Katrina’s Big Brother – Hurricane Michael, Starbucks Partners With Care.com and SoftBank Eyes Big WeWork Stake

Good Wednesday Morning,

Daylight – Starbucks did the smartest thing since inventing the frappuccino – rolled out backup subsidized child care as a benefit to any employee on the payroll. They partnered with Care.com (home child care) to provide care if normal duty falls through like no school on snow days or the babysitter has a big test tomorrow.

Economics – The subsidy is $1 per hour per child and $2 for every fourth child. This is a perk in recruiting and the employee does not have to miss a shift. I think Howard Schulze might be gone for good. The new CEO also is getting in the groove and excited the senior team since he cut loose and told them at a staff meeting they had gotten lazy and bureaucratic.

Live Rounds – We had Members in the Florida panhandle flee yesterday to Jackson, Mississippi and all the way to Birmingham. I got a feeling this Hurricane Michael is Katrina’s big brother. I checked in with the Waffle House weather war room this morning – dozen or more stores on the board to close.   

Hedge Funds – I’m not the only one buying StarBucks. William Ackman’s hedge fund has built a 1.1 percent stake, $900 million, a so-far friendly bet that the coffee giant will recover from recent blunders and bad PR.

Align Capital Partners recapitalized iPROMOTEu, a tech-enabled business process outsourcing provider to the promotional products industry.   

M&A – Wall Street delivered the verdictPapa John’s will have to go fully private to get Founder John Schnatter back in charge and franchisees have moved on as employees do a lot faster than we think. Trian Fund Management can’t win a lot from this because PE normally requires companies to change ownership to have the company operate more efficiently.

Bain Capital Private Equity agreed to acquire a majority stake in Rocket Software, a provider of enterprise modernization and optimization solutions. Deal valued at about $2 billion.

Ardian agreed to sell ADA International, a European maker of hotel cosmetics, to Moonlake Capital.

RLJ Equity Partners acquired a majority stake in Crossfuze, an enterprises services company, from Palladian Capital Partners.

Industrial Opportunity Partners sold Alexandria Moulding, a supplier of moldings and related millwork, to US Lumber Group.

Cairngorm Capital Partners acquired Helix Tool Company Limited, an independent cutting tools specialist.

Style – Note from Millennial Matt – Before I came on as Morning Report Editor, we were hovering around a highly respectable 40 percent open rate. The people over at Hubspot said – I don’t know what you all are doing, but these are great numbers. Almost a year later and switching over to Pardot, our new database, we’ve just crossed into 60 percent open rate.

I have learned a great deal about brand, but we’ve also been honing our focus and making sure our product engages outside the Morning Report itself. It comes from text message alerts, answering your emails, conversing with you to continue the conversation, fielding your inquiries about events etc.  

What I’ve learned as an editor is that people want to be engaged, not simply read a crisp newsletter and move on. When dynamic personalities are behind a product/brand, it’s like a magnet. All comes from keeping your feet on the ground and not forgetting why you got to such a high rate – we care about what you all have to say.

Buzzard’s Roost – Nicolas De-Meyer, who was the personal assistant for Goldman Sachs CEO David Solomon, was expected to plead guilty in federal court in Manhattan but killed himself by jumping from the 33rd floor of a hotel yesterday. Prosecutors charged him with stealing more than $1.2 million worth of his boss’s wine. There’s more to this story.

Hot – Evangelical white women are rebelling in Texas – in droves they are putting Beto O’Rourke bumper stickers on their SUVs and driving them to church. Beto is the Democratic candidate challenging Ted Cruz for United States Senate. Beto is the Bradley Cooper of this year’s crop of candidates. If he beats Cruz in Texas, he will run for President. Talented.

Yesterday the so-called Warby Parker of towels – Weezie launched online – $58 for a long staple cotton towel and $15 to get two monogrammed. Don’t count me in. Long staple cotton does not absorb water – it rakes over it (redistributes water) – nice to sit on, but does not dry anything. This is politically incorrect- thin towels are better.  

With Hurricane Michael barreling through South Georgia late this morning , expect cotton prices to go up as the harvest is only about 20 percent complete. Peanuts are half-harvested, but this was the week to let them dry. Pecan crop is always forgotten and could face 80 percent wipe out. Good cash crop.  

Culture – The Rock & Roll Hall of Fame announced its 2019 nominees for induction yesterday. They are The Cure, Def Leppard, Devo, Janet Jackson, John Prine, Kraftwerk, LL Cool J, MC5, Radiohead, Rage Against the Machine, Roxy Music, Rufus & Chaka Khan, Stevie Nicks, Todd Rundgren and The Zombies. It’s a crying shame Steppenwolf isn’t in.

Investment Banking – New Water Capital invested in The Perfect Bite, a developer of recipes and products for national grocery brands.

IPO – Volkswagen is close to hiring Citigroup, Deutsche Bank, Goldman Sachs, and JP Morgan to help with the potential stock market listing of its truck unit Traton. This move could be done to get some funding to purchase rival company Navistar, which VW already owns a 16.85 percent stake.

Venture Capital – SoftBank Group is in discussions to take a majority stake in WeWork, in what would be a giant bet on the eight-year-old provider of shared office space.

The investment could total between $15 billion and $20 billion and would likely come from SoftBank’s Vision Fund. The $92 billion Vision Fund already owns nearly 20 percent of WeWork.

TidalScale, a developer of software for in-memory applications, raised $24 million.

Kitchen United, a virtual restaurant concept, raised $10 million.

Frontify, a startup building a brand management platform, raised $8.3 million.

Spotlight – Yesterday Charleston HQ’s called and said who is Johnson R&D? I said that’s Lonnie Johnson. They asked again – Who is he? I said – Inventor of Super Soaker. Thanks Lonnie for renewing!

And that’s what’s ahead, Cliff