Corporate news in focus
In addition to a much anticipated rate cut by the US Federal Reserve, there was a flurry of company-specific news this week. Netflix agreed to acquire Warner Brothers Discovery for an equity value of USD 72 billion. The deal covers the streaming and studio businesses while Discovery Global, the cable TV segment, will be separated next year via a spinoff into a new, publicly traded company.
The deal would give Netflix access to the deep film and series catalogue of Warner Brothers as well as its renowned movie studios. For now, the plan is to keep all current operations, including HBO and the HBO Max streaming business. While the long-term strategy for the newly acquired assets is still unknown, there is already regulatory scrutiny, as US President Donald Trump raised potential antitrust concerns. A termination of the takeover would be costly, as Netflix agreed to a breakup fee of USD 5.8 billion. Shortly thereafter, Paramount made a counter bid offering USD 30 per share in cash (versus the Netflix offer of USD 27.75 in cash and stock), with the intention to acquire the entirety of Warner Brothers Discovery. Trump’s son-in-law, Jared Kushner, is listed among the Paramount financing partners through Affinity Partners, which raised speculation about an easier regulatory approval path.
Defence stocks remained volatile amid the ongoing Ukraine peace negotiations. While investors are trying to gauge potential implications, the CEO of Rheinmetall commented positively, saying that a peace deal has "absolutely zero" impact on its business. In fact, he sees high demand for the next 10 to 15 years.
Hon Hai, also known as Foxconn, delivered positive news for its chip-producer partner Nvidia. Foxcomm, a Taiwanese electronics producer, which assembles the servers that house chips in datacentres, accelerated its revenue growth in November to 26%. This suggests that AI demand remains high.
In addition, Nvidia has received consent from the Trump administration to sell its H200 chips to approved customers in China, albeit with a surcharge that requires 25% of the export revenue to be paid to the US government. Chinese President Xi Jinping is said to have responded favourably to the proposal. The decision would allow Nvidia to potentially regain some lost revenue in a key market. The same ruling also applies to the chipmakers AMD and Intel.
Meanwhile, Chinese graphic-processing-units maker Moore Threads jumped over 400% on a highly anticipated market debut that raised USD 1.13 billion. The IPO had enormous oversubscription, reflecting strong investor appetite for domestic Chinese semiconductor alternatives amid ongoing tech self-sufficiency initiatives.