Transcript
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Ann Barry (0:32)
From Montana to Wyoming, US Companies are digging in to win from the critical minerals race. But other efforts fueling results. An FCC ruling on foreign made routers may shake up your home Wi fi. So we look at one stock that's up on the news and can two wobbly beauty giants be better as one? For this week's merger moment, a potential deal between Estee Lauder and Spanish giant puj. Why one stock popped and the other dropped on the news. We break it all down the Tuesday, March 24th. It's Brum Markets Daily and I'm Ann Berry. More market details to come. But first, if beauty is in the eye of the beholder, Pooj Brands has certainly got it. The stock surged up by as much as 17% today. That was on news that the owner of Charlotte Tilbury is in merger talks with Estee Lauder. Well, the Spanish Poosh and the American beauty giant certainly need to shake things up. Estee Lauder early in a turnaround with shares down more than 20% year to date. That was before the news. And the skincare OG ticker EL, founded in 1946 and with a market cap of $25 billion, has suffered from US share losses both to independent brands. And just a faster moving big competitors like l' Oreal Cosmetics also has seen softness impacting its Bobbi Brown brand. And with about 30% of Estee involving China and travel retail, the company's been particularly hurt by weaker sentiment in those markets, especially in its prestige portfolio, which includes that eponymous Estee brand as well as the iconic one Le Mer, which, fun fact, was founded in the 1950s by an aerospace physicist looking to heal burns he suffered in a lab accident. While added to sales declines and inventory struggles over the past three years has been the impact of tariffs, of course, and the company flagged in February, a hundred million dollar hit to full year profit from trade levies. Meanwhile, Poosh has seen sales grow steadily ever since it went public in 2024 on the Barcelona, Madrid, Bilbao and Valencia stock exchanges under the ticker Puig. And its portfolio spans fragrance, which is a category that's actually enjoyed secular growth, as well as skin care and as well as makeup under brands like Dina, Rishi and Raban. Well, that top line strength has not, though, been enough for Pooj to keep investor concerns about competition at bay. And so if I looked back to Friday before the merger news broke, its stock traded at about €15. Just one year earlier, those shares were at 1750. And if you go back to its IPO in 2024, then the share price was nearly 30% higher. So a merger maybe might save the day for both A deal that could create a $40 billion luxury beauty group with around $20 billion in combined sales, which would suggest meaningful synergies in the supply chain, distribution, leverage and overhead reduction. But the key for that to be the case is to make sure that investors don't think that this is just doubling down on a weakness. Well, from the perspective of puj, those shareholders certainly saw a boon today. That's why the stock was up. And one reason being not just on the potential operating merits of a merger, because the transaction could require a chunky premium to Pooj's valuation just to persuade the Pooj family to give up control after more than a century. Well, the family holds roughly 77% of the European company shares and more than 90% of voting rights. Now, Estee Lauder actually also controlled by a family. The Lauder is holding more than 80% of voting power despite only a minority economic stake. The American company's investors clearly concerned that the standalone turnaround might be sacrificed to get an overpriced deal done. Well, Estee Lauder shares dropped 10% in response to the news. And there is a long way, though for to run for this merger moment. And that's because Estee Lauder, while it did confirm that deal talks are in place, that was in a press release. The company also stated that, quote, no final decision has been made and no agreement has been reached. Unless and until an agreement is signed between the companies, there can be no assurances regarding the deal or its terms. So plenty to go here. Plenty happening in this industry and by the way, an important one in terms of its size and consumer impact. So we'll keep on watching. Coming up, we dig into two companies in the spotlight with America's critical mineral push and a French food giant buying a protein shake maker. Maybe a faux pas in the French culinary scene. But in the age of health conscious, weight conscious consumers, investors may just be on board we'll break it down, but first a word from our presenting sponsor, Vaneck. Vaneck believes gold has entered a new potential phase of structural strength, not just a tactical hedge. 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