🔖 Rentokil, Megabus Bankrupt & FlixBus Rising, Weakening US Consumer
Articles, ideas and/or investment stories we think are interesting (06.18.2024). Not investment or financial advice.
Disclaimer: Nothing we write or say should be taken as investment or financial advice.
🔖 Rentokil
Headline: Rentokil Initial PLC: A Compounder For Sale
Value Punks, which publishes a Substack newsletter, posted (on June 4th) a free preview of a piece on Rentokil Initial (LON: RTO), a UK-listed company (“PLC”)
Piece gives a nice overview, including background to quirky name, of the business that now owns Terminix, a well known American pest control company
On June 11th “activist” investment firm Trian, controlled by Nelson Peltz, revealed a large stake in Rentokil causing shares to jump 10%+ intraday
Peltz might aggressively push for Rentokil to change primary listing to the US, especially given Rentokil now owns US-based Terminix and generates a large portion of its revenue in North America
Changing a UK PLC’s primary listing to the US is an increasingly popular “activist” investment strategy that Trian has already pulled off with Ferguson, a supplier of plumbing and heating products
Thinking is that US investors will be more constructive on valuation vs. UK market, also US stock market provides access to larger investor base and increased liquidity
Source(s): Value Punks (Substack), Bloomberg, CNBC, TradingView
🔖 Megabus Bankrupt & FlixBus Rising
Headline: Megabus parent company Coach USA files for bankruptcy
New Jersey-based Coach USA, which owns widely known low cost bus service brand Megabus, filed for Chapter 11 bankruptcy
LA-based Variant Equity Advisors, a private equity firm, purchased Coach USA from UK transport group Stagecoach in April 2019 for ~$271 million
Company employs about 2,700 people and operates about 2,070 buses across the U.S. and Canada for its charter, airport shuttles and scheduled route services
Megabus will continue to operate during bankruptcy but has already agreed to sell some of its assets to The Renco Group and Avalon Transportation
In 2023, Coach USA ridership was at 45% of pre-COVID levels
"In 2019, there were about 3,000 bus companies, according to Peter Pantuso, the chief executive officer of the American Bus Association. Since then, about half have closed, many of those remaining are operating at about 70% capacity, he said.
- Bloomberg (June 11, 2024)
Stagecoach sold Megabus’ European operations to Germany’s FlixBus. FlixBus now owns Greyhound (gaining market share in the US)
FlixMobility, FlixBus’ parent entity, raised over $650 million at a $3 billion valuation in 2021 from blue chip investors including Canyon Partners, General Atlantic, Permira, TCV, HV Capital, Blackrock, Baillie Gifford and Silver Lake
Was considering $4.4 billion IPO in 2023 (and again in 2024)
Source(s): Marketplace.org, Bloomberg (2), NorthJersey.com, SmartCitiesDive, Pittsburgh Post-Gazette, FlixBus (2) (3) (4), Wikipedia, Reuters
🔖 Weakening US Consumer
Headline: Bruce Richards, CEO, Chairman & Founder of Marathon Asset Management, LinkedIn post on US consumer spending
Bruce Richards, CEO, Chairman & Founder of Marathon Asset Management, shares some thoughts on US consumer spending in a LinkedIn post
~70% of US GDP is driven by consumer spending
Richards references different stats that indicate US consumers might be genuinely struggling from decreasing FICO credit scores to increased household debt (particularly 18 to 29 year old segment)
Marathon Asset Management CEO & Founder also shares list of defaults in the consumer sector since 2023 ending his post with “stay tuned, much more to come.”
Source(s): Bruce Richards (LinkedIn)