What you Need to Know for March 26th

Welcome back!

We’re excited to announce it’s officially the two year anniversary of The Wall Street Rollup! We are excited to deliver for you as we advance to 3x/week. If this is your first time reading the WSR, this news aggregator is part of the High Yield Harry and Buyside Hub umbrella.

Obviously, we’re at a bit of a standstill with the U.S. Iran war. Trump’s 48 hour ultimatum got extended out to the weekend. While the U.S. has been vocal about talks taking place, Iran is seemingly dismissing this and refusing to accept “unconditional surrender”. Iran has reportedly been focusing on defending Kharg Island in advance of any US operations to take control of the key export facilities. Iran has stated that “non-hostile” ships with no ties to the U.S. or Israel will be allowed through the Strait of Hormuz. This weekend is going to be a massive inflection point towards if we get de-escelation or not. At the moment, the market is expecting a return to normalcy, but we don’t think it’s a done deal given the hot-headed nature of this war so far.

On Tuesday, we did a writeup on the S&P 500 laggards we think are going to be in trouble for a while. Our -40% off offer for WSR IC will end in 2 weeks given the large amount of content we’ve added over the past few months.

Earnings Corner 💸 

• $KBH ( ▼ 1.55% ) KB Home missed on revenue at $1.08B vs. $1.10B, and EPS was in-line. Sales declined on lower home deliveries (-14%) and a drop in average selling price (-10%) as affordability pressure and higher mortgage rates weighed on demand. Margins were pressured as pricing came down while land and build costs remained elevated. The company is shifting back to a built-to-order model to better align supply with demand. Guidance was lowered as weaker orders and macro uncertainty are expected to weigh on deliveries and revenue.

• $CHWY ( ▲ 13.31% ) Chewy missed on revenue at $3.26B vs. $3.27B and on EPS, though active customers rose 4% and recurring Autoship orders remained a key support. Sales were held back by a flat pet market and margins improved on better mix, ads, and cost discipline. Guidance came in above expectations as continued customer growth and margin expansion are expected to drive results.

• $GME ( ▲ 1.18% ) GameStop missed on revenue as sales fell 11% y/y to $1.1B, but beat on EPS at $0.49 vs. $0.08, driven by cost cuts and higher margin categories like collectibles. The more notable story is the company building a $9B cash position, fueling speculation around a potential large scale acquisition.

On The Move 📈 📉

• Braze $BRZE ( ▲ 19.87% ) stock jumped after reporting strong 4Q results, with revenue beating estimates and accelerating to +27.9% y/y, solid bookings growth, and upbeat guidance that offset an EPS miss.

• Arm Holdings $ARM ( ▲ 16.38% ) surged after unveiling its first in-house AI data center CPU, marking a major shift away from its traditional licensing model and expanding its role in the AI infrastructure market.

• JetBlue Airways $JBLU ( ▲ 13.37% ) shares rise after reports that they’re pursuing a sale.

• On Holding $ONON ( ▼ 11.19% ) fell after announcing its CEO will step down, with co-founders stepping in as co-CEOs, raising questions around leadership stability as sales growth slows.

• Draft Kings $DKNG ( ▼ 8.11% ) declined amid regulatory overhang, as a proposed Senate betting bill and an NCAA lawsuit over “March Madness” branding raised concerns around growth and profitability.

IPO Roundup 📍 

• SpaceX is preparing to file for an IPO, targeting a $75B raise at a $1.75T valuation. The company is seeking a market debut in June.

• Japan’s IPO market struggles continued as J-Pharma Co. and Basic Inc. fell a respective 22% and 8% on their first day of trading.

• Club Med, a high-end resort chain club, is in talks with banks about a potential Hong Kong IPO.

For deeper, stock market research, including our recent piece on S&P 500 laggards, upgrade to the WSR Investing Club

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Today’s Headlines 📖🍿 

• Claude Computer wow the world: Anthropic’s Claude can now autonomously carry out tasks on your computer like navigating a web browser or filling a spreadsheet. Users can prompt Claude from a phone and it will open apps on your computer to complete the task. The feature is currently available to Max or Pro subscribers.

