Deja Vu with TaskUs and STAAR Surgical – The Special Situations Report Episode #40

Episode Summary

Executive Summary: Episode 40 of the Special Situations Report covered a wide mix of event-driven deals, activism, spin-offs, buybacks, and executive changes. The hosts highlighted contested M&A in healthcare and software, a major MASH-related biotech deal, a bank merger, the sale of ABB’s robotics business to SoftBank, insider buying at Scholar Rock, and leadership changes at Pepsi and Verizon.

Main Topics: Contested M&A: TaskUs and Star Surgical (Priority: 5/5): TaskUs failed after minority investors opposed Blackstone’s take-private, while Star Surgical faces organized resistance from Broadwood, Yunqi, Defender Capital, and Glass Lewis against Alcon’s $28/share offer. Biotech M&A around MASH and rare diseases (Priority: 5/5): Novo Nordisk’s acquisition of Akero Therapeutics and the rumored Johnson/Protagonist deal show continued appetite for high-value biotech assets, especially in MASH and rare blood disorders. Strategic bank combination: Comerica and Fifth Third (Priority: 4/5): Comerica’s activist-pushed sale to Fifth Third creates a larger regional banking platform and raises regulatory timing questions. ABB’s robotics unit sold to SoftBank (Priority: 4/5): What could have been a spin-off became a sale, giving ABB a large gain and depriving investors of a pure-play robotics listing. Insider buying and biotech setback at Scholar Rock (Priority: 4/5): A large insider purchase by a highly ranked director stands out against a backdrop of an FDA complete response letter tied to a manufacturing issue, not drug efficacy. Activism and management changes at Pepsi and Verizon (Priority: 3/5): Elliott-linked pressure at Pepsi coincided with a new CFO hire, while Verizon appointed Dan Schulman as CEO amid slowing subscriber trends. Buybacks and capital returns at AutoZone (Priority: 3/5): AutoZone’s latest repurchase authorization reinforces its long-running share-count reduction strategy and shareholder-return profile.

Key Arguments: TaskUs demonstrated that enough minority opposition can block a deal even when a negotiated take-private is already signed. Star Surgical may still close because antitrust clearance has been obtained in the U.S., but cross-border regulatory approvals and shareholder opposition keep the spread from going negative. Novo Nordisk’s acquisition of Akero reflects strong strategic interest in MASH, especially after GLP-1 therapies like Wegovy gained a new approved use in the disease. The CVR on Akero is effectively a free upside option if the deal closes near the cash price. Comerica’s sale was effectively catalyzed by activism, illustrating how shareholder pressure can push boards toward strategic alternatives. ABB’s robotics unit was valuable enough to attract a $5.4 billion purchase, suggesting strong third-party demand for high-quality industrial automation assets. Scholar Rock’s FDA setback was caused by manufacturing contamination issues at a Catalent/ Novo-linked facility rather than by problems with the drug itself, which may preserve long-term value. Pepsi needs operational improvement more than acquisitions; importing a Walmart CFO fits a turnaround agenda under activist scrutiny. Verizon’s CEO change reflects dissatisfaction with long-term stock performance and worsening subscriber losses despite revenue growth from pricing. AutoZone remains a preferred capital return story because of aggressive buybacks, solid cash generation, and manageable leverage.

