| | Good morning. Especially to David Ellison, who must still be riding quite the high. Yesterday evening, Netflix bowed out of the bidding war for Warner Bros. Discovery, declining to make a counteroffer after WBD's board called the latest $31 per share all-cash bid from Ellison's Paramount the "superior deal" on the table. "This transaction was always a 'nice to have' at the right price, not a 'must have' at any price," Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement. So that's that: Paramount gets its white whale, WBD gets a $111 billion buyout, and Netflix gets a $2.8 billion termination fee paid by the former on behalf of the latter, one of the sweeteners that Paramount threw in to seal the deal. How's that for a Hollywood-style happy ending? | | | | | This land is your land, this land is AI's land. From California to the New York islands, or at least to New Jersey. They may be some 2,750 miles apart, but dual earnings reports on Thursday showed that two energy giants, the San Diego-based Sempra and the Newark, New Jersey-based Public Service Enterprise Group (PSEG), have far more in common than not. Crucially, both companies announced they are boosting their five-year capital expenditure plans to keep pace with Big Tech's ongoing data center boom. Grid Pro Quo While power producers, especially those in the nuclear industry, are getting a lot of buzz in the AI era, traders on Wall Street increasingly view regulated utilities and distributors as one of the most intriguing and possibly safe bets on growth in the broader AI revolution. As every new data center popping up turns into its own infrastructure project, requiring wiring, interconnections, substations and other expensive equipment to access the grid, utility companies are becoming the toll roads of the AI industry. Since returns are tied to regulator-approved expansions, they appear more reliable and predictable. Meanwhile, as demand surges to unprecedented levels, tech firms have become more time-elastic than price-elastic, rewarding utility players who can quickly meet their needs with premium prices. "Demand is running so far ahead of supply that in many markets, the balance of power has shifted to the utilities," Shaia Hosseinzadeh, founder and chief investment officer of commodities-focused hedge fund OnyxPoint Global Management, told The Daily Upside. But first, utilities have to build the infrastructure, which is why PSEG and Sempra had such similar announcements this week: - Sempra is boosting its five-year capex plans by 16%, from $56 billion to $65 billion, with a particular focus on expanding regulated utilities in Texas and California.
- PSEG, meanwhile, said it is executing a similar ramp-up. The company now expects to spend $24 billion to $28 billion through 2030, up from a previous five-year plan that targeted $22.5 billion to $26 billion.
  To a 'T': The bicoastal firms are hardly alone. Ohio-based American Electric Power, for instance, said earlier this month that it's expanding its own capex plans through 2030 by as much as $8 billion. And last year, California-based Pacific Gas & Electric said it planned to invest $73 billion by the end of the decade to match surging power demand. US electric companies spent around $208 billion to upgrade, modernize and expand the energy grid in 2025, according to the Edison Electric Institute (EEI). Combined, the industry will likely spend more than $1.1 trillion through 2029, EEI predicted in a report published in October. Written by Brian Boyle | | | | | | | | | | | | | Photo via Xiaomei Chen/SCMP/Newscom | Not only does money never sleep, it seldom gets a break between rounds. No sooner did Netflix officially concede to Paramount Skydance in a multibillion-dollar sparring match over Warner Bros. Discovery on Thursday than another bidding war muscled its way into the spotlight. The San Antonio investment firm Victory Capital started a Texas-style duel with billionaire Nelson Peltz's Trian, making what it called a "clearly superior" bid for transatlantic asset management giant Janus Henderson, which Trian agreed to acquire just two months ago. Sign of the Asset Management Times A bidding war for Janus Henderson is no surprise, given the state of asset management. For years, investors have turned away from active mutual funds with higher fees, choosing instead to invest in cheaper passive ETFs and index funds offered by the likes of BlackRock and Vanguard. To buttress themselves against the resulting outflows, many traditional asset managers have pursued consolidation. US asset manager Nuveen, for instance, agreed to acquire the UK's Schroders in a $13.5 billion deal earlier this month. Hence, the appeal of Janus Henderson. The transatlantic giant was formed in 2017 to address this very problem. London's Henderson Group and Colorado's Janus Capital, both grappling with investors decamping for low-cost passive products, saw a chance to scale up, cut overlapping costs, and expand their geographic footprint. While the combined firm struggled for years with outflows, it turned that around last year. Peltz's Trian and its partner General Catalyst swept in before Christmas, agreeing to buy Janus for $7.4 billion, or $49 a share in cash. On Thursday, however, Victory Capital went public with what it says is a better deal: - Victory offered Janus Henderson shareholders a total of $57.04 a share, $30 in cash and the rest in common stock. David Brown, the chairman of Victory, said its offer represents a 16% premium over Trian's.
