—— Qualtrics Receives $12.4 Billion Buyout Offer; LIBOR Surpasses 5% Threshold; Tesla Cuts Model S and X Prices Again; Major Credit Suisse Shareholder Exits Position; Goldman Sachs Star Trader Resigns; Tech Companies Face Financing Crunch; U.S. May Introduce Bill to Ban TikTok
1. Qualtrics Receives $12.4 Billion Buyout Offer
U.S. private equity firm Silver Lake and Canada’s largest pension fund, Canada Pension Plan Investment Board, have made a $12.4 billion buyout offer for management software company Qualtrics. If completed, it would likely be one of the largest acquisitions of the year.
The offer represents a 6% premium over Qualtrics’ closing price last Friday. Documents also show that two other firms are participating in the bidding process.
SAP, the majority shareholder of Qualtrics, plans to divest 71% of its stake as part of a recent restructuring.
In 2018, SAP acquired Qualtrics—known for its enterprise experience management tools—for $8 billion and helped take it public three years later. After disclosing its sale plan to shareholders, Silver Lake, which owns a 4% stake, expressed interest in purchasing more shares.
Qualtrics develops software to collect and manage user experience data, tailored for enterprise clients.
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2. LIBOR Surpasses 5% Threshold
On Monday, the three-month U.S. dollar London Interbank Offered Rate (LIBOR) surpassed 5% for the first time in 15 years.
LIBOR represents the cost of short-term borrowing between British banks and is a key global interest rate benchmark.
The rise is primarily attributed to the Federal Reserve’s rate hikes—traders now anticipate a higher terminal rate and a more prolonged peak.
Previously, a Fed-backed committee endorsed the Secured Overnight Financing Rate (SOFR) as the replacement benchmark for U.S. dollar loans. LIBOR will be phased out by June 30 this year.
LIBOR remains a critical benchmark, often used as a base plus spread in floating-rate loan agreements.
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3. Tesla Cuts Model S and X Prices Again
According to a recent statement on Tesla’s website, the company is reducing prices for its Model S and X vehicles by 5.3% and 9.1%, respectively.
Additionally, the Plaid performance variants of both models are being reduced by 4.3% and 8.3%, making them $26,000 and $29,000 cheaper than at the start of January.
Last week at Tesla’s March 1 investor day, Elon Musk noted that even small price cuts can lead to “crazy” spikes in demand.
However, this new round of cuts may suggest that the earlier round of discounts seven weeks ago failed to generate the desired results.
Year to date, prices for the Model S and Model X have fallen by 14% and 17%, respectively.
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4. Major Credit Suisse Shareholder Exits Position
According to a recent email statement, Harris Associates portfolio manager David Herro has sold off the firm’s entire stake in Credit Suisse Group AG, ending a nearly 20-year investment.
Harris Associates was once among Credit Suisse’s largest shareholders, having reduced its stake from 10% to 5% by the end of 2022.
Last month, Credit Suisse reported disappointing earnings, and its stock hit a record low. Compared to its 2007 peak, the bank’s share price has declined by 95%.
In an interview, Herro explained that while rising interest rates are generally good for banks, they pose a higher capital cost for a poorly structured institution like Credit Suisse.
While European bank stocks have broadly risen, Credit Suisse’s stock has moved in the opposite direction.
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5. Goldman Sachs Star Trader Resigns
Sources report that Joe Montesano, the rainmaker behind Goldman Sachs’ industry-leading equity trading business for two consecutive years, has notified the firm of his decision to step down as Head of North American Equity Trading and take a break.
Over the past three years, amid heightened market volatility during the pandemic, Montesano helped the firm generate enormous trading profits. In 2021, his total compensation matched that of CEO David Solomon—$35 million.
That year, Montesano’s equity algorithmic trading division delivered the highest average revenue per employee across the entire firm.
In 2021 and 2022, Goldman’s cumulative $23 billion in equity trading revenue exceeded that of JPMorgan and Morgan Stanley.
In 2021, Montesano’s pay even surpassed the CEO’s $35 million package.
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6. Tech Companies Face Financing Crunch
According to new data from Dealogic, 150 tech firms that raised more than $100 million each in IPOs during 2020 and 2021 collectively burned through $12 billion in cash in 2022.
Due to declining share prices across the tech sector, dozens of these firms are now facing financing difficulties—some are raising capital at higher costs, others are slashing expenses, and several have been acquired by private equity firms.
Among the 91 publicly traded tech firms that have reported earnings so far this year, only 17 posted net profits. Airbnb accounted for over $2 billion in profits alone.
On average, the group’s stock prices have dropped 35%, making equity fundraising more expensive and significantly diluting shareholders.
Of the 91 tech companies that released earnings this year, only 17 turned a profit.
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7. U.S. May Introduce Bill to Ban TikTok
On Sunday, Senate Intelligence Committee Chair Mark Warner said in a FOX News interview that he plans to introduce legislation this week that would allow the U.S. government to ban technologies from China, including TikTok, the social media platform owned by ByteDance.
Following the news, Snap shares surged 14%, breaking above their 200-day moving average for the first time since 2021. Digital ad rivals Pinterest and Meta also gained 4.4% and 2.4%, respectively.
Bloomberg analysts noted that if TikTok were ultimately banned in the U.S., YouTube could emerge as the biggest beneficiary, thanks to its ad revenue-sharing model with creators and superior content recommendation algorithms.
Since late 2021, Snap’s stock has underperformed relative to industry peers.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.