Activist Investor Pushes for Yelp-Angi Merger or Sale, Shares of Yelp Surge

Activist investor TCS Capital Management has urged Yelp Inc (NYSE:YELP) to explore a sale or a merger with online-services company Angi Inc. TCS Capital, one of Yelp’s largest investors with a stake of over 4%, believes that a merger with Angi could create a major player in the $500 billion home services market. Shares of Yelp rose 10% in premarket trading following the announcement.

Yelp provides a platform for user reviews on local businesses from restaurants and dentists to mechanics, while Angi helps customers with repairs and renovations and other home care needs. TCS Capital founder Eric Semler believes that a combination of the two companies would yield enormous revenue synergies and cost savings that could double the value of Yelp’s shares.

Yelp’s market valuation stood at about $2.1 billion, about $500 million more than Angi’s, as of last close. Shares of Yelp have risen 47% since going public in early 2012, while the benchmark S&P 500 index has more than tripled in the same period. The company is witnessing strong demand for its advertising products, with revenue rising 13% in the last reported quarter and Yelp raising its full-year net revenue outlook.

Shareholder of Diversified Healthcare Trust Seeks Alternatives to Proposed OPI Merger

Diversified Healthcare Trust (DHC) and Office Properties Income Trust (OPI) announced a merger in April, which would create a more resilient company. However, Flat Footed LLC, one of DHC’s largest shareholders, is opposing the deal, saying it undervalues the REIT by 90%. Flat Footed LLC holds a 7.4% stake and has urged the board to consider various strategic alternatives, including a sale of some assets.

The proposed deal would give DHC shareholders 0.147 share of OPI common stock for each DHC share, which represented an implied value of $1.70 per common share on the day the deal was announced. Flat Footed LLC believes DHC’s portfolio should be valued at $5 billion and its stock price should be trading between $9 and $10 a share. The stock price has lost 15% since the merger was announced.

The new company would be called Diversified Properties Trust and would continue to have its assets managed by the RMR Group Inc. Flat Footed wrote in its letter that RMR Group stands to gain outsized benefits from the merger by being able to increase its fees.

Flat Footed LLC has said it will vote against the proposed merger at a special meeting, which has not yet been set.

A US Judge Examines Amgen’s Acquisition of Horizon, Scheduling a Trial for September

Amgen has argued that the FTC’s case is based on a flawed analysis of the market and that the deal would not harm competition. The company has said it is confident the court will approve the transaction.

The judge’s decision will be closely watched by the pharmaceutical industry, which has seen a flurry of mergers and acquisitions in recent years. If the deal is blocked, it could signal a tougher stance by the FTC on large pharmaceutical deals.

Microsoft Launches AI Products with Enhanced ChatGPT and Bing

Microsoft has announced a range of AI upgrades, including to its search engine Bing, ChatGPT and cloud services. These upgrades will allow users to access live search results from Bing on ChatGPT, and use plug-ins for Bing to transact more easily with businesses. Microsoft is also rolling out AI copilots for enterprises and Windows users, and helping consumers determine if its AI generated an image or video. These updates are part of Microsoft’s effort to capture more of the estimated $286 billion market for search advertising globally.

Shell CEO Protected by Security Amid Climate Activists’ AGM Demonstration

At Shell’s annual shareholder meeting in London on Tuesday, climate activists disrupted proceedings, calling for the energy giant to stop producing fossil fuels. Security staff formed a human chain to shield executives and directors from the protesters. Shell CEO Wael Sawan and Chairman Andrew Mackenzie listened to the protesters, with Mackenzie saying it would be nice to have a debate rather than repeating the same points.

Shell reported a record $40 billion profit last year and is investing in lower-carbon solutions, but is also contending with an increasingly vocal minority of institutional shareholders who want it to move faster to tackle climate change. A resolution submitted by activist group Follow This, calling on the company to set more ambitious emissions targets, was rejected by Shell’s board, but received a fifth of the vote.

