🛫 JetBlue goes hostile

1. The Spirit saga continues: JetBlue moves to buy the budget airline at a "downturn discount"

Like "Succession" in the sky… Spoiler alert: the latest episode of the Spirit Airlines merger drama just dropped, and things are getting hostile. Yesterday JetBlue said it would try a hostile takeover of Spirit after its previous offer was rejected. Refresher:

• Earlier this season: Spirit accepted a $2.9B buyout offer from Frontier in February. Then JB made a $3.6B bid in April, but Spirit’s board didn’t budge.
• Plot twist: Now JB’s appealing directly to shareholders, asking them to ditch Frontier for a $3.3B deal (that’s lower than its first offer, but more than Frontier’s — and almost twice Spirit’s Friday price). JB said it would pony up more if Spirit’s board negotiates.

Only the big survive… American, Delta, Southwest, and United take up lots of airspace: together they control 80% of US domestic flights. Meanwhile, an ongoing pilot shortage and rising fuel costs are making it hard for smaller airlines to compete. But buying Spirit could give JetBlue (or Frontier) more leverage:

• The Big 5: If either airline succeeds in taking over Spirit, they’ll become the fifth-largest US carrier with about 10% market share.
• More control: Spirit’s buyer won’t just get market share: they’ll get more pilots, more pricing power (which helps offset rising fuel costs), and more routes (which are often reserved at major hubs).

THE TAKEAWAY

Downturns create buying opportunities… Spirit’s stock is down 46% over the past year, and JetBlue believes its latest offer will still be attractive to shareholders. Historically, hostile takeovers increase during downturns, when market caps slide (reminder: Belgian InBev gulped down Bud-brewer Anheuser-Busch for $52B during the 2008 crisis). JetBlue probably won’t be the last buyer to shop for a downturn discount either: Elon Musk hinted yesterday he might try to renegotiate his Twitter deal at a lower price.

2. Marriott launches targeted ads on its hotel screens and sites, as privacy changes reveal the value of "first party" data

Turning on the bathroom TV... to an ad for premium shampoo. As travel demand rebounded last quarter, Marriott’s hotel occupancy surged to nearly pre-pandemic levels. Now the chain’s getting creative with ways to monetize its returning guests (beyond $10 minibar waters): Marriott is rolling out a media network with Yahoo to let brands advertise on its digital and physical real estate.

• Targeted stays: Marriott will use anonymized guest data to help brands target ads. Think: theme-park commercials for families vs. BMW-rental ads for deep-pocketed businesspeople.
• Inescapable ways: The ads will appear on Marriott's hotel websites (think: WiFi portal) and on hotel screens (think: lobbies, gyms, bars, room TVs).

Prada blazer... for the forgetful biz traveler. Privacy developments like Apple's iOS change ("ask app not to track") and Google's plan to block third-party tracking cookies on Chrome have made ad targeting much harder. Now brands are increasingly looking to "first-party data" (aka: info they collect directly from consumers) rather than "third-party data" (think: targeting offered by Insta and YouTube).

• Marriott says it will use info from searches and bookings on its platforms to deliver relevant ads. It has 164M loyalty members and knows when and how they'll be traveling.
• Walmart, DoorDash, and CVS have also been leveraging customer data to offer marketers new ways to reach consumers (your 3 a.m. taco orders speak volumes).

THE TAKEAWAY

If you have eyeballs, you have ad-tention... Companies that haven't traditionally sold ads are realizing that they can, whether it’s Kroger and Walgreens replacing fridge doors with digital screens or Marriott selling you rental cars in your hotel room. And while the $500B+ digital ad market is dominated by Facebook, Google, and Amazon, even a small slice of the pie can mean fresh billions — and fresh consumer-privacy concerns.

What else we’re Snackin’

• Team: Neutral no more: Sweden and Finland are moving quickly to join NATO. Both countries have a history of not picking sides, but Russia’s war on Ukraine increased pressure to join the military alliance.
• De-Arch: McDonald's is leaving Russia for good, selling its Russian biz 32 years after first opening in the country and becoming a symbol of globalization. By leaving, Mickey D’s says it’ll lose up to $1.4B.
• Burned: Grill maker Weber slashed its sales outlook for the second quarter in a row. The supply-chain crisis and a travel resurgence have hurt demand for backyard barbecues and made it harder to source parts.
• Raise: Microsoft is doubling its salary budget and boosting stock comp to help employees deal with inflation. The $$$ will also help Microsoft compete with other tech biggies in this tight labor market.
• Mature: Twitter’s CEO tweeted a long explanation of how the company handles fake accounts, after Musk put his takeover "on hold" over the prevalence of spambots. He responded to the thread with a poop emoji.

Snack Fact of the Day

Tuesday

• April retail sales
• Earnings expected from: Walmart, Home Depot, JD.com, The Container Store, and On Running

Authors of this Snacks own: Bitcoin, and shares of Amazon, CVS, Walmart, Microsoft, Delta, Twitter, Google, and Apple

ID: 2205079