~$40bn Apollo acquisition – GE Capital Aviation Services (GECAS), GE’s aircraft leasing operations
Bidder: Apollo, an offer as much as $40 billion according to Bloomberg & Reuters
GECAS has a fleet of more than 1,900 planes, which it provides to airlines under long-term leases.
1/4/2019
~$1bn KKR investment – Altavair, focusing on the acquisition of new and used commercial aircraft for leasing to passenger airlines and cargo operators
Investor: KKR, $1 billion capital commitment to acquire commercial aircraft in partnership with Altavair + a 50% interest in Altavair; Altavair will be KKR’s partner for aircraft leasing investments going forward
Since its inception in 2003, Altavair has completed over $8 billion in commercial aircraft lease transactions with over 40 airline customers in 27 countries representing over 200 individual Boeing and Airbus aircraft
~$5bn Carlyle acquisition – StandardAero, largest independent maintenance, repair and overhaul (MRO) providers
Bidder: Carlyle, for more than $5 billion (Reuters) from Veritas
Veritas acquired StandardAero from Dubai Aerospace Enterprise Ltd (DAE) for $2.1 billion, including debt, in 2015
Carlyle first acquired StandardAero in 2004. In 2007, DAE simultaneously purchased StandardAero and Landmark Aviation, also an aircraft maintenance services company, from Carlyle in a transaction valued at $1.8 billion, including debt.
~$15bn Apollo acquisition – Arconic (ARNC), aluminum products used around the world by aerospace manufacturers
Bidder 1: Blackstone, Carlyle, Onex and Canada Pension Plan Investment Board
(winning) Bidder 2: Apollo, seems winning with a potential acquisition price of $22; also considered is a spin-off of its cladding operation with potential liability from the Grenfell Tower fire of two years ago.
* BV (Buena Vista) was the brand name which was historically often used for divisions and subsidiaries of The Walt Disney Company, whose primary studios, the Walt Disney Studios, are located on Buena Vista Street in Burbank, California
Top 3 are all from Disney, as are #9 & #10, making Disney occupy half of the Top 10 seats of best-selling movies in US.
And according to ComScore, 2018’s movie business hit all-time benchmarks of $11.9 billion in North America and $41.7 billion globally, with Disney taking in nearly a fifth of that figure. (Variety)
Among Disney’s domestic box office of $3.09 billion, its top 3 got ~$1.99 billion (64.32%), top 5 got ~$2.42 billion (78.25%).
Besides, Disney’s movies in Top 10 all have rating of 7.0 or above, averaging at ~7.56 on IMDb (beating the Top 10 average of 7.35)
2018 US Top 3 Movies | Source: IMDb
Overall…
Total US movie sales is barely growing. The figures below are not inflation-adjusted.
But the number of movie productions is increasing, partially due to a lack of funding after financial crisis (bottomed in 2009 with 521 movies that year).
Yearly US Box Office 2008-2018 | Source: boxofficemojo.com
As streaming is disrupting the market, increasing the number of production seemed to be a way to make up for the total revenue?
Then expenses are up and industry margin is low. It is a sure thing that movies are hard to survive alone.
Then no wonder the consolidation kicked in.
Disney bought Marvel for $4 billion in late 2009, bought Lucasfilm for $4 billion in late 2012. Before the financial crisis, Disney also got Pixar in a $7.4 billion in stock.
With the completion of $71 billion acquisition of Fox, Disney will add X-Men and Avatar to its list of movie series.
Warner Bros. will be under a new umbrella – AT&T’s, together with HBO and Turner.
Tesla had very impressive numbers in Q3, when Model 3 delivery (55,840) was almost tripled from Q2 (18,440).
While no one is expecting another jump, the Q4 numbers are kinda lackluster, especially when adding Model 3 delivery and in transit numbers.
Tesla shares fall 9% on Wednesday when those numbers were reported.
$2,000 Price Cut and Phase-out of Tax Credit
Tesla also announced a price cut of $2,000 for Model S, Model X and Model 3 in the US. The move will partially offset the phase-out of the $7,500 federal tax credit for EV.
[Phase-out will start in the second calendar quarter when the manufacturer has 200,000 plug-in registered in US. The credit is reduced to $3,750 for the next 6 months, then to $1,875 for the next 6 months before expiring completely.]
Source: InsideEVs
According to InsideEVs’ estimate, Tesla hit the 200,000 first in the second half of 2018, while General Motors was second with a breakout month of sales for the Bolt and Volt in November 2018.
The next four manufacturer in EV are Nissan (126,875), Ford (111,715), Toyota (93,011), BMW (79,679).
A combination of flat delivery + in transit Model 3, and a price reduction, warned people about the actual demand for Model 3.
