Why Sonic Was So Expensive; #MeToo Movement Heads to Activist Investing — ICYMI

What did you think was going to happen, Elon? The SEC questions statements on a lot smaller companies and a lot less high profile, let alone public Twitter statements made by CEOs of multibillion-dollar tech firms. And so came on Thursday the seemingly inevitable: the SEC sued Tesla (TSLA) CEO Elon Musk over his “funding secured” tweets regarding a proposed take-private transaction for the automaker. More on that later today and tomorrow from TheStreet and its sister publications.

Shareholder activism was a big topic of discussion Thursday, as TheStreet’s sister publication The Deal reported on the latest from the #MeToo movement where companies could soon see pressure from insurgent investors in regards to practices around diversity, compensation and other governance issues. Proposals have already been lodged to change culture at a number of companies, explained a report from David Katz, a partner at Wachtell, Lipton, Rosen & Katz, and Laura McIntosh, a consulting attorney for the firm, cited by The Deal’s Anders Keitz. The lawyers noted that Trillium Asset Management, for instance, earlier this year filed a first-of-its-kind proposal at Nike (NKE) , requesting that the board improve its risk oversight with respect to workplace sexual harassment, focus on its shortcomings in gender diversity and pay disparity, and produce a report describing its efforts in harassment prevention. The proposal was ultimately withdrawn upon the company’s commitment to consider the request and meet quarterly to discuss the results. Corporations will need to move quickly to install bylaws and best-practices to address diversity and gender equality concerns, or risk facing pressure from institutional investors, some of the most influential shareholders.

It’s a dog eat dog world in the restaurant space. Figuratively, of course, but competition is heating up for prime assets. Hence the multiple of about 15.5 times cash flow that Roark Capital-backed inspire Brands shelled out to take drive-in operator Sonic (SONC) private. One buyout executive tells The Deal’s Steve Gelsi that the hefty purchase price multiple of 15.5 times Ebitda to take Sonic private for a total of $2.3 billion reflects the steep competition for deals in the PE space nowadays combined with the need for firms to deploy capital. By contrast, Inspire Brands paid about 9.7 times for Buffalo Wild Wings in a deal that closed in February. Citing analyst commentary, Gelsi points to Wendy’s (WEN) and Wingstop (WING) , among others, as potential targets given the demand for quality restaurant assets with scale.

Markets Today: Stocks ended modestly higher on Thursday, Sept. 27 as major indexes gave up more than half of their earlier gains in the wake of Wednesday’s interest rate hike from the Federal Reserve. The Dow Jones Industrial Average rose 55 points, or 0.21%, to 26,440, the S&P 500 was up 0.28%, and the Nasdaq gained 0.43%.

This is an excerpt from “In Case You Missed It,” a daily newsletter brought to you by TheStreet. Sign up here.

Source link