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M&A Deals Take Headlines from Q2 Earnings: VZ, FLTX, TSLA, SCTY

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Monday, August 1, 2016

Taking headlines from the continued barrage of Q2 earnings reports to begin the week are two mergers that have captured investors’ attention: Ride-sharing company Uber’s Chinese business — Uber China — has agreed to merge with its biggest ride-sharing rival in the country, Didi, and Verizon (VZ - Free Report) has kept its year-long acquisition spree going with the purchase of mobile workforce management company Fleetmatics .

The merger of Chinese ride-sharing entities, in effect, helps set the table for an Uber IPO, which has been long-awaited by the market. The $35 billion deal looks complex on its face, largely because it navigates the Chinese government’s rules for ride sharing business in the first place.

As for Verizon, it has now purchased a logistics/fleet management system roughly a week after buying Yahoo’s Internet assets and a year after the telecom major took on AOL. Thus, Verizon is building out on a wide scale that suggests it aims to compete with far-reaching Internet and delivery services companies like Amazon (AMZN - Free Report) . Fleetmatics is being purchased for $2.4 billion in cash or about $60 per share. This represents roughly a 40% premium to the company’s Friday close.

Finally, Tesla (TSLA - Free Report) is currently holding a conference call regarding its intent to purchase SolarCity for $2.6 billion in an all-stock deal. The acquisition of one Elon Musk-led company for another suggests $150 million in business synergies in manufacturing, generation and Gigafactory objectives. This deal still requires approval from both executive boards, and Musk himself will not be voting on whether to pass the deal.

For in-depth consideration of how Q2 earnings season is unfolding, click here for Zacks Director of Research Sheraz Mian’s latest Earnings Preview report.

Mark Vickery
Senior Editor

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