A Potential Bidding War for Guess - The Special Situations Report Episode #16

Episode Summary

Executive Summary: Episode 16 of Special Situations Report covered a wide range of event-driven catalysts: a possible bidding war for Guess, merger updates for Acelis/Alumis and Discover/Capital One, Columbia Banking System’s $2B acquisition of Pacific Premier, ABB’s planned robotics spin-off, heavy corporate buybacks, insider buying at Lindblad, activism at Harley-Davidson and Bausch Health, and executive departures at Match Group and Avanos Medical.

Main Topics: Potential acquisition of Guess and emerging bidding war (Priority: 5/5): The hosts discuss Guess rising on reports of an Authentic Brands Group bid, potentially topping WHP Global’s $13/share offer. They emphasize that no definitive merger agreement exists and note the founders/CEO already have majority ownership and are rolling over shares, complicating the outcome. Merger arbitrage updates: Acelis/Alumis and Discover/Capital One (Priority: 5/5): Acelis and Alumis amended their merger terms after rumors of a higher bid proved true, but the spread turned negative again, suggesting investors still expect more. Discover and Capital One received final OCC and Fed approvals, putting the deal on track to close by May 18, 2025. Columbia Banking System’s acquisition of Pacific Premier Bancorp (Priority: 4/5): The hosts highlight Columbia’s $2B all-stock acquisition of Pacific Premier as the first billion-dollar deal of the month, expanding Columbia beyond the Pacific Northwest into Southern California and creating a roughly $70B-asset bank. ABB’s robotics division spin-off (Priority: 4/5): ABB announced a 2026 spin-off of its robotics business, a meaningful industrial separation because the division is a real operating business with scale, customers like Tesla/SpaceX/BMW, and a sizable revenue base rather than a speculative carve-out. Corporate buybacks across large-cap and healthcare names (Priority: 4/5): Google, Equifax, Medpace, Pacira, and United Rentals all announced major repurchase programs. The hosts frame buybacks as more compelling when valuations are reasonable and financial performance supports capital returns. Insider buying and activist situations (Priority: 4/5): They cover insider buying at Lindblad Expedition Holdings, then activist developments at Harley-Davidson and Bausch Health. Carl Icahn’s large synthetic/ownership stake in Bausch is especially notable, alongside the company’s debt burden and poison pill. Leadership changes at Match Group and Avanos Medical (Priority: 3/5): The episode ends with executive turnover: Match’s CTO/product chief exits after Spencer Rascoff’s arrival, while Avanos’ interim CEO/former CFO leaves after the company hires a permanent CEO, illustrating how leadership changes often trigger broader reorganization.

Key Arguments: Guess may face a real bidding contest because Authentic Brands could outbid WHP Global, but majority control by founders/CEO and their share rollover makes the final outcome uncertain. Negative merger spreads can persist even after higher terms are announced, meaning the market may be pricing in yet another topping bid or simply overestimating deal certainty. Columbia’s acquisition of Pacific Premier is strategically attractive because it expands geography and comes at just below tangible book value, while also potentially offering a way to own Columbia at a discount. ABB Robotics is noteworthy because it is a substantial, profitable industrial business with real customers and scale, not a mere concept spin-off. The hosts view buybacks as most meaningful when they materially reduce shares outstanding rather than merely offset stock compensation; Google’s history suggests that’s what has been happening. Lindblad’s insider buying is interesting not because the company is thriving financially, but because the director buying shares has a highly unusual and credible background tied to Meta and analytics. Harley-Davidson’s turnaround may require an outside owner because the electric-bike strategy badly missed expectations and the brand’s value may be better realized away from quarterly public-market pressure. Icahn’s Bausch stake shows how activism can combine direct ownership and derivatives; the company’s debt load makes strategic pressure especially relevant. Match Group’s turnaround thesis depends on repositioning Tinder for a younger user base, but competitive and regulatory issues may limit strategic options such as a Bumble acquisition.