- Victory is no stranger to acquisitions, having added $100 billion in assets under management last year with the purchase of Pioneer, the US arm of France's Amundi.
Catalyst Constraint: Janus said it received and will consider Victory's proposal, while there is no word from Trian yet. But if the deal falls through, the bigger impact may rest with its partner, General Catalyst. The venture capital firm has worked diligently to expand beyond its origins, buying a hospital system and starting a wealth management business, as executives have reportedly considered an initial public offering. No Janus would mean one less diversified business under the umbrella for the IPO. Written by Sean Craig | | | | | | | | | People keep drinking coffee, even in tough economic times, but they skip the mini donuts. Folgers-owner JM Smucker reported its net sales rose 7% in the most recent quarter, boosted by pricier coffee due to tariffs and harsh weather conditions. But Donettes- and Twinkies-maker Hostess, which Smucker acquired for $5.6 billion in 2023, is struggling. Comparable revenue in Smucker's sweet baked goods sector fell 11%. The Uncrustables purveyor, which also expects profits to take a hit from a recent fire at one of its manufacturing facilities, narrowed its full-year sales growth forecast to 3.5% to 4%. That's down from a range that previously topped out at 4.5%. Cleanup in Aisle 3 Smucker is under pressure to sweeten its sales from activist Elliott Investment Management, which revealed yesterday that it's one of the 128-year-old PB&J company's biggest stakeholders. Smucker agreed to add two new members to its board, including the former CEO of snackmaker Snyder's-Lance. The food company was already in the midst of a turnaround effort. But Mark Smucker, the CEO and great-great-grandson of founder Jerome Monroe Smucker, said last week that turning around the business's sweets segment is taking longer than expected. Smucker recently upped its efforts: - Smucker plans to reduce its Hostess sweet treats by 25% and limit product promotions. The CEO said it also expects to save $30 million by shutting down an Indianapolis plant. And earlier this month, Smucker shook up its C-suite, parting ways with its COO, creating a CTO position and expanding its CFO's responsibilities to include spreads and frozen handhelds.
- Speaking of the freezer section, not all little treats are struggling. Uncrustables are still a hit for Smucker, which expects the PB&J pockets to make $1 billion in sales this fiscal year. Uncrustables are now also available in a fridge-friendly version.
Stale Sales: Elliott is also shaking up Doritos-owner PepsiCo after building up a $4 billion stake in the snack and soda company. Under the activist's influence, PepsiCo is scaling back its product lines and slashing prices to try to turn around a snacks biz that has suffered as customers switch to healthier options and smaller sizes. Shoppers have gotten pickier about which snacks they'll splurge on, and PepsiCo said last week its price cuts are already starting to pay off. Written by Jamie Wilde | | | | | - Papa's Gone: Pizza chain Papa John's said it will close hundreds of locations amid declining traffic, weeks after a similar announcement from rival Pizza Hut. Neither can seem to keep up with their thriving, expanding foe Domino's.
- Home Run: The average long-term US mortgage rate fell below 6% this week for the first time since 2022, Freddie Mac said Thursday.
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** Partner | | | | Disclaimer *Alternative investments are speculative and possess a high level of risk. No assurance can be given that investors will receive a return of their capital. Those investors who cannot afford to lose their entire investment should not invest. Investments in private placements are highly illiquid and those investors who cannot hold an investment for an indefinite term should not invest. Private credit investments may be complex investments and they are subject to default risk. | | |
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