Michael Kors Buys Versace; Qualcomm Sues Apple; Arby’s To Buy Sonic

The Water Coolest

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THE HEADLINES

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VERSACE, VERSACE, VERSACE, VERSACE

Michael Kors Versace

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“Affordable-luxury brand” (aka what rich people call middle-class “high-end” brands) Michael Kors plans to buy un-affordable-luxury brand Versace for roughly $2.1B.

Kors, which will be renamed Capri Holdings post-acquisition, plans to grow the Versace label to an $850M player, on par with Prada, but still well below Gucci. MK plans to focus on Migos’ favorite accessories, expanding Versace’s line of shoes and handbags to represent 60% of total sales (35% currently). The lower-brow brand also plans to adds stores and bolster the high-fashion house’s online presence.

Despite Versace’s namesake designer, Donatella Versace staying on board, there are concerns about brand dilution under new ownership. Don’t believe us? Look no further than Twitter for Versace fan’s reactions to the tie-up …

  • “Cheap fabric for soccer moms.”
  • “Duty-free cheap (expletive) you buy at the airport.”
  • “A brand about to go from high-end luxury to TJ Maxx & Walmart.”
Yikes.

Water Cooler Talking Point: “Listen, I’m not going to sit here and tell you that I understand high fashion, but the numbers don’t lie: Sonic is worth more than Versace. There is justice in this world.”

 

CHIPS AND DIPS

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According to court docs filed by Qualcomm, Apple stole its modem chip design and handed over the secret recipe to Intel to help make cellular chips at a lower price.

Apple originally switched from Intel to Qualcomm for its modem chips in 2011 when producing the iPhone 4, but went crawling back to Intel in 2016 because of its cheaper price, even though the Pentium maker’s performance wasn’t as impressive.

The original complaint by Qualcomm states that Apple violated a software agreement by not allowing the company to audit Apple’s compliance with the agreement. An audit which was sparked by Apple’s alleged inclusion of an Intel employee on proprietary Qualcomm emails.

Apple has since fired back with a lawsuit of their own, saying that Qualcomm has repeatedly made allegations without evidence, including yesterday’s claims.

Water Cooler Talking Point: “In a perfect world all disputes between major corporations would be settled in the People’s Court, in 22 minutes or less.”

 

WHAT DOESN’T ARBY’S HAVE?

arbys bourbon bbq sandwiches

Arby's


Inspire Brands, the company born after Arby’s and Buffalo Wild Wings combined like something out of a cardiologist’s nightmare, plans to buy Sonic Corp. The deal, worth a reported $2.3B, is part of Inspire CEO Paul Brown’s goal of purchasing 10 chains worth a total of $4.5B.

Inspire is currently the owner of a number of niche restaurants and Sonic’s drive-thru status only adds to their eclectic portfolio. Sonic has struggled this year as it has been pitted in an uphill battle against the big buns over at McDonald’s and Burger King.

Sonic’s shareholders will receive $43.50 per share in cash, a 19 percent premium over Sonic’s Monday close. Sonic operates more than 3,600 locations that generated $4.4B in sales last year.

Water Cooler Talking Point: “So does that mean those two annoying guys from the commercials get a raise?”

 


IN OTHER NEWS

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  • Amazon made its first investment in the home building space with an investment in prefabricated house manufacturer Planet Prefab. “Alexa, play extreme makeover Bezos’ edition!”

 

  • The Knot and WeddingWire are are making it official. The Knot’s owner, XO Group, will go private as part of a $993M deal led by Permira and Spectrum Equity, lead investors in WeddingWire. Some people just wind up marrying for money.

 

  • Wells Fargo suspended two employees tied to a Department of Justice investigation over potential fraud related to low-income housing credits. WF and other banks were allegedly colluding with developers to drive down project bids, resulting in higher returns for the bank’s investments. This is surprising … said no one ever.

 

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The Water Coolest is a daily business newsletter consisting of business news, financial advice, and unfiltered commentary. Delivered fresh in your inbox every morning so you're ready to snap necks and cash checks. Written by Tyler Morrin, AJ Glagolev, Nick Ellis, and Ian Barto.