• Private credit redemption caps: Apollo and Ares were hit with withdrawals, and stuck to their 5% limits after investors sought to redeem 11.2% and 11.6%, respectively. Inflows remained solid, but the financial media continues pushing a draconian private credit view to maximize clicks. While Public BDCs are trading at steep discounts and non-traded funds are capping redemptions, fresh capital continues flowing in.

• Private capital pivots from software to “HALO” assets: Private equity firms are rotating away from software into heavy, asset-backed industrial businesses, as AI disrupts SaaS valuations and stalls tech exits. This includes anything from manufacturers of ship engines to convey belt producers.

• OpenAI’s “guaranteed” return: OpenAI is offering PE firms a guaranteed minimum return of 17.5% as it aims to outpace Anthropic in securing distribution partners. The deal would create a joint venture with the firms, raising fresh capital and accelerating AI adoption through the firms’ portfolio companies. TPG is set to serve as the anchor investor, with Advent, Bain, and Brookfield also participating.

• Private equity faces new scrutiny in childcare: Lawmakers open investigation into rising prices at PE-backed providers, specifically KinderCare Learning Companies and Learning Care Group.

• Private equity healthcare crackdown: Lawmakers propose cutting Medicare funding for PE-owned nursing homes, putting 400+ facilities at risk of losing a critical revenue. Senator Chris Murphy called out that nursing homes owned by PE have a 11% higher mortality rate.

• SMFG explores Jefferies acquisition: Jefferies $JEF ( ▼ 2.24% ) shares rose after reports that Japan’s SMFG is preparing a possible bid for the investment bank. SMFG already owns a 4.48% stake, as Jefferies’ stock remains down sharply this year amid credit quality concerns.

• Caa1-rated Planview turns to private credit for financing: Software firm Planview is approaching private lenders to address $1.5B+ in debt amid refinancing challenges and distressed trading levels.

• JPMorgan-led group boosted a junk loan tied to the buyout of Janus Henderson, increasing it from $2.0B to $2.6B after a $600mm bond sale was cancelled amid volatile markets. Final terms were set at S+275 at an OID of 99.5.

  • Victory Capital pulled their $9B offer for Janus Henderson after losing to Trian and General Catalyst, who raised their offer to $52 a share.

• Advent plans to invest $1B in the defense sector as global tensions rise, focusing “next-generation” defense technology and long-term security needs.

• BlackRock’s Rieder has reiterated his call for a rate cut despite the war, saying that “small businesses, young people, low income, are really getting hurt by this interest rate.”

• US mortgage rates climb to five-month high: The average 30-year fixed rate rose to 6.43%, making a third straight weekly increase driven by oil price concerns. Mortgage applications fell 10.5%, with refinancing down 14.6% and purchase activity down 5.4%.

• Meta and YouTube lost a social media addiction trial after jurors found that the companies were negligent and designed their apps to be addictive and harmful to children.

• OpenAI shuts down Sora video generator: OpenAI is discontinuing its Sora AI platform just months after signing a multiyear Disney licensing deal amid high operating costs for video generation and broader efforts to streamline operations.

M&A Transactions💭 

Nippon Sheet Glass (TKS: 5202), manufactures glass and glazing products, has entered into a definitive agreement to be acquired for $3.7B by Apollo Global Management through a public-to-private LBO. EV/EBITDA was 8.03x and EV/Revenue was 0.66x. NSG said on Tuesday that it would raise JPY 165.0B by issuing new shares to Apollo and delist after squeezing out minority shareholders for JPY 500.0M per share. The price represents a 23.5% premium to Monday’s close. As part of the deal Apollo will also inject JPY 140.0M of funds from major Japanese banks into NSG to repay debt they are owed, in effort converting debt to equity. The transaction will help to reduce NSG’s borrowings, which have climbed to JPY 500.0B.

Desktop (BVMF: DESK3), a telecommunications company, was acquired for BRL 4.0B by Claro NXT Telecomunicacoes. EV/EBITDA was 9.6x and EV/Revenue was 4.82x. Bank of America advised on the sale.

