TheChek News Flow

Plan to acquire European coffee maker and separate coffee and soft drink operations was poorly received by the market

US activist investor Starboard Value has built a stake in Keurig Dr Pepper in the wake of its poorly received plan to acquire European coffee maker JDE Peet’s for €15.7bn, which pummeled the beverage group’s shares.

The New York-based hedge fund began building a stake following August’s deal announcement and has been holding private negotiations with KDP’s management and board in recent weeks, according to people briefed on the matter.

KDP’s shares have tumbled by 27 per cent since it unveiled an all-cash acquisition of JDE Peet’s as well as announcing a plan to separate its coffee and soft drink operations, in effect reversing the 2018 merger that created Keurig Dr Pepper. There is no avenue for Starboard to push to stop the deal as there is not a shareholder vote.

Investors had wanted KDP to carve out its coffee business to give it greater scale in the highly competitive sector, but some industry analysts highlighted how the biggest beneficiary of the deal was JAB Holdings, the investment firm that masterminded the merger that created KDP and was JDE Peet’s biggest shareholder.

Instead of opting for a cash-and-stock deal or choosing to spin out the coffee business using a tax-free spin-off, known as a reverse Morris trust, KDP used a €16bn bridge loan to finance an all-cash deal with a hefty premium, which will leave the company with a debt-to-earnings ratio of more than fivefold.

JAB, which has been selling off chunks of its consumer-focused assets as it retreats from the sector, will retain a 5 per cent stake in KDP’s coffee and beverage businesses after the break-up. It owns a 68 per cent stake in JDE Peet’s.

The exact size of Starboard’s stake in KDP and its demands of the company could not immediately be established. Starboard’s discussions with KDP had so far focused on improving execution and restoring investor confidence, rather than the threat of a public campaign, the people said.

KDP and Starboard did not immediately respond to multiple requests for comment.

Starboard, known for its hands-on approach to operational turnarounds, has a long record of targeting consumer and retail companies, including Tylenol maker Kenvue, Papa John’s Pizza and Olive Garden owner Darden Restaurants.

Starboard, which was co-founded by Jeff Smith who has served on the boards on Kenvue, Papa John’s and Yahoo, has more than $9bn of assets under management.

KDP, which has a market capitalisation of roughly $35bn, has faced slowing sales in its coffee systems division and rising competition in ready-to-drink beverages. The company owns coffee brands Green Mountain Coffee Roasters as well as soft drinks brands Dr Pepper, Canada Dry and Snapple.

After the acquisition and split, the beverages business is expected to generate more than $11bn in annual sales, while the coffee unit would contribute about $16bn a year. JDE Peet’s owns more than 50 brands, including café chain Peet’s Coffee and retail coffee brands Douwe Egberts and Kenco.

Company names operating chief Scott Peyree as new CEO

LendingTree TREE -2.92%decrease; red down pointing triangle founder and chief executive Doug Lebda died Sunday in an all-terrain vehicle accident.

The company named Chief Operating Officer Scott Peyree as the new chief executive officer and Lead Independent Director Steve Ozonian as chairman of the board.

Lebda founded LendingTree in 1996 and co-founded Tykoon, a financial-services platform for children and families, in 2010.

“Doug’s unwavering commitment to our team, customers and partners shaped LendingTree’s culture and values, and permanently changed the way in which consumers access financial products,” LendingTree said.

The companies plan to deploy 10 gigawatts of custom AI chips over the next four years

OpenAI and Broadcom are working together to develop and deploy 10 gigawatts of custom AI chips and computing systems over the next four years, a high-profile partnership aimed at satisfying some of the startup’s immense computing needs.

OpenAI plans to design its own graphics processing units, or GPUs, which will allow it to integrate what it has learned from developing powerful artificial-intellligence models into the hardware that underpins future systems. As part of the agreement announced Monday, the chips will be co-developed by OpenAI and Broadcom and deployed by the chip company starting in the second half of next year.

The new agreement will be worth multiple billions of dollars, people familiar with the matter said. The companies didn’t disclose financial terms.

Broadcom shares rose 8% in early trading.

