange.

Nordstrom Delivers a Mixed Bag 🛍

Nordstrom (JWN) fell considerably in the wake of its third-quarter results released after hours on Tuesday. Like many before it, the retailer was caught on the back foot with excess merchandise earlier in the year and has begun deep discounting, resulting in a bite being taken out of profitability.

Despite this, Nordstrom was able to deliver a revenue and earnings beat after lowering its full-year guidance in August. Sales amounted to $3.55 billion compared to $3.49 billion anticipated, however, this was down 2.5% year-over-year. The Rack, Nordstrom’s discount business, saw sales fall by 1.9% while the chain’s name-brand store saw sales decrease by 3.4%. Earnings came in at an adjusted 20 cents a share compared to the 15 cents expected by analysts.

According to management, due to “high markdown rates”, the department store’s gross profit margin dropped to 33.2%, well below its typical 36%. Though, it does seem this pain is temporary and Nordstrom is well-prepared for the coming months. CEO Erik B. Nordstrom stated:

“When customer demand decelerated in late June, we took action to align inventory and expenses with the changing trends, which has prepared us to navigate the current macroeconomic environment.”

Nordstrom was able to reaffirm its full-year sales outlook but was forced to trim its profit forecasts. The chain is expecting revenue growth between 5% and 7% year-over-year while anticipating earnings per share of $2.13 to $2.43. The company’s previous estimates were between $2.45 to $2.75.

Nordstrom’s stock is down more than 9% in pre-market trading.

Manchester United Owners Exploring Sale ⚽️

Manchester United, arguably the most famous football club in the world, could be about to be sold. Shares of the club, which are traded on the New York Stock Exchange, jumped 12% following the news.

On Tuesday, the current owners of the club, Avram and Joel Glazer issued a statement saying they had “authorized a thorough evaluation of strategic alternatives”. According to reports, that could include a partial sale or investments in the stadium and infrastructure redevelopment.

The Glazers took control of Manchester United 17 years ago in a highly-leveraged $940 million deal that has been heavily criticized by fans and sporting journalists. Fans have regularly protested the Glazer family’s involvement, which last year led to the postponement of a high-profile match against rivals Liverpool.

The news comes on the same day that the club announced it had terminated its agreement with Cristiano Ronaldo after he appeared in an unauthorized interview that was critical of the club and current manager Erik Ten Hag. Ronaldo is currently in Qatar with the Portuguese national team, who are scheduled to play their opening World Cup game tomorrow.

This could be the third major English football club to be sold this year. In the summer, Chelsea Football Club was bought by American businessman Todd Boehly for $3.2 billion. The club had previously been owned by Russian billionaire Roman Abramovich, who had been subject to sanctions by the UK Government. Liverpool Football Club is also currently exploring a sale according to the club's chairman.

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