Shell’s own climate strategy resolution won 80% of the vote, in line with last year. Sawan said the silent majority is being clear with their expectations for a balanced transition. Scientists say the world needs to cut greenhouse gas emissions by about 43% from 2019 levels by 2030 to meet the Paris Agreement’s goal of keeping warming to less than 2 degrees Celsius.

Apple and Broadcom Reach Multi-Billion Dollar Agreement for American-Made Chips

Apple Inc. and Broadcom Inc. have announced a multi-billion-dollar deal that will see the chipmaker develop 5G radio frequency components for Apple, designed and built in several U.S. facilities. The components, known as film bulk acoustic resonator (FBAR) chips, are part of a radio-frequency system that helps iPhones and other Apple devices connect to mobile data networks.

Apple CEO Tim Cook said in a statement, “All of Apple’s products depend on technology engineered and built here in the United States, and we’ll continue to deepen our investments in the U.S. economy because we have an unshakable belief in America’s future.” The deal will support more than 1,100 jobs in Broadcom’s Fort Collins FBAR filter manufacturing facility.

Broadcom shares were up 4.3% in premarket trading after the announcement. The chipmaker is already a major supplier of wireless components to Apple.

Lowe’s Reduces Outlook as Home Improvement Market Slows

Lowe’s Cos Inc has cut its annual sales and profit forecasts, joining larger rival Home Depot in highlighting waning demand for home improvement tools. The shift in spending to services, falling lumber prices and a damp start to the Spring season have all contributed to the squeeze on sales. Lowe’s expects full-year comparable sales to fall between 2% and 4%, compared to its prior outlook of flat to down 2%.

In the first quarter, Lowe’s reported a steeper-than-expected fall in comparable sales, but it topped profit expectations, with margins holding up better thanks to tighter cost control. While demand from Lowe’s core do-it-yourself customers came in weaker than anticipated, strength in sales to its “Pro-customers” helped offset some of that.

Analysts warned Lowe’s could trim its outlook again this year, but the results were not as bad as feared after Home Depot’s gloomy outlook last week. Investors responded positively, with shares reversing premarket losses and rising 2% in morning trading.

Negotiations on Debt Ceiling Weigh on U.S. Stock Market

The stock market is feeling the pressure of the looming debt ceiling deadline as negotiations continue. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite all fell as investors wait for a resolution. President Joe Biden and House Speaker Kevin McCarthy met at the White House on Monday, but no deal was reached. Treasury Secretary Janet Yellen has set June 1 as the X-date for raising or suspending the debt ceiling. Meanwhile, the Federal Reserve is looking toward their next meeting in June, with traders factoring in a pause in interest rate increases. Apple Inc and Broadcom Inc announced a new deal, while Lowe’s Companies Inc and Dick’s Sporting Goods Inc both affirmed their annual sales outlooks. Oil prices rose, while gold futures fell. Investors will be watching closely as the debt ceiling deadline approaches.

UBS: Meta Platforms’ Reels Revenue Impact Less Severe than Expected

UBS has reiterated its Buy rating on Meta Platforms Inc (NASDAQ:META) with a $300 price target. Analysts reviewed the company’s Reels opportunity, noting that the revenue headwinds have been more moderate than expected. They expect Reels to have a $5 billion revenue runrate exiting FY 2023 and also see it getting to revenue neutrality. UBS believes that Overlay ads will allow higher ad load on Reels with limited disruption to the user experience, resulting in a total benefit of 18%. They concluded by reiterating their Buy rating on Meta shares, with a compelling +53% / (36%) upside/downside skew.

Barclays Appoints McDavid as Head of Equities from Morgan Stanley

Barclays has appointed Scott McDavid, a veteran of Morgan Stanley, as its new global head of equities. Ronnie Wexler has also been appointed as global head of equities distribution. McDavid will join Barclays in September and report to Adeel Khan, co-head of Global Markets. Wexler will report to Stephen Dainton, the bank’s other Global Markets chief.

The appointments come as Barclays seeks to break Wall Street rivals’ hold on the top five global rankings. The bank has seen strong performance in the past few years, but recent results have been more mixed due to high interest rates and inflation.

Barclays is hoping that the new appointments will help to drive the bank’s investment banking operations forward and continue to build on its success.