Toyota Industries (TKS: 6201), engaged in the manufacture and sale of automobiles, was acquired for JPY 5.9T by Toyota Motor (TKS: 7203). EV/EBIT was 65.2x and EV/Revenue was 2.13x.

Retina & Vitreous of Texas, operator of a retina practice center, has reached a definitive agreement to be acquired for $1.1B by Cencora. Jefferies advised on the sale.

Kobalt Music Group, operator of an independent music services company, has entered into a definitive agreement to be acquired for $1.5B by Primary Wave Entertainment. Goldman Sachs advised on the sale.

Huel, producer of nutritional powders, has reached a definitive agreement to be acquired for EUR 1.0B by Danone (PAR: BN).

Guardian Capital Group (TSE: GCG), a diversified financial services company, was acquired for CAD 1.67B by Desjardins Group. EV/EBITDA was 7.17x and EV/Revenue was 4.37x. BMO Capital Markets and Scotiabank advised on the sale.

Grab Holdings (NAS: GRAB) has reached a definitive agreement to acquire The Foodpanda Delivery Business in Taiwan of Delivery Hero (ETR: DHER) for $600.0M.

800 Super Holdings, provider of environmental services, was acquired for SGD 540.0M by Actis and Mr. William Lee. The transaction values the company at an estimated SGD 600.0M.

Royal Challengers Sports, operator of a cricket sports franchise, has reached a definitive agreement to be acquired for $1.78B by Aditya Birla Management, Times of India,, Bolt Ventures, and Blackstone. Citigroup advised on the sale.

Secil - Companhia Geral de Cal e Cimento, manufacturer of cement and building materials, was acquired for EUR 1.4B by Molins (MAD: CMO). EV/EBIDTA was 7.4x and EV/Revenue was 1.92x.

Rajasthan Royals, operator of a regional cricket team, has reached a definitive agreement to be acquired for $1.63B by Mr. Kal Somani, Mr. Rob Waltona, and Ms. Sheila Ford Hamp.

MedMera Bank, provider of banking and financial services, has reached a definitive agreement to be acquired for SEK 1.96B by Morrow Bank.

Avenir International Engineers and Consultants, provider of multidisciplinary engineering and consulting services, has reached a definitive agreement to be acquired for AED 708.0M by SEPC (BOM: 532945).

KKR has struck a deal to acquire U.S. bakery chain Nothing Bundt Cakes from Roark Capital for over $2.0B, including debt.

CoolIT Systems, manufacturer of computer hardware products, has reached a definitive agreement to be acquired for $4.75B by Ecolab (NYS: ECL). Morgan Stanley advised on the sale.

Private Placement Transactions💭 

A Joint Venture was formed between Firstcolo and Ovag International for EUR 250.0M. The JV is the operator of a data center providing colocation and infrastructure services. Firstcolo will hold 80% stake and Ovag International will hold 20% stake in the company.

Zipline, developer of an autonomous aerial delivery systems, raised $800.0M of Series H venture funding led by Fidelity Management & Research Company at a pre-money valuation of $6.8M.

QCraft, developer of autonomous driving technology, raised $100.0M of Series D venture funding from Wonderland Capital, Ningbo Ninghai Xingtaihe Fund, and Liangxi Science and Technology Innovation Industry Fund of Funds.

Kandou AI, operator of a semiconductor hardware company, raised $225.0M of Series A venture funding led by Maverick Silicon at a pre-money valuation of $175.0M.

Hynaero, manufacturer of a large-capacity water bomber amphibious aircraft, raised EUR 117.0M of venture funding from undisclosed investors.

Earendil Labs, developer of an AI scientific computing platform, raised $787.0M of venture funding from Dimension Capital Management, 21Vita, and DST Global.

Dash0, developer of an observability software, raised $110.0M of Series B venture funding led by Balderton Capital at a pre-money valuation of $890.0M.

Sakana AI, operator of an AI driven information technology company, raised $135.0M of Series B venture funding led by Citigroup at a pre-money valuation of $130.0M.

Halter, developer of a livestock management software, raised $220.0M of Series E venture funding led by Founders Fund at a pre-money valuation of $1.78B.

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