Good news are: 1) people may just be waiting for the basic Model 3, aka $35,000 version that Elon touted but analysts said money-losing for Tesla; 2) Tesla is still way ahead in the EV market
Since 2017, three major airlines in US have made changes to their boarding process, in the face of different layers/tiers, ticket types and other privileges.
Here is a description of the mess before – “Under American’s old boarding call, Group 1 actually was the fifth group called for boarding, trailing the carrier’s elite frequent-fliers and first- and business-class customers who were subdivided into five groups of their own that all boarded earlier.”
“Group 1 actually was the fifth group called for boarding”
What are the “new” procedures and how airlines value their customers?
American Airlines – 10 segments
Group
Boarding pass type
ConciergeKey℠ members
ConciergeKey℠
Group 1
First
Active duty U.S. military with military I.D.
(Business on a 2-class international plane)
Group 2
Executive Platinum oneworld® Emerald℠
(Business on a 3-class plane)
Main Cabin Extra (excluding Basic Economy)
Eligible AAdvantage® credit cardmembers*
Eligible corporate travelers**
Group 6
Group 6
Group 7
Group 7
Group 8
Group 8
Basic Economy to / from Europe
Group 9
Basic Economy within the U.S., Canada, Central America, Mexico & Caribbean
Delta Airlines – 7 segments
Pre-Boarding
Customers needing assistance or additional time to board, including families with car seats or strollers
Active Duty U.S. Military personnel with ID
Premium Boarding Zone
Delta One® customers
First Class customers
Delta Premium Select customers
Diamond Medallion® Members
Sky Priority Boarding Zone
Platinum Medallion® Members
Gold Medallion® Members
Delta Comfort+® customers
Flying Blue Platinum and Gold members
Virgin Atlantic Flying Club Gold members
Virgin Australia Platinum and Gold members
GOL Smiles Diamond members
SkyTeam® Elite Plus members
Zone 1
Silver Medallion® Members
Delta Corporate Travelers
Priority Boarding Trip Extra customers
Gold, Platinum and Reserve Delta SkyMiles® Credit Card Members
Flying Blue Silver members
Virgin Australia Velocity Silver members
GOL Smiles Gold members
Sky Team® Elite
United℠ Explorer, Club, Presidential Plus℠ and Awards Cardmembers
Groups 3 – 5
Economy Plus®
United Economy®
Basic Economy*
* Customers who have purchased a Basic Economy ticket will be in the last boarding group, except for Premier members, Chase Cardmembers of qualifying cards and Star Alliance Gold members, who will still receive their priority boarding.
..
Just a reflection on the complicated business development efforts and corporate strategies… think about the internal slides behind the schemes
Walmart first announced its acquisition of a 77% stake in Flipkart in May 2018, with a consideration of $16 bn including $2 bn of new equity funding. The deal closed in August.
According to QZ, “in the fiscal year ended March 31, Flipkart had net sales of $4.6 billion, over 50% higher than the previous year, Walmart said. Its gross merchandise value (GMV, or the total value of goods sold from its platform) was $7.5 billion during the period.”
“Amazon India is currently worth $16 billion and has the same 30% marketshare as local competitor Flipkart”, source: Forbes, Citi
Valuation multiple ~4.5x of net sales in FY2017.
China
Walmart chose JD as its partner in China in June 2016 when it used its China business for an initial 5.9% stake in JD (newly issued shares)
Then it doubled the stake in Oct. 2016 to 10.8%; and in Feb. 2017, the ownership level was increased to 12.1% (289.1 mn shares).
Walmart also invested $500mn Aug. 2018 with JD in the Dada-JD JV Daojia, which claimed to have 20 million monthly active users at that time.
Latin America
In June, 2018, Walmart sold 80% of its Brazil business to Advent International, a PE firm and recorded a $4.5 bn loss. In connection with the deal, Advent would also invest 1.9 billion reais ($485.66 million, in three installments; the first two capital raises will total 750 million reais each; the first was already completed in 2018 and the second is expected for 2019; the remaining amount will be invested by 2021, according to Reuters)
Walmart acquired Latin American (Mexico and Chile focused) grocery-delivery marketplace Cornershop for $225 million in Sep. 2018 (WSJ report).
UK
Walmart sold a majority stake in its UK business Asda in Apr. 2018 for $4 bn. Asda was valued at $10 bn (valuing Asda at approximately £7.3 billion on a cash-free, debt-free and pension-free basis, implying an EV / FY17 EBITDA multiple of 5.8x).
China’s passenger vehicle sales has been through 6 month of yoy decline (Jun – November) and will post the first yoy annual decline in 2018, after 26 years of boom
Two sources: CAAM and CPCA, passenger car sales down 16-18% yoy in November.
