Wings, Beer, Sports...Roast Beef

Quote of the Day

This is going to be the biggest bubble of our lifetimes.”

Market Snapshot

• U.S. indexes finished up despite concerns over a North Korean missile test.
• Financials stocks led the charge—Bank of America jumped 4%.
• Most European and Asian markets ended higher.
• Bitcoin officially passed $10,000. You win this round, Mike Novogratz.

Wings, Beer, Sports…Roast Beef?

Owner of Arby’s, Roark Capital, is acquiring sports and wings paradise Buffalo Wild Wings (+6.28%) for $2.44 billion in blue cheese cash, creating a merger made in meaty heaven.

The merger comes after a wild year for bdubs. Chicken prices were up and restaurant margins were down. Then in June, the chain’s long-time CEO Sally Smith was pressured to retire by activist hedge fund Marcato Capital.

Marcato’s solution? Boost franchises from 50% to 90%. But Roark plans to take it a step further. Similar to how it turned around Arby’s since its 2011 acquisition, Roark is focusing on BWW's “low hanging fruit”: food and operations.

As long as the boneless wings, spicy garlic sauce, and potato wedges stick around, we won’t complain.

Let’s Meetup at WeWork

WeWork is proving it’s more than an asylum for corporate castoffs, acquiring in-person social networking company Meetup. We were just as shocked to hear people still meet face-to-face.

But turns out they do—Meetup organizes like-minded people for everything from pickup basketball to Nose Pickers Anonymous, hosting 15,000 events each day. WeWork alone was home to 100,000+ people attending meetups this year.

And although startups and meetups don’t exactly go hand-in-hand, Meetup does jive with WeWork CEO Adam Neumann’s vision of building a global community. Plus, why let all that office space go to waste after work?

This isn’t WeWork’s first foray into other ventures. There’s Rise by We, a health & wellness club, Flatiron, a coding academy, and WeGrow, the elementary school for future entrepreneurs.

Ambitious, yes. But when you’ve got a $20 billion valuation and are still shy of $1 billion in annual revenue, it’s time to diversify.

Powell Takes Batting Practice

Jerome Powell’s path to chair the Fed kicked off with a hearing in front of the Senate Banking Committee.

And while this group of legislators usually has finance moguls shaking in their $1,000 loafers, Powell’s interrogation was less Jack Bauer, and more Alex Trebek. Since the five-year veteran of the FOMC plans to stay the course of outgoing chair, Janet Yellen, he should cruise through the confirmation process.

From Powell’s voice box to your inbox:

On a potential interest rate increase in December—“I think that the case for raising interest rates at our next meeting is coming together."

On financial regulation—“I think they are tough enough,” responding to Elizabeth Warren’s question on post-recession bank guidelines.

On cryptocurrency—“They don’t really matter today...they’re just not big enough.” And blockchain? It “may have significant application in wholesale payments.”

On GOP tax bill—Nice try...next question?

Uber's on Sale for SoftBank

SoftBank CEO Masayoshi Son hopes to extend Black Friday deals slightly past the deadline, offering to buy Uber shares at a $48 billion valuation, a 30% discount from its current valuation.

Refresher: A SoftBank-led consortium is aiming to take 14% of the company from existing shareholders. SoftBank is planning a separate $1 billion direct investment in Uber at a $68 billion valuation.

Priced into the 30% discount? Uber’s terrible, horrible, no good, very bad year: ex-CEO Travis Kalanick resigning in disgrace, legal battles from London to Tel Aviv, and a concealed hack of 57 million accounts.

But this is also Masa playing hardball. It’s an opening bid in a negotiation that could last several weeks, so expect the price to fluctuate before the sale is finalized.

Siemens Sees Growth in the New Year

German industrial group Siemens (+0.88%) is publicly listing a chunk of its $47 billion healthcare business. If it goes through, it’ll be one of Europe’s biggest IPOs in years.

Here’s what we know so far:

• Siemens wants to sell a 15-25% stake in the medical equipment unit, which could amount to $12 billion.
• It expects to IPO mid-2018.
• The location will likely be in Frankfurt.

This move reflects the healthcare industry’s switch to digital tech for imaging, genetics, and AI. Siemens is a leader in developing these technologies (particularly imaging systems) and CEO Joe Kaeser hopes to explore new areas of growth like molecular diagnostics.

The German industrial conglomerate appointed Goldman Sachs, Deutsche Bank, and JPMorgan to underwrite the IPO, so needless to say, it’ll be in good hands.

What Else Is Happening…

• Emerson Electric (+3.67%) dropped its bid for Rockwell Automation...but you can’t say it didn’t try.
• Japan’s No. 1 Bitcoin exchange, bitFlyer, has started operating in 41 U.S. states.
• Carbon fiber manufacturer Toray became the latest Japanese company to be caught up in a cheating scandal.
• FCC Chairman Ajit Pai fired back at critics opposing Net Neutrality repeal.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: New Home Sales (+)

• Tuesday    Earnings: No Events

                  Economic Events: Consumer Confidence (+)

• Wednesday    Earnings: Tiffany & Co

                        Economic Events: GDP, Corporate Profits

• Thursday   Earnings: Barnes & Noble, Express

                   Economic Events: Jobless Claims, Personal Income and Outlays

• Friday       Earnings: No Events

                 Economic Events: Motor Vehicle Sales, PMI Manufacturing Index, ISM Manufacturing Index

Brewified Term: Pass-Through Businesses

If you’ve been following the GOP’s tax plan, you’re probably aware that it calls for a large corporate tax cut. But here’s the thing—it’ll affect just corporations, a mere fraction (5%) of U.S. businesses. The rest belong to another category: “pass-through businesses.”

What are they?

Pass-through businesses encompass sole proprietorships, S Corps, LLCs, and partnerships. They’re everywhere, from your local handyman to the massive hedge fund.

And the name?

Actually important: it explains how these businesses are taxed. Put simply, tax on income is “passed through” from the company to owners so that they pay individual, not corporate, rates. It’s an attractive model because as an owner of a pass-through business, you often end up paying a lower rate.

What’s in the Senate tax plan?

Going hand-in-hand with the corporate tax cut is a 17.4% deduction on income taxes for pass-through businesses. This is different than the House bill, which caps the highest rate for pass-throughs at 25%. Both try to reduce the tax burden, but through different methods.

If business taxes get your heart rate going, read all about pass-throughs here.

The Breakroom

Question of the Day

Just using addition, subtraction, multiplication, and division, can you form all the numbers from 1 to 10 using exactly four 4's?
You may use parentheses and you can also combine fours to make other numbers (like 44 or 444).

(Answer located at the bottom of newsletter)

Business Trivia

What was the first company Elon Musk started?

Bonus: Which company acquired that startup?

(Answer located at the bottom of newsletter)

Stat of the Day

50%—Amazon accounted for half of all Black Friday sales, raking in over $1 billion in sales in 24 hours. Impressive, but Alibaba posted $1.5 billion in three minutes on Singles Day.

Breakroom Answers

Question of the Day: (Click here for answer...sorry it's long)

Business Trivia: Zip2 (acquired by Compaq)