Data Points: Guess stock move: +17% - Rose on reports of a potential Authentic Brands Group offer WHP Global offer: $13/share - Original potential offer for Guess Guess low point: $8.57 - Stock fell to this level two weeks earlier on tariff concerns WHP Global brand portfolio: 14 brands - Includes Toys R Us, Anne Klein, Isaac Mizrahi, Express, Joseph Abboud WHP Global annual sales: Over $7 billion - Annual sales generated by its brand portfolio Authentic Brands portfolio: 50+ brands - Scale cited to show it is much larger than WHP Global Authentic Brands annual revenue: $32 billion - Used to frame potential ability to outbid WHP Global Acelis/Alumis exchange ratio: 0.4814 Alumis shares per Acelis share - Amended merger consideration announced last week Acelis/Alumis prior exchange ratio: 0.4274 Alumis shares per Acelis share - Prior merger terms before amendment Acelis/Alumis value: $2.41/share - Implied value under the amended merger agreement Acelis/Alumis spread: -5% - Spread moved negative after initially turning positive Discover/Capital One closing date: May 18, 2025 - Expected closing after regulatory approvals Columbia/Pacific Premier deal size: $2 billion - All-stock acquisition announced as first billion-dollar deal of the month Pacific Premier assets: $18 billion - Bank assets mentioned in deal discussion Columbia assets: Over $50 billion - Pre-deal asset base referenced by hosts Combined assets: Around $70 billion - Estimated combined company size after merger ABB Robotics revenue: $2.3 billion - 2025 revenue of the division being spun off ABB Robotics share of ABB revenue: 7% - Division’s contribution to parent revenue ABB employees: 110,000+ - ABB Group employee count Robotics division employees: 7,000 - Employees in the division to be spun off Robotics EBITDA margin: 12.1% - Operating EBITDA margin cited for ABB Robotics Google buyback: $70 billion - New share repurchase authorization Google buyback as % of market cap: 3.6% - Hosts contextualized size relative to market value Google shares retired: 8%+ - Shares outstanding reduced over the last three years Google revenue growth: 12% - Overall revenue increase in reported results Search and YouTube ad growth: About 10% YoY - Revenue growth in core advertising businesses Google Cloud growth: 28% - Strong segment growth during the quarter Subscriptions/platforms/devices growth: 19% - Non-ad revenue category growth Google Network revenue change: -2% - Year-over-year decline Google Other Bets revenue change: -9% - Year-over-year decline Equifax buyback: $3 billion - Repurchase program announced by the credit bureau company Equifax buyback as % of market cap: 9.65% - Size of buyback relative to market cap Medpace stock performance: -24% over 1 year - Context for why buyback may be attractive Medpace buyback increase: $1 billion - Raised from a prior $500 million authorization Medpace buyback as % of shares outstanding: 11.17% - Repurchase size relative to the company’s share count Pacira buyback: 26.3% of shares outstanding - Very large repurchase authorization for the pain-management company United Rentals buyback: $1.5 billion - Repurchase announced by the equipment rental company Lindblad stock performance: +24% over 1 year - Context for insider purchases H Partners portfolio size: 3 positions - Illustrates the activist fund’s concentrated approach Harley-Davidson electric-bike sales forecast miss: $385M expected vs. $209M actual - Presentation highlighted a major miss on LiveWire projections Bosch Health direct Icahn ownership: 9.4% - Icahn’s direct stake in the company Bosch Health swap exposure: 24.6% - Additional economic exposure via cash-settled swaps Bosch Health debt: $27 billion - Debt balance as of end of last year Guess trading context: Potential rival offer - Stock reaction to reports of Authentic Brands interest Pacira focus area: Non-opioid pain management - Company’s main therapeutic focus

Pivotal Quotes: "it almost feels like each week there's a new update regarding the Accelerin and Alumis deal" — Asif Suria: Describing how often the merger terms and spread have changed "If the future is AI-powered robots or a realization of James Cameron's vision in the Terminator movies, then this spin-off might be worth keeping an eye out for." — Tamanda Suria: Introducing ABB’s robotics spin-off "They missed the mark by, I think, like 96% or 97%." — Tamanda Suria: Referring to Harley-Davidson/LiveWire’s sales shortfall

Implications: The episode highlights how event-driven investors can find opportunities in bids, spin-offs, buybacks, and activism, but outcomes remain uncertain. Several situations suggest optionality, while others reinforce the need to verify catalysts, spreads, and management motives.