Bill Ackman’s ties to new Starbucks boss

A mega offer to get you started: Mars, the candy, food and pet care giant, has reached an agreement to acquire Pringles and Pop-Tarts maker Kellanova at a valuation of more than $29 billion, marking one of the largest deals ever of the year, people with knowledge of the matter said.

In today’s newsletter:

The Bill Ackman-Starbucks Connection

Monday night, while the hedge fund billionaire Bill Ackman PROVIDED Elon Muskthe several-hour interview with the Republican presidential candidate Donald Trump on the social media platform X, Starbucks was putting the finishing touches on a historic leadership change.

The coffee giant’s recent saga reached a crescendo Tuesday morning when Starbucks announced it would abruptly replace its chief executive. Laxman Narasimhan with Chipotle Mexican Grillhis boss Brian Niccol.

For two months, the company has been under pressure from the activist hedge fund Elliott Management to return its lagging share price. But people close to the company said the management changes should resolve the talks.

The coffee giant is wasting no time. Narasimhan resigns immediately, along with the CFO Rachel Ruggeri stepping up in the meantime to run the company. Niccol will start on September 9.

Investors reacted strongly to the news, with share prices of both companies moving sharply. Starbucks was up more than 24 percent and Chipotle was down more than 7 percent by late trading in New York on Tuesday.

So where? Pershing Square founder Ackman fit into all of this? He’s made headlines for a myriad of other reasons recently, but he also has ties to the future head of Starbucks.

While it’s unclear if he had any involvement in recruiting Niccol to Starbucks, he was instrumental in bringing the executive to Chipotle six years ago.

The lease turned out to be a huge win for the Mexican grocery chain — and for Ackman’s portfolio. Under Niccol, the company’s stock price has risen nearly 800% (which Starbucks, of course, bragged about in its press release yesterday morning).

Ackman may have missed out on this trade, but he previously made a huge profit from Starbucks. He bought the stock in 2018 and held it for just over a year. He made a return of 73% during the period.

So far, at least, he’s been quiet on X, with no mention of Niccol’s move. Instead, his focus Monday night was on Musk’s interview with Trump.

While Starbucks was finalizing its management review, Ackman instead posted the interview’s initial technical difficulties.

“It hasn’t started yet. All I hear is the sound of silence,” he wrote. “There is a certain peace in the sound of silence.”

Private credit giant HPS earned $30 billion

Scott Kapnick spent most of the last two decades building HPS Investment Partners into a giant in the riskier corners of the credit markets.

Now, Kapnick and his team are pushing upmarket in an area that has captured the attention of rivals: investment-grade private debt.

It’s the phrase du jour in the asset management industry (others sometimes call it asset-backed finance) and an area that HPS sees as key to its future.

In a deal revealed by the FT on Monday, HPS is taking $30bn of assets from Guardian Life Insurance to manage. It will increase HPS’ assets under management to $146 billion. Critically, it’s money that should be invested mostly in investment-grade debt.

Asset managers such as HPS see a huge opportunity as insurers and pensions look to boost their returns against traditional investment-grade bonds, which yield around 5% today.

These investment-grade private deals have taken many flavors: loans backed by railroad cars, airplanes, corporate loans, real estate, and even music royalties. These include offers such as ApolloThe recent $11 billion funding of a Intel factory in Ireland.

HPS’ expansion into investment-grade private debt expands the business as the company’s executives consider their next move, which could include a merger or an initial public offering.

The investment from Guardian gives HPS a much more significant outside investor – Guardian’s stake in the business will rise from less than 10% to around 14% – and puts it on par with its listed peer. Blue owlwhich manages $192 billion and has a valuation of $26 billion.

In particular, the firm took a different approach to larger rivals such as Apollo and KKRthat directly own insurers.

“We were very fortunate,” Kapnick told DD’s Eric Platt. “I tell people every day, ‘You have to perform. You have to keep delivering. It doesn’t always go according to plan, but you have to get over it. This transaction is a natural progression and a positive statement of why investors are comfortable providing us with capital.”

Commodity trade hangover hits Cargill

The world’s biggest crop traders have been on a high in recent years, hitting record revenues as Russia’s full-scale invasion of Ukraine has driven up prices. But now, a commodity hangover seems to be starting.

Tuesday, Cargill — the world’s biggest crop trader — reported that its revenue fell after hitting a record $177 billion the previous year, the FT’s Susannah Savage reports.

And he’s not the first retailer to lose ground. Last month, the company’s rivals listed on the stock exchange Archer Daniels Midland and Bunge reported declining profits, with both companies’ earnings per share falling to their lowest levels since 2020.

Cargill is part of the so-called ABCD of global food retailers, which also includes ADM and Bunge of the US and Louis Dreyfus in Europe.

The quartet posted record profits in recent years amid volatility and price increases driven by the pandemic and Russia’s 2022 invasion. But prices have since fallen as crop supplies have increased – squeezing traders’ margins.

Cargill’s CEO Brian Sikeswho took the helm in 2023, does not sit idly by. He is overhauling the company’s operations by streamlining the business from five to three units: food business, agriculture and trade and specialty portfolio.

But the success of crop traders in a time of historic inflation has raised eyebrows. The UN said in a report last October that the conditions faced by ordinary people were in “stark contrast” to the “rising profits of commodity trading giants”, highlighting “a disturbing reality”.

The job is moving

• Tate and Lyle called Sarah Kuijlaars as financial director. She was previously CFO of The De Beers Group. She will begin the role in September.

• Davis Polk hired Andrew Ahern, Alice Waxman and Luke Eldridge for the New York law firm’s investment management practice. All have previously worked at Debevoise and Plimpton.

• Paul Hastings hired Reena Gogna for the finance practice as a partner in London. She previously worked for Weil Gotshal.

• Akin Gump hired Payson Lyman as a partner in Boston for the firm’s private equity division. He previously worked at Kirkland and Ellis.

Smart readings

Back seat boss Starbucks’ new chief executive should be wary of his former boss Howard Schultz, who tends to be a backseat barista, writes Lex.

“ChatGPT, write me a resume” About half of job seekers use tools like ChatGPT to help write cover letters. But without editing, that could come with great risk, the FT reports.

Wealthy advisors The secretive Reimann dynasty allocated its wealth to managers who became billionaires. He would have been better off investing in a low-cost index fund, Bloomberg reveals.

Presenting the news

Hipgnosis Sues Barry Manilow Over Bonus Payments (FT)

China’s Hesai to be removed from US Department of Defense (DOD) blacklist

Elliott Prepares to Launch Proxy Fight at Southwest Airlines (WSJ)

US considers rare antitrust move: Google breakup (Bloomberg)

Volkswagen’s Porsche-Piëch family looks for bargains in deflated market (FT)

Just Group boosts profit outlook after rise in corporate pensions (FT) deals

Home Depot cuts sales outlook as consumer spending weakens (FT)

AstraZeneca hits £200bn valuation (FT)