Whether you started listening to this show in the past month, the past year, or you’ve been one of the dozens since we started this show in 2011, I really think you’re going to like what’s coming in January.
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We made the obvious joke that, “Boy, when Taco Bell is rejecting you on quality, that’s really saying something.” Emily immediately lead with, “Hey, look, they’ve got partnerships with McDonald’s and some other big national outfits.” This seems like for people who are bullish on Beyond Meat, this is the type of deal they want to see happen sooner rather than later.
If you’re the first mover in an industry and you bringing new technology to the market, whether we’re talking software or here we have alternative meat or plant-based meat, it takes a lot of partnerships to get your brand accepted, it takes years of development, so much investment.
When you see something like this that McDonald’s is going to move forward potentially in about 3-5 months with the McPlant and that the tests are going well as far as the analysts who recommend the stock this morning has been able to note with channel checks, I think you have that beginning of long-term traction coming.
I think for them, it’s more about just the marketing of it to take what they’ve got in-house, repackage it, make it look good, and then spread it through their distribution footprint.
It is a cash and stock deal worth 6.7 billion and shares of Terminix are up 20 percent, shares of Rentokil down 11 percent, which immediately makes me think that investors don’t like what Rentokil is paying.
For those of you who watch All Creatures Great and Small, it’s a PBS show, or have read the wonderful novels by James Herriot, you probably are familiar with the scene in which James Herriot, this young veterinarian, in turn of the century, 20th-century England, finds himself out late at night and has to stop at what is essentially an early form of a truck stop.
But they also play in the hygiene space, so they provide soaps, hand sanitizers, they rent all kinds of uniforms. We see some companies that are very similar here in the US like UniFirst.
I believe it trades around 14 times when you take its total enterprise value versus its EBITDA, so it’s a little bit of a bargain there.
I think, over time, this is accretive for the British company and we will turn out to be just another great acquisition fast forward past today to the next 3-5 years.
I think if you’re a Terminix shareholder, you have to be happy with this deal because Rollins, which is a company we talk about from time to time, the parent company of Orkin is one of their rivals here in the United States and Rollins is just flat out a better stock, a better business.
I mean, there’s glacial change in this industry, but fun deal to contemplate and really interesting acquisition in a time where maybe as we’re in this post-COVID environment, Terminix is a little cheaper than it might have been.
What happens to that stock in the breakup of GE when they split up the company in a few years? Does it stay at GE, does it convert to some new companies? Or has GE not said yet? The answer will determine if I cash in and put the money elsewhere or stay the course.” Thank you for that, Wayne.
If you hold GE shares now in early 2023, you’ll get shares of the new company, which itself will be publicly traded.
Hey, do I hold shares? Do I sell these? Academic studies actually show that a parent company and you have to take this with a grain of salt, but by and large when parent company’s spin-off smaller divisions that are faster growing, often the effect of something you wouldn’t expect.
Chris Hill: I mean, the reason I own shares of PayPal is because I was, and still am, an eBay shareholder.
There will be a time who knows when it will be maybe a few decades from now, where we will see something like this arise again.
Chris Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear.