New On The Block

Vera Bradley Inc. (NASDAQ:VRA) sales are down.

The handbag brand’s largest shareholder, Fund 1 Investments LLC, isn’t happy about it. A Dec. 30 letter to the board referred to co-founder Barbara Bradley Baekgaard‘s designs as “iconic” and “synonymous with innovation and disruption for decades."

But after the compliments came the critique: Fund 1 takes issue with Vera Bradley’s questionable capital allocation, poor operational performance and a failed brand turnaround, all compounded by tough macroeconomic conditions for fashion brands. What's the solution, according to Fund 1? A "strategic alternatives process" to explore selling the company to a larger organization or taking it private.

Also for sale, as of this week:

• Imagination Technologies Group Limited, a British semiconductor and software design company owned by private equity firm Canyon Bridge Capital Partners, is up for sale. Lazard is shopping it around, according to Bloomberg.
  
• Skin care startup Minimalist is considering a $350 million deal, TechCrunch reported. On the buy side is Hindustan Unilever Ltd., which recently purchased Oziva and Wellbeing Nutrition. Hindustan Unilever's skincare offerings include Dove and Pond's. Jaipur-based Minimalist reported an 89% revenue growth to $40.8 million in fiscal year 2024.

Off The Block

SouthState Corp (NYSE:SSB) has finalized its $2 billion stock acquisition of Texas-based Independent Bank Group, potentially signaling a wave of regional bank mergers. Key drivers include regional bank stock price growth, lower interest rates improving deposit profitability, and anticipated deregulation under Trump’s administration.

Hookipa Pharma (NASDAQ:HOOK) is acquiring Poolbeg Pharma in an all-stock deal. Hookipa shareholders retain rights to milestone payments from Gilead’s hepatitis B partnership and proceeds from the HB-200 program.

See Also: Stanley Druckenmiller Loaded Up On Regional Banks Ahead Of Trump’s Win

Bankruptcy Block

Mitch Modell, the ex-CEO of the Modell's sporting goods chain, wants to revive bankrupt retailers Party City and Big Lots. He plans to raise $1 billion and keep 33,000 jobs afloat. He also wishes to name his 20-something sons, Matthew and Maxwell, as co-presidents, according to the New York Post.

Modell, known for the catchy "Gotta go to Mo's" jingle, had his eureka moment at none other than Mar-a-Lago, where he decided the struggling chains needed a sporting goods flair. His vision includes ditching Big Lots' bulky furniture and sprucing up Party City with sportswear and footwear — because nothing says "Happy Birthday" like a new pair of sneakers.

To keep prices low, Modell plans to tap factories in China, Mexico and India, courtesy of Source One Global. He's also enlisted other former CEOs, such as Larry Meyer (Forever 21) and Demos Parneros (Barnes & Noble) to help evaluate the deal.

Notes From The Block

In 2025, the incoming Trump administration is expected to be friendlier to media conglomerates looking to conduct mergers, compared to the Biden administration. "The overwhelming mood is positive from an M&A perspective," Christopher Vollmer, managing director at MediaLink, told Variety. "People are looking to kick off M&A activity in the first quarter of 2025."

But people forget that Trump wasn’t exactly cordial to dealmakers the last time he was in office. The previous Trump administration, from 2016 to 2020, blocked and sued or threatened to block a lot of big deals.

If you recall:

• AT&T (NYSE:T) and Time Warner failed to ink a deal. Regulators argued that it could increase prices for consumers and disadvantage rival distributors.
• Sinclair Inc (NASDAQ:SBGI) and Tribune Media faced resistance due to concerns about consolidation in the broadcast industry. Sinclair paid a hefty fee for whiffing.
• Broadcom Inc (NASDAQ:AVGO) and Qualcomm Inc (NASDAQ:QCOM), had they merged, could have affected U.S. national security, a federal probe showed.
• DraftKings Inc. (NASDAQ:DKNG) and FanDuel: A merger of the two largest daily fantasy sports platforms was blocked to preserve competition in the industry.

The Department of Justice also mandated divestitures in major transactions. For example:

• Bristol-Myers Squibb Co. (NYSE:BMY) had to divest Celgene’s Otezla treatment to resolve concerns about reduced competition in the market for psoriasis drugs.
• Harris Corp. was required to sell parts of its military communications business to proceed with its merger with L3 Technologies, creating the company L3Harris Technologies Inc (NYSE:LHX)

These interventions reflected the DOJ's focus on preventing market dominance. Should M&A volume under Trump be comparable to the last four years, deal pros can’t blame anyone but themselves.

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