Shares of Starbucks stock rose Monday following reports last week that activist investor Starboard Value has bought in to the coffee chain. Elsewhere, the Bank of Nova Scotia bought a nearly 15% stake in KeyCorp. KEY stock and Starbucks stock were among the leaders in the S&P 500 Monday.
New York-based hedge fund Starboard Value purchased a stake in Starbucks with plans to improve the coffee giant's stock price, the Wall Street Journal reported late Friday citing unnamed sources. The exact size of Starboard's stake and specific plans were not available.
Starboard Value also owns shares of Bloomin' Brands, GoDaddy, News Corp and Salesforce, among other stocks, according to its latest 13F filing.
Meanwhile, Starbucks is working on a settlement with another activist investor, Elliot Investment Management. Elliott built its own position in the company and has worked to push for changes behind the scenes, the WSJ reported in mid-July. Currently, Elliott Investment is vying for representation on Starbuck's board, and could potentially launch a proxy battle for a board seat. It's unclear if Starboard Value will also try to secure a board seat.
Former CEO Howard Schultz remains the top Starbucks shareholder, according to the WSJ. He was succeeded by Laxman Narasimhan in March 2023.
Starbucks Stock Moves Up
Starbucks stock swung 2.6% higher Monday.
Shares tumbled nearly 20% in 2024 amid slowing sales, which prompted the coffee giant to cut its guidance.
Elsewhere, KeyCorp on Monday announced that it agreed to sell a 14.9% stake to The Bank of Nova Scotia for about $2.8 billion.
The Bank of Nova Scotia, also known as Scotiabank, will pay $17.17 per share. That represents about a 17.5% premium over its Friday closing price of $14.61.
As part of the transaction, KeyCorp and Scotiabank plan to explore commercial real estate.
Scotiabank will purchase the shares in two tranches to ensure antitrust and Federal Reserve approval. The two parties expect to complete the initial $0.8 billion investment at the end of August, subject to closing conditions and approvals. The second, $2 billion investment is expected to occur in the first quarter of 2025.
KeyCorp estimates the investment will boost its common equity tier 1 (CET1) capital ratio, a measure of its capital strength and solvency, by 195 basis points to 12.4%. The deal should also increase KeyCorp's tangible book value per share by more than 10%, the Cleveland-based bank said.
KeyCorp also intends to evaluate a potential repositioning of its available-for-sale securities portfolio in conjunction with the deal. The goal is to accelerate profitability timing, liquidity and capital improvements, and increasing resiliency. KeyCorp expects the two moves will boost its capital ratio to range from 11.3% to 11.6%.
The deal should increase KeyCorp's 2025 earnings per share in the low-single digits and be slightly accretive to 2026 EPS, the bank said.
KeyCorp Stock Jumps On Announcement
KEY stock rallied 9.1 Monday following the announcement.
Shares retook their 50-day moving average last week, after diving to a test of 200-day support. KEY stock rose 10.7% in 2024.
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