Broadcom specializes in designing custom AI chips that are specifically tailored to certain artificial-intellligence applications. It began working with OpenAI on creating a custom chip 18 months ago, and the companies broadened their partnership to include work on related components, including server racks and networking equipment.

The new racks will rely on Ethernet technology and other connectivity from Broadcom, the two companies said. They will be deployed in data centers OpenAI owns as well as those operated by third parties, the people familiar with the matter said.

The massive deal brings the total scale of computing capacity OpenAI has agreed to buy from chip giants Broadcom, Nvidia NVDA 2.95%increase; green up pointing triangle and Advanced Micro Devices AMD 3.43%increase; green up pointing triangle to 26 gigawatts, enough to meet the summer electricity needs of New York City more than two times over.

The startup will have to spend hundreds of billions of dollars to pay for these deals. It expects to generate $13 billion in revenue this year, meaning that it will have to increase sales at an exponential rate to make good on its computing bills.

With a $500 billion valuation, OpenAI is the world’s most valuable startup and has launched some of the most popular AI tools, including ChatGPT and video-generating software Sora. It has more than 800 million weekly active users.

Broadcom has been bolstered by its work helping tech companies manufacture custom chips that speed up artificial-intelligence computations. Shares are up more than 80% in the past six months, and its market capitalization has increased to more than $1.5 trillion.

Open AI Chief Executive Sam Altman and Greg Brockman, its president and the executive responsible for building out infrastructure, have said they don’t have enough computing power at their disposal. Demand for AI products is rising at a rapid clip, and the two men have said they are hoping to build giant new data centers across the world to keep up.

OpenAI’s deals with chip and cloud companies in the past few months have helped fuel a global rally in tech stocks. Each agreement has raised the already high expectations set by Altman in describing the seemingly infinite amount of compute needed to bring forth the AI revolution. The deals have surprised some competitors who have far more modest projections of their computing costs.

Altman recently told employees that OpenAI wanted to build 250 gigawatts of new computing capacity by 2033, according to people familiar with the matter, a plan that would cost over $10 trillion by today’s standards. He has said that OpenAI would have to create new financing tools to help fund this massive build-out but hasn’t shared many details on what that would look like.

The tech site Sources earlier reported Altman’s computing target.

OpenAI’s partners are making a huge bet that Altman’s vision for a world remade by AI will pan out and that the startup will be the main winner of this technological shift. In September, consultants at Bain & Co. estimated the wave of AI infrastructure spending will require $2 trillion in annual AI revenue by 2030—more than the combined 2024 revenue of Amazon.com, Apple, Alphabet, Microsoft, Meta Platforms and Nvidia.

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The artist hosted a bag signing meet and greet at the Moynat IFC store, and dined with friends in Shanghai at the Michelin-starred Fu 1015.

SHANGHAI — Labubu‘s creator Kasing Lung had a busy weekend in Shanghai.

Just before The Monsters 10th anniversary exhibition opened its doors to the public on Sunday, he made a final walkthrough at the venue in Shanghai’s Rockbund, making sure everything was where it should be.

He then doodled next to his portrait, adding all the family members from The Monsters series, which includes the now world-famous Labubu.

Still, despite dominating the global conversation this year, few actually know the full story behind the fluffy figurine with a grin of spikey teeth.

The exhibition, titled “Monsters by Monsters: Now and Then” and co-curated by How2Work and Pop Mart, kick-started its world tour in Shanghai during the local fashion week. It’s aimed at creating a space for visitors to meet all the characters and the story behind them in an immersive setting.

It would be hard to miss the 6-meter-tall Kingmon statue pointing at Shanghai’s landmark Oriental Pearl Tower in the courtyard, a wall made of 1,100 Pop Mart-made Labubu plush dolls, and a wonder room at the end of the tour with all the Labubu-adjacent creations in one place.

But more importantly, the experience is about education, as it showcases Lung’s creative process with close to 300 of the artist’s unpublished manuscripts and original artwork presented to the public for the first time.

Lung created The Monsters universe in 2015 with other characters such as Mokoko, Spooky, Tycoco, Yaya, Puca, Pippo, Vos, Monster Boy, Pato, and Zimomo, who is the leader of the Labubu clan.

