Plus, HSBC and Heineken delivered earnings beats, Parker Hannifin is buying Meggitt for $8.8 billion, and Foot Locker bought two smaller shoe retail chains for $1.1 billion.
Stocks were higher at the open on Monday with the Dow adding 33 points, or nearly 0.1%. The S&P 500 rose by 0.2%, while the Nasdaq jumped 0.6%.
Square shares are up just over 10% at the time of writing after the payments company announced it is buying Australian fintech Afterpay in an all-stock deal valued at $29 billion. The deal marks Square’s largest-ever acquisition, and the company said Afterpay’s buy-now, pay-later concept will give it a chance to capitalize on a shift away from traditional credit, especially among younger consumers. “Square and Afterpay have a shared purpose. We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles,” CEO Jack Dorsey said in a statement. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”
Square also reported second quarter earnings results, and said that it had $45 million in Bitcoin impairments in the second quarter, more than double its first quarter impairment. The payments company also posted earnings per share of $0.40 on revenue of $4.68 billion, representing a gain of 143% year-over-year. Square said its Cash App “delivered strong growth in the second quarter of 2021, generating $3.33 billion of revenue and $546 million of gross profit, which increased 177% and 94% year-over-year, respectively.”
In other earnings news, HSBC delivered an earnings beat for the first half of the year. The bank reported pre-tax profit more than doubled from a year ago to $10.84 billion, while analysts had expected profit of $9.45 billion. “We were profitable in every region in the first half of the year,” said HSBC CEO Noel Quinn in a statement. “This performance enables us to pay an interim dividend for the first six months of 2021.” CFO Ewen Stevenson said, “We definitely feel more confident. We will keep buybacks under review,” together with dividends. And Heineken said its operating profit before one-offs doubled to 1.63 billion euros ($1.93 billion), beating expectations for a reading of 1.22 billion euros. Heineken did warn that rising commodity costs would begin affecting its operations in the second half of 2021, and would have a “material effect” on performance in 2022.
Meggitt Plc shares are up more than 56% this morning on the heels of U.S. industrial company Parker Hannifin announcing that it has agreed to buy the British defense and aerospace company for $8.8 billion. “The combination of Parker and Meggitt is an exciting opportunity for both companies’ team members, customers, shareholders and communities,” Tom Williams, Chairman and CEO of Parker Hannifin, said in a press release. “We strongly believe Parker is the right home for Meggitt. Together, we can better serve our customers through innovation, accelerated R&D and a complementary portfolio of aerospace and defense technologies.We are committed to being a responsible steward of Meggitt and are pleased our acquisition has the full support of Meggitt’s Board. We fully understand these responsibilities and are making a number of strong commitments that reflect them. During our longstanding presence in the UK we have built great respect for Meggitt, its heritage, and its place in British industry. Our own journey over more than 100 years has taught us the importance of a strong culture and reputation.”
And Foot Locker said it is buying two smaller shoe store chains for around $1.1 billion in cash. The mall staple is $750 million for Eurostar Inc, the operator of WSS stores primarily based on the U.S. West Coast, and Japanese streetwear retailer Atmos for $360 million. Both deals are expected to close late in the third quarter. CEO Richard A. Johnson said “WSS has built a successful, high-growth business by pioneering the neighborhood-based store model, built on community engagement and a full-family offering. This acquisition enhances our product mix and provides access to a customer base and store footprint that are both differentiated from and complementary to our current portfolio. We are thrilled to welcome WSS’s customers into the Foot Locker family, as well as join forces with their talented team. Looking ahead, we see significant opportunities to expand this business, including by accelerating WSS’s store growth into new geographies in North America.” Johnson said in a separate release that “atmos is uniquely positioned through its innovative retail stores, high digital penetration, and distinctive products that have made it a key influencer of youth and sneaker culture. With atmos, we are executing against our expansion initiative in the rapidly growing Asia-Pacific market, establishing a critical entry point in Japan and benefitting from immediate scale.”
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O2Micro International Limited (NASDAQ: OIIM): O2Micro shares jumped as much as 9.4% on Friday after the company reported 51.6% revenue growth year-over-year to $26.2 million in the second quarter. “O2Micro’s escalating growth continued through the second quarter with revenue increasing 12.8% from the prior quarter and 51.6% over the same quarter in 2020,” Chairman and CEO Sterling Du said in the earnings release. “Our strong business came from both LCD backlighting and battery products. The cohesive flexible working hours between work from home and office continue to fuel the high demand of TV, Monitor and household battery powered appliances. Our battery business grew strongly in all sectors, while our intelligent lighting group continued seeing the benefit of post pandemic trends. Expanding acceptance of our technology resulted in additional Top Tier and OEM manufacturers’ choosing O2Micro Integrated circuits. These factors, plus our strong patent granted technologies along with continued management of operational costs, are leading O2Micro into sustainable long-term profitability.”