There are two factors to consider here:
Long-term: the market is reaching maturity.
a. Although there may be another few years before China finds its stable level of car ownership, it has become a fairly high level of – an average Chinese household has around 0.58 cars. (China’s household number has been estimated to be ~455 mn and China has ~310 mn automobiles by the end of 2017, assuming 6/7 of which are passenger cars)
b. The second half of China’s car ownership boom is at the beginning of shared vehicles & an era of transportation-as-a-service. Therefore, China may never reach a stable level of ownership as high as major industrial countries’.
c. China’s cities are more condensed. Population is so centralized that high car ownership rate in cities may not be possible
c. an average US household has 1.968 cars
Short-term: consumer confidence & tariffs
a. The tariff was proposed to be decreased from 25% to 15% in May, but due to trade war the tariff for US produced cars were raised to 40% since July.
b. Consumer confidence is damaged while financing may also be limited
2018 年 6 月，有报道 Lyft 在寻求 $250 mn 收购 Motivate（旗下拥有纽约的 Citi Bike 和加州的 Ford GoBike 等）；uber 也尝试参与，竞价收购，最后 7 月初由 Lyft 拿下。
– Motivate 2017 rev. $100 mn, ~ half coming from sponsorship
– Motivate has ~30k bikes, operating in 8 US cities – Citi Bike (New York), Ford GoBike (San Francisco Bay area), Divvy (Chicago), Blue Bikes (Boston metro area), Capital Bikeshare (Washington, D.C. metro area), BIKETOWN (Portland metro area), CoGo (Columbus, Ohio), and Nice Ride (Minneapolis)
– 纽约的 Citi Bike 用户数约 15 万；For GoBike 17 年6 月与 Ford 达成合作正式 launch，截至 18 年 1 月用户数近 1 万
– Motivate has an advantage of exclusive deal terms with cities including NYC, SF, among others
– Motivate’s bikes are dock-based, which was an old model but fit with cities like NYC
– Unionized workers (~600) are a major issue, which was not included in the acquisition
Citi Bike | Source: citibikenyc.comCiti Bike Pricing Plan_Dec 2018 | Source: citibikenyc.com/pricing
在湾区，尽管开始时 Motivate 有 exclusive 合同，但由于纽约和 SF 有一个区别在于 SF 很多上下坡，在曼哈顿适用的自行车在 SF 的使用场景大幅缩减，电动助力自行车 (e-bike) 的需求凸显。这给了其它 bike-sharing 公司一个绝佳的机会，以 e-bike 的形式抢进 SF 市场，绕开 Motivate 的排他性条款，比如 Social Bicycles。随后 SF 与 Motivate 达成和解，基本算允许了其它电动自行车的试验，尽管有数量限制。
Ford GoBike @ SAP Center, San Jose | Source: fordgobike instagramFord GoBike Plus with pedal assist (电动助力)，服务 SF 市场，18 年 4 月 正式 launch，首批 250 辆 | Source: fordgobike.com/plusFord GoBike Pricing Plan_Dec 2018 | Source: fordgobike.com/pricing
Ohio is becoming the first state to accept crypto as tax payments on https://ohiocrypto.com/.
The move is made by Ohio State Treasurer Josh Mandel. Born in Sep. 1977, he had made several moves after being elected as Ohio State Treasurer in Dec. 2010, including OhioCheckbook.com that posts all state spending information on the internet for better government transparency.
The current cryptocurrency accepted is Bitcoin, with more to come. A third party cryptocurrency payment processor, BitPay, will serve between taxpayers and Ohio State Treasury, so that the former will pay crypto and the latter will receive dollar.
Although the State Treasurer himself is said to be an enthusiast of cryptocurrencies and blockchain, it might as well be seen as a state-level move to differentiate itself and embrace the future tech world. According to TechCrunch, Ohio has other moves to become tech-friendly including a technology hub forming in Columbus, home to one of the largest venture capital funds in the Midwest, Drive Capital. And Cleveland (the city once called “the mistake on the lake”) is trying to remake itself in cryptocurrency’s image with a new drive to rebrand the city as “Blockland”, etc. Columbus also reported last year that its Smart Columbus program had an expanded $417 million in resources to turn Columbus into the testing ground for intelligent-transportation systems.
Politics and future development is more interconnected than ever. Policy makers are becoming smarter and seeing/learning the tech future as others. “Policy infrastructure” played an important role in the past and will continue to do so. Each city/state may have a specialization and leveraging its hub effect. Blockchain is one of those “specializations” that many are going after. China and US are no different in terms of this strategy of development.
