Lululemon (LULU), Hillshire Brands (HSH), Time Warner Cable (TWC) - these are brands that are very familiar to Americans. Hard to believe, but they may not be around by the end of next year. According to 24/7 Wall St. these companies are at risk of disappearing either due to the manic pace of mergers or because quite simply, they are not performing.
So let’s delve in and check out the 10 brands that may disappear over the next 18 months. According to 24/7, retail is one sector with several struggling companies. It predicts both Aeropostale (ARO) and Lululemon Athletica will be shuttered. Aeropostale's teen line of branded clothes is fighting a losing battle with the likes of low cost brands such as H&M and Forever 21. Lululemon had its pantsgate scandal last year when a large portion of its yoga pants were found to be too sheer. Revenue has dropped off and the share price has fallen 50% from its peak a year ago. Yahoo Finance’s Jeff Macke says, “Lululemon has experienced some speed bumps. It would probably get acquired by someone that’s a little more opportunistic, wheareas Aeropostale might just close its doors and go bye-bye."
Over in the broadband space, there is a lot of M&A activity. AT&T (T) will likely buy DirecTV (DTV) and Time Warner Cable will likely be bought by Comcast (CMCSA) as they both scramble to be the premium provider of entertainment to American homes. AT&T would gain access to DirecTV’s 38 million subscribers and it’s paying $49 billion for the privilege. Time Warner Cable, meanwhile, accepted an offer from Comcast for $45.2 billion at the beginning of the year. The deal would create the biggest cable company in the U.S. The single biggest hurdle to both transactions is regulatory approval. But Macke says not to worry as, “There is a laissez faire approach to these mergers and acquisitions. Time Warner will disappear, which will become Comcast which will eventually become The Cable Company as brought to you by Washington, D.C.”
But being bought out doesn’t mean the name will disappear as branding is one of the assets that companies seek, especially in the food sector. For example, Tyson Foods (TSN) purchase of Hillshire Brands. A bidding war broke out for the maker of Ball Park hot dogs and Jimmy Dean sausages. Tyson Foods was the eventual victor beating out Pilgrim’s Pride (PPC) after agreeing to pay $8.5 billion including debt. Since Hillshire Brands is already well known in grocery aisles, it’s unlikely the name will go away. The case is the same with Russell Stover. America’s third largest candy maker is up for sale and may bring in as much as $1 billion. Rumors are that Hershey (HSY) is interested in buying the brand as well as Mars, Nestle or even private equity firms.
Blackberry (BBRY) is a stock that has come back from the dead. While 24/7 thinks the company may be on its way out, it has recently risen to its highest share price - around $11 a share - since before a deal to sell the struggling smartphone maker fell apart last year. The stock is up 35% over the past three weeks after the company reported better-than-expected earnings for its last quarter. Investors are buying into CEO John Chen’s turnaround plan for Blackberry. He has cut costs, sold assets and held onto cash. Chen has set his next target now has his target set for revenue growth next year. We’ll have to see if 24/7 called it correctly for Blackberry or Chen proves them wrong. Other names likely to hit the skids by the of 2015 are social gaming company Zynga (ZNGA), Alaska Air (ALK) and Shutterfly (SFLY).
- Consumer Discretionary
- Mergers, Acquisitions & Takeovers
- Time Warner Cable
- Hillshire Brands