Data Points: TaskUs deal price: $16.50 per share - Blackstone take-private that ultimately failed to win shareholder approval Star Surgical acquisition value: $1.5 billion - Alcon’s proposed acquisition of the ophthalmic surgery company Star Surgical offer price: About $28 per share in cash - Takeover price referenced in the Alcon deal Star Surgical trading spread: About 5% - Stock trading near $26 versus $28 deal price Broadwood stake in Star Surgical: 27.3% - Largest disclosed opponent of the Alcon transaction Yunqi Capital stake in Star Surgical: 5.1% - Investor publicly opposing the deal Defender Capital stake in Star Surgical: About 1.5% - Additional shareholder opposition to the deal Protagonist Therapeutics market cap: A little over $4 billion - Target of rumored acquisition talks with Johnson Protagonist enterprise value: $5.2 billion - Valuation after stock jump on M&A rumors Protagonist stock move: Nearly 30% - Share price jump on reported takeover talks Protagonist one-year stock gain: 87% - Performance mentioned after takeover speculation Protagonist five-year stock gain: Nearly 300% - Long-term share performance cited in the discussion Akkero Therapeutics deal value: $1.7 billion - Novo Nordisk acquisition discussed in the MASH segment Akero cash consideration: $54 per share - All-cash portion of the Novo Nordisk deal Akero CVR value: Up to $6 per share - Contingent value right tied to FDA approval by June 2031 Akero CVR deadline: June 2031 - FDA approval milestone date for the CVR payment Wegovy FDA approval for MASH: August 15 - GLP-1 therapy received approval for use in MASH Roche acquisition of 89Bio: Up to $2.4 billion - Referenced as another MASH-related deal GSK MASH deal: Up to $2 billion - Acquisition from Boston Pharmaceuticals Comerica acquisition by Fifth Third: $10.9 billion - All-stock bank merger Comerica assets: About $78 billion - Size of the target bank Comerica market cap: $9.75 billion - Target valuation discussed on the podcast Fifth Third assets: About $212 billion - Size of the acquiring bank Fifth Third market cap: $27.45 billion - Acquirer valuation discussed on the podcast ABB robotics division revenue: $2.3 billion - 2024 revenue of the unit sold to SoftBank ABB robotics division share of ABB revenue: 7% - Importance of the robotics segment within ABB SoftBank acquisition value for ABB robotics: Nearly $5.4 billion - Purchase price for ABB’s robotics business ABB expected gain on sale: $2.4 billion - Accounting gain expected from the transaction AutoZone buyback authorization: $1.5 billion - New share repurchase announced AutoZone buyback as share of market cap: 2.24% - Size of the authorization relative to market cap AutoZone shares repurchased over four years: Over 20% - Longer-term capital return track record AutoZone one-year stock performance: About 30% - Recent share price appreciation AutoZone five-year stock performance: 256% - Long-term stock appreciation AutoZone debt: About $12 billion - Balance sheet leverage mentioned in relation to market cap AutoZone market cap: $68 billion - Used to contextualize debt burden and buyback scale AutoZone valuation: P/E 28; EV/EBITDA 19.19 - Described as expensive but high quality Scholar Rock insider purchase: Nearly $19 million - Director Shivas Akaraju’s large open-market purchase Akaraju insider performance score: 100 - New insider performance metric highlighted by the hosts Scholar Rock priority review date: September 22, 2025 - FDA review timeline before the CRL Scholar Rock FDA action: Complete response letter (CRL) - Noted as due to manufacturing issues rather than efficacy or safety concerns Scholar Rock SMAs patients: Around 150,000 in the U.S. - Patient population referenced for the disease market Pepsi/Elliott stake: $4 billion - Activist involvement in Pepsi mentioned by the hosts Pepsi new CFO: Stephen Smith - Appointed from Walmart’s U.S. division CFO role Verizon CEO tenure under Hans Vestberg: Seven years - Context for leadership change Verizon stock performance under Vestberg: Up 8% - Cited as weak long-term performance Verizon postpaid customer loss in Q1 2025: 356,000 - Subscriber losses discussed as a strategic concern Verizon postpaid customer loss in Q2 2025: 51,000 - Continued deterioration in customer growth

Pivotal Quotes: "the stock is trading just below the $54 per share cash price, making the CVR a free lottery ticket to a future payment of $6 per share" — Mana Surya: Describing Akero Therapeutics’ deal structure and the embedded upside from the contingent value right "The deal has failed." — Asit Surya: Conclusion on the TaskUs take-private after shareholder opposition blocked approval "not quite, the waiting period under the HSR Act expired at the end of September" — Asit Surya: Explaining that Star Surgical still faces non-U.S. regulatory approvals despite U.S. antitrust clearance

Implications: The episode underscores that activism, regulatory risk, and deal structure still drive outcomes in special situations. Listeners should watch for CVRs, contested votes, and operational turnarounds where management changes or strategic sales can reshape valuations.