How2work, a design production house in Hong Kong’s Kwun Tong district, manufactures most of the plastic renditions of the characters from The Monsters series. Lung started working with How2work in 2011 as a book illustrator for the release of a series of children’s storybooks and figurines.

In 2019, he signed a licensing agreement with China‘s Pop Mart, and just like most of Pop Mart’s popular toy ranges, the mischievous-looking Labubus became furry plush dolls and blind box collections, meaning the customer receives a random product from a themed series. It often includes standard styles that are revealed on the packaging and hidden styles that are highly sought after by collectors.

The global rise of Labubu this year can be largely attributed to the success of Pop Mart’s third generation of Labubu plush doll blind box series, Big Into Energy, released in April.

Lung told WWD earlier that he was amazed at how Labubu, a “side character” in The Monsters series, has emerged to become a global phenomenon. By his own admission, “the story is really, really dark. It’s not for children, but children can read it.”

The artist said he draws inspiration from Nordic folklore and mythology for his intricately illustrated books, populated by his original characters.

“When I was young, I used to read many comic books, including The Smurfs. In my mind, a Smurf is a monster, but it’s a very cute monster,” said Lung, who was born in Hong Kong and currently lives in Belgium. “And there’s the reason I created Labubu, because I’ve had many inspirations from when I was young, and many inspirations from The Smurfs.”

The Shanghai exhibition, running until Nov. 8, has an online reservation system on WeChat miniprogram and the ticketing platform Damai.

There will also be almost daily drops of rare Labubu collectibles, produced by How2Work, via a raffle system. Two sets of Shanghai-exclusive goodie bags are also on offer. Both come with a black fur Labubu plush doll wearing a T-shirt with the number 10.

Coinciding with the exhibition, Moynat debuted its handbags and small leather goods collaboration with Lung in Shanghai. Lung had said many people have been asking when he might do a luxury collaboration — and Moynat was a top target.

The brand hosted a meet-and-greet at its Pudong IFC store on Sunday afternoon, with a long line forming outside. Fans came with their favorite plush charms and solid figurines and their latest purchase from the collaboration for Lung to sign.

Later in the evening, Moynat hosted a dinner at the Michelin-starred Fu 1015 with friends of the house.

Following traditional Shanghai cuisine, such as braised pork belly with bamboo shoots, deep-fried fish in sweet soy sauce, and soy milk ice cream, with crispy fried dough, Lung patiently signed all the Labubu dolls brought to the table and had prolonged exchanges with the guests.

After Shanghai, Lung and Moynat’s next destination will be Art Basel Paris in two weeks, and the collaboration will be sold at other Moynat boutiques in select cities over the coming months.

At the same time, Lung is working on his next picture book, slated for release in 2026, with a host of new characters inside, and with Labubu getting a big upgrade, becoming the main character at last.

The footwear designer and entrepreneur died on Sunday in Civitanova Marche, Italy.

MILAN — Footwear designer and entrepreneur Cesare Paciotti has died. He was 69.

Details about the cause of death were not disclosed. A statement issued on Sunday night said Paciotti died in Civitanova Marche, in central Italy, surrounded by his family and children.

Together with his sister Paola, “he wrote a fundamental page in the history of Made in Italy shoes,” the statement said. It continued: “The iconic pointed-dagger, the brand’s symbol, will remain as a declaration of identity and courage. He will be remembered for his seductive style and his extraordinary human generosity.”

Paciotti’s namesake signature brand is known for its sexy and feminine footwear designs. At Milan Fashion Week last month, the dagger heel was in the spotlight once again as the label doubled down on its heritage.

The company was founded in 1948 in Civitanova Marche — one of Italy’s main shoes manufacturing hubs — by Giuseppe and Cecilia Paciotti, Cesare and Paola’s parents. Their mission was to create artisanal footwear made by hand.

Cesare Paciotti launched his namesake brand in 1980 and turned it into an established and international business, with its sharp stilettos and innovative designs garnering success with the likes of Beyoncé Knowles-Carter and Paris Hilton to name a few. Fur-lined or crystal-embellished sandals and boots were some of the hits. The brand became a fixture at Milan and Paris Fashion Week.

In 2007, the designer debuted a full apparel line under the Paciotti 4US label.