Revisiting the Failed CoreWeave and Core Scientific Deal – The Special Situations Report Episode #44

Episode Summary

Executive Summary: Episode 44 of Special Situations Report focused on event-driven opportunities across M&A, spin-offs, insider activity, and buybacks. The hosts highlighted Kennedy Wilson’s take-private proposal, the competitive bidding and eventual Pfizer win for Metsera, major deal updates at Warner Bros. Discovery, Brighthouse, and Kenview, plus notable corporate actions at Capri, Core Scientific, Unilever, DuPont, and CarMax.

Main Topics: Kennedy Wilson take-private proposal (Priority: 5/5): The CEO and Fairfax Financial offered $10.25 per share for the real estate asset manager, with discussion centered on valuation complexity, assets under management, debt, property holdings, and the appeal of a dividend while waiting for the deal to progress. Metsera bidding war and Pfizer victory (Priority: 5/5): The hosts reviewed how Pfizer and Novo Nordisk competed aggressively for Metsera, with legal and regulatory issues ultimately pushing Novo aside and leading to Pfizer’s higher final offer being accepted. Newly announced M&A: Kenvue and Brighthouse Financial (Priority: 4/5): Kimberly-Clark’s large acquisition of Kenvue and Aquarian Capital’s cash deal for Brighthouse Financial were framed as major transactions with strategic logic, long timelines, and meaningful spreads to closing. Warner Bros. Discovery strategic interest from multiple suitors (Priority: 4/5): Comcast and Netflix joined prior interest from Paramount Skydance in evaluating Warner Bros. Discovery assets, though each appears focused on selective studio/streaming pieces rather than the full media empire. Spin-offs and capital allocation: Unilever, DuPont, and Capri (Priority: 4/5): The episode covered Unilever’s delayed Magnum ice cream spin-off amid Ben & Jerry’s disputes, DuPont’s completed Qunity Electronics spin-off, and Capri’s unusually large $1 billion buyback following its failed Tapestry merger and Versace sale. Core Scientific transformation and insider buying (Priority: 5/5): After CoreWeave’s failed merger with Core Scientific, an insider purchase highlighted investor interest in the company’s pivot from Bitcoin mining toward higher-density AI/HPC hosting and its strategic relationship with CoreWeave. Management change at CarMax (Priority: 3/5): The podcast closed with CarMax terminating CEO William Nash, noting weak stock performance over his tenure and signaling pressure in the used-car market.

Key Arguments: Valuation of Kennedy Wilson is complicated because it combines AUM, real estate assets, loans, and debt, making simple multiples less useful than for a pure asset manager or REIT-like business. The Kennedy Wilson deal offers shareholders income from a 5%+ dividend while waiting, which lowers the cost of deal uncertainty. Metsera shows how a genuine bidding war can drive a target far above initial expectations, especially in hot categories like GLP-1 drugs. Novo Nordisk’s bid faced serious regulatory and antitrust risk because of its dominant GLP-1 position, whereas Pfizer’s bid was more likely to survive scrutiny. Brighthouse’s long sale process demonstrates that deals often involve quiet competition before any announcement, and a higher spread can reflect funding complexity rather than weak strategic interest. Capri’s massive buyback is notable but surprising given leverage and the need to stabilize remaining brands after the failed Tapestry merger and the Versace divestiture. Core Scientific is no longer just a Bitcoin miner; its economics increasingly depend on high-density compute and AI infrastructure demand, making it a hybrid AI/crypto play. The CoreWeave/Core Scientific relationship illustrates vertical integration and capital support dynamics that may preserve value even after the merger failed. CarMax’s CEO termination underscores weak momentum in used-car retail, especially relative to better-performing peers like AutoNation.

