How does a 63% premium sound?
Happy Monday from rainy New Orleans. The newsletter will return to its regular publishing time and length when I get back home. For now, I’m writing to you as the girls nap or are otherwise not trying to have me read to them. Hugs, love, and you look amazing today!
— Alex
📈 Trending Up: The Eagles … character … Ukraine, three years into invasion … NinjaOne … deals! … earnings this week, as noted by our Sunday economic calendar …
Crypto, after Coinbase and now Robinhood were let loose from SEC investigations.
Apple at home: After working to diversify its operations away from China to India and other markets to ensure that it can keep building its phones and computers even if Xi decides to try and take Taiwan by force, Apple announced plans to “invest more than $500 billion in the U.S. and hire 20,000 people over the next four years with expansion and construction planned from coast to coast,” per Axios.
Impressive! But like many similar headline-grabbing notes from folks who hope to duck the President’s pique, “Apple made a similar announcement four years ago” Axios continued.
Starbucks, which intends to reclaim the ‘third space.’ More from Medium’s newsletter here.
📉 Trending Down: NATO … House GOP spending plans … Microsoft-OpenAI now that we’re seeing Salesforce-Google form? … tech stocks … cloud stocks in particular … the IPO calendar, which currently features a big pile of nothing into the start of March …
Data center buildout? After rumblings that Microsoft might be lightly hedging some of its plans to build datacenters around the world, does the move by Redmond to trim buildout mean that AI demand is slowing? No. But it does imply that there is an upper-ceiling to needed capacity. That ceiling is miles above pre-ChatGPT expectations, but nonetheless, appears to exist.
I’ll start to fret about Nvidia when nation-states stop trying to one-up each other to build bigger, more power hungry digital brains.
xAI, after it was revealed that Grok 3 was tuned to lie. Finger pointing is now afoot, but after Musk tuned Twitter to boost his account, is working to undercut Community Notes that he doesn’t like, and now had his personal AI avoid criticizing him, you start to see a pattern form.
The Big Deal
Prosus is buying Just Eat for $4.3 billion or €20.30 per share. That’s a 63% premium to Just Eat’s value before the deal was announced. Shares of Prosus fell more than 7% following the news.
Is $4.3 billion a lot of money for Just Eat? Yes and no. Yes, in that the public markets valued the company at a far smaller figure before Prosus rocked up with a checkbook. No, in that the company’s 2024 saw it generate just over €5 billion worth of revenue. Just Eat is selling at a fat premium to its prior worth, and is still selling at <1x trailing revenues.
For those who prefer sports analogies:
Why is Just Eat selling? And why is it worth less than a single times its 2024 top line? Mostly because it’s growth has halted (-2% global revenue growth last year), its adjusted EBITDA margin was less than 10% in 2024, and its free cash flow generation (“Free cash flow before changes in working capital for the Group improved to €104 million in 2024 from minus €52 million in 2023”) is nothing to brag about.
All the above explains why Prosus investors are leery of the deal. It doesn’t seem cheap given what the company is buying, and as Bloomberg points out, “Prosus is an emerging markets investor, while Just Eat is a market leader in places like the Netherlands and the UK.” So, the ability for Prosus to link its new purchase to its existing food delivery assets could be limited.
Still, far be it from these pages to pooh-pooh transactions of any sort. We want more of them! Even if it results in the loss of a public company. It’s 2025, corporate America and corporate World. We were promised deals. Comply!
What’s a Christian Democratic Union of Germany?
By now I presume you are caught up to the results of the German election, and the freezing out of AfD by other political groups in the nation. Less obvious than mere numerical results and political alignment to the American mind, however, is what center-right means in the European context.
The good news is that the winning party — the Christian Democratic Union, which intends to form a government with center-left Social Democratic Party — is pro-Europe, anti-Putin, and about as much a fan of AfD as it is cooking fried foods in the buff.
So what does the CDU want to do now that it has won the election? Pulling from its January document, a lot that I think readers of CO would like (with certain exceptions):
Lower taxes, both for workers (“exempt overtime pay for those in full-time employment from tax”) and corporations (“cut corporate tax rates to a maximum of 25 per cent”)
Less regulation (“eliminate unnecessary red tape by introducing laws to simplify and cut through bureaucracy, reduce reporting requirements and duplicate structures”)
An ‘all of the above’ energy policy (“develop grids, storage facilities and all renewables,” and “keep nuclear energy on the table”)
A reasonable position on emissions (“commit to emissions trading. It is the right instrument to efficiently limit emissions and thus protect the climate in the best possible way”)
German Dynamism (“drive the re-industrialization of our country with digitalization, sovereign AI, and cloud applications”)
R&D support + startup encouragement (“Germany must become a centre of excellence and innovation for future aerospace and quantum computing technologies”, and “With a ‘start-up protection zone’, we will largely exempt new
companies from bureaucratic regulations in the start-up phase”)
Changes to social welfare including replacing '“Bürgergeld” with “a new type of essential income support” that rests on the principle of “supporting and challenging”
No cuts to pensions
A stronger surveillance state (digital and IRL), reversion of cannabis liberalization, stiffer asylum rules and less immigration, no tolerance for “mosques where hatred and anti-Semitism are preached” while showing “right-wing extremists the red card” and “ an equally consistent approach to left-wing extremism.”
Support for Ukraine, European allies, conscription, more defense spending, improved national healthcare, YIMBYism, falling back in love with internal combustion, and no assumption of the debts of other nations.
All told, the German center-right sounds like a more technocratic Democratic party here in the United States, albeit one with slightly less warm views of immigration and cannabis. Hardly the stuff of right-wing American fever dreams.
The work by President Trump to appease Russia will go down as a generational mistake; those supporting him in clearing the path for autocrats and dictators to seize democratically-controlled land is a stain.