6. Russell Stover
Earlier this year, we noted Russell Stover was on the auction block. We also indicated that the third largest candy maker in America could sell for as much as $1 billion. While a purchase price was not disclosed, Russell Stover was, in fact, acquired by Swiss chocolate giant Lindt & Sprüngli.
One of the rumored buyers earlier this year was Hershey’s, itself a massive player in the chocolate industry. With a market cap of $21.6 billion and trailing 12-month revenue of nearly $7.4 billion, Hershey’s would not have had much trouble swallowing up Stover. According to estimates, Stover had around $600 million in revenue with 10% operating margins as an independent company.
Shutterfly is a Web 1.0 business in a social media world. While it continues to dominate the online photo-printing industry, the emergence of free-sharing and online storage sites, such as Instagram, Facebook, and Dropbox, has compromised the company’s future ability to attract customers. Many of these services are native to mobile, where Shutterfly falls short.
Shutterfly had a modest 2.52 million customers in the third quarter of 2014, compared to 2.38 million the same quarter last year. Even though revenue rose 16% year-over-year in the most recent quarter, Shutterfly remains a small business compared to the massive reach of image-sharing social media sites.
Shutterfly shares are down over 17% so far this year, against an 11% gain in the S&P 500. But with shares down, Shutterfly could become an attractive acquisition target for an online sharing or storage business. In July, the company hired investment bank Qatalyst Partners, which focuses on tech deals, to help it find a buyer. However, Shutterfly recently expressed its intent to remain independent.
8. Time Warner Cable
Time Warner Cable accepted an offer from Comcast for $45.2 billion at the beginning of this year. The acquisition would create the largest cable company in the U.S. with a combined total of 30 million subscribers, the companies announced in a joint February press release. The deal is valuable because there is very little market overlap. Many, however, oppose it, including Netflix, and consumer advocacy groups that believe the combination will create a monopoly and result in higher rates.
The single biggest hurdle to the deal is federal government approval. The Justice Department, Federal Trade Commission, and Federal Communications Commission will have to render their verdicts before a deal is approved. Some members of Congress have also expressed doubts about whether the transaction would be fair to consumers.
The deal would be one in a series of anticipated mega-mergers that would leave wired and wireless broadband in just a few hands.
BlackBerry may be about to run out of chances. As recently as 2008, the company, then operating as Research In Motion, had 19.5% of the global smartphone market. However, since the introduction of the iPhone in 2007 and Google’s release of the Android mobile operating system in 2008, BlackBerry’s market figure fell to less than 1% by late 2013.
Despite the fanfare surrounding the release of two new phones last year, sales of the Z10 and Q10 were abysmal. At the end of last year, BlackBerry outsourced its hardware to Foxconn to focus on its software offerings.
The company has positioned its QNX platform as the most secure operating system for mobile communication, and it is now a leading OS in the auto and health care industries. While these are attractive businesses for potential buyers, they are inadequate on their own to make the company viable as an independent business.
Revenue has continued its multiyear slide, suggesting that BlackBerry may not be able to survive on its own. In the most recently reported six months, revenue totalled $1.9 billion, down from $4.6 billion a year earlier.
Aeropostale competes with Abercrombie & Fitch and American Eagle Outfitters. Like those competitors, Aeropostale makes and markets inexpensive, casual clothes for teenagers, which it sells through company stores. The entire category is in trouble because teens are choosing fast fashion retailers like Forever 21 and H&M over branded apparel.
Out of the three largest teen-retailers, Aeropostale is in the most trouble. In the most recently reported quarter, revenue fell 13% to $396 million from the same period last year. Same-store sales were off 13%. The retailer’s loss also widened to $63.8 million from $33.7 million in the same period a year earlier. The company’s stock price has dropped by about 85% in the past five years.
Following poor first-quarter results, the company announced that it had secured $150 million in financing from private equity firm Sycamore Partners, which is expected to keep Aeropostale — which has had serious cash flow problems — afloat at least until the end of the year.