Data Points: Kennedy Wilson offer price: $10.25 per share - Proposal from CEO William McMorrow and Fairfax Financial Kennedy Wilson stock move: $7.47 to $9.80, then $9.40 - Market reaction to the offer during the week Kennedy Wilson dividend yield: A little over 5% - Income received while waiting on deal outcome Kennedy Wilson ownership: 32% - Stake already owned by William McMorrow and Fairfax Financial Kennedy Wilson premium: 38% - Premium to the company’s last close at the time of the offer Kennedy Wilson AUM: $31 billion to $36 billion - AUM increased after the Toll Brothers apartment communities acquisition Kennedy Wilson valuation per AUM: $46 million per $1 billion AUM - Implied deal value without the Toll Brothers transaction Kennedy Wilson valuation per AUM incl. Toll Brothers: $39 million per $1 billion AUM - Implied deal value after including the new acquisition Papa John’s rumored bid: Around $64 per share - Apollo’s initial rumored take-private proposal Papa John’s trading level after pullout: $41.08 per share - Stock level after Apollo withdrew its bid Metsera initial Pfizer deal: $4.9 billion / $47.50 cash + $22.50 CVR - Original acquisition agreement terms Metsera first Novo bid: $6 billion / $56.50 cash + about $21 CVR - Competing proposal from Novo Nordisk Metsera revised Novo bid: $10 billion / about $62 cash + $24 CVR - Higher revised offer after bidding intensified Metsera final Pfizer offer: $86.25 per share - Accepted final proposal after bidding war Metsera final Pfizer structure: $65.60 cash + up to $20.65 CVR - Final accepted consideration Kenvue acquisition value: $48.7 billion - Kimberly-Clark acquisition of Kenvue Kenvue shareholder consideration: $3.50 cash + ~0.15 KMB shares per Kenvue share - Cash-and-stock deal structure Kenvue total per-share value: Around $21 per share - Approximate total consideration at announcement Kenvue debt: $9 billion - Debt on the balance sheet at the time of the deal Kenvue market cap: $32 billion - Used to assess leverage and deal scale Brighthouse acquisition value: $4.1 billion / $70 per share - Aquarian Capital’s cash acquisition offer Brighthouse premium: Over 35% - Premium to the stock’s last close Brighthouse earlier buyback: $750 million - Repurchase authorization discussed in prior coverage Brighthouse buyback as % of market cap: 25% - The buyback represented about one-fourth of market cap at announcement Brighthouse prior repurchases: 42% of stock outstanding - Stock retired over the prior four-year period Brighthouse spread: 6% spread / about 5% annualized - Expected return given the deal’s anticipated 2026 close Unilever spin-off date: December 6, 2025 - Expected completion date for Magnum ice cream spin-off after delay DuPont spin-off effective date: November 1, 2025 - Effective date for Qunity Electronics spin-off DuPont distribution ratio: 1 Qunity share for every 2 DuPont shares - Shareholder distribution terms Qunity shares distributed: 209 million - Number of shares distributed in the spin-off Qunity Q3 2025 net sales: $1.275 billion - Third-quarter sales after the spin-off Qunity Q3 2025 sales growth: 11% year over year - Reported growth for the quarter Qunity full-year guidance: Raised to $4.7 billion from $4.6 billion - Updated 2025 guidance Qunity medium-term growth target: 6% to 7% organic sales through 2028 - Management’s forward target Qunity adjusted EBITDA target: 7% to 9% - Target growth range through 2028 Capri buyback size: $1 billion - Authorized share repurchase program Capri buyback as % of market cap: More than 40% - Repurchase size relative to market capitalization at announcement Capri failed merger price: $57 per share - Rejected Tapestry deal price Capri post-failure drop: 48% in a single day to $21.28 - Stock reaction after FTC blocked the merger Capri market cap: $2.63 billion - Current equity value mentioned in the episode Capri enterprise value: $5.39 billion - Includes debt and lease liabilities Capri net debt: $1.3 billion - Balance-sheet leverage Capri lease liabilities: $1.6 billion - Additional obligations affecting enterprise value Core Scientific deal value: $9 billion - Failed all-stock merger with CoreWeave Core Scientific insider purchase: $100,000 - Director’s small buy after deal termination Core Scientific revenue mix target: 60% to 70% HPC hosting in 2026 - Transformation away from crypto dependence Core Scientific 2023 revenue mix: 100% cryptocurrency revenue - Starting point for business transition HPC hosting economics: $1 to $4 million per megawatt annually - Compared with Bitcoin mining economics Bitcoin mining economics: Roughly $1.1 million per megawatt - Benchmark used to compare with HPC hosting CoreWeave hosting contracts: $8.7 billion over 12 years - Existing commercial relationship with Core Scientific Lease payments avoided by vertical integration: $10 billion cumulative - Strategic rationale for CoreWeave seeking ownership CoreWeave CapEx funding: 80% of total CapEx in first nine months of 2025 - CoreWeave’s support for Core Scientific’s data-center conversion CarMax CEO termination date: December 1, 2025 - Effective date of William Nash’s termination CarMax stock performance under Nash: Down 43% - Approximate share performance during his tenure AutoNation stock performance under comparison period: Up nearly 200% - Benchmark cited versus CarMax

Pivotal Quotes: "you actually get paid to wait to see if this situation actually plays out" — Asif Surya: Discussing Kennedy Wilson’s dividend yield while the take-private proposal is pending "custom chips for AI is probably hotter than the superhero movies the other Marvel generates" — Asif Surya: Joking comparison while introducing Marvell Technology and its AI chip exposure "this is a great case study on how investors can very much profit from a bidding war" — Tmana Surya: Commenting on the Metsera bidding war between Pfizer and Novo Nordisk

Implications: The episode suggests event-driven investors should watch for hidden value in contested deals, spin-offs, and buybacks, but also factor in regulatory risk, balance-sheet leverage, and business-model transitions when pricing outcomes.