1 00:00:05,160 --> 00:00:07,760 Speaker 1: This is what the Flux I'm Brett and I'm Justin 2 00:00:07,800 --> 00:00:08,479 Speaker 1: and it's Friday. 3 00:00:08,520 --> 00:00:10,000 Speaker 2: At twenty eighth the March, doesy Boy. 4 00:00:10,039 --> 00:00:14,560 Speaker 1: Despite the hblec's lengthy investigation, the average basket of groceries 5 00:00:14,640 --> 00:00:17,200 Speaker 1: is now costing more at Woolies than it was one 6 00:00:17,280 --> 00:00:20,120 Speaker 1: year ago, while the price has fallen at both Coals 7 00:00:20,200 --> 00:00:22,880 Speaker 1: and Outy Interesting and this could be part of the 8 00:00:22,880 --> 00:00:25,360 Speaker 1: reason why Wooly's share price is down more than twelve 9 00:00:25,400 --> 00:00:26,920 Speaker 1: percent just for the last six months. 10 00:00:27,160 --> 00:00:29,240 Speaker 2: Very juicy be man. You raise a very good point 11 00:00:29,320 --> 00:00:31,440 Speaker 2: and you are sharp with all the latest business news. 12 00:00:31,520 --> 00:00:33,479 Speaker 2: So flex am today in the Flux app will be 13 00:00:33,560 --> 00:00:35,839 Speaker 2: dropping quick sticks and if you're the fastest person to 14 00:00:35,840 --> 00:00:38,960 Speaker 2: answer all three questions correctly, you'll win fifty bucks and 15 00:00:39,080 --> 00:00:41,199 Speaker 2: a huge ego boost as well. To make sure to 16 00:00:41,200 --> 00:00:43,519 Speaker 2: download the Flux app and turn on your notifications to 17 00:00:43,600 --> 00:00:44,680 Speaker 2: win at Money Today. 18 00:00:44,840 --> 00:00:48,280 Speaker 1: Three arrogant stories today, Dozy Boy, let's do it for 19 00:00:48,440 --> 00:00:51,200 Speaker 1: our first. The Reject Shop has seen at share price 20 00:00:51,400 --> 00:00:54,680 Speaker 1: skyrocket one hundred and ten percent after an acquisition offer 21 00:00:54,680 --> 00:00:56,840 Speaker 1: from Canadian retail giant Dollar Ama. 22 00:00:56,960 --> 00:00:59,080 Speaker 2: Talk about going from reject to glow up b man, 23 00:00:59,160 --> 00:01:01,040 Speaker 2: So tell me what is going on here well. 24 00:01:01,080 --> 00:01:04,440 Speaker 1: The Reject Shop was founded in nineteen seventy nine with 25 00:01:04,520 --> 00:01:09,200 Speaker 1: the plan to sell discontinued lines of products and factory rejects. 26 00:01:08,680 --> 00:01:11,040 Speaker 2: And that's where it got its name, the reject Shop. 27 00:01:10,800 --> 00:01:12,720 Speaker 1: But juzzy boy. Over the years, it's become a lot 28 00:01:12,760 --> 00:01:15,400 Speaker 1: more than just rejects, and it has still maintained its 29 00:01:15,440 --> 00:01:17,920 Speaker 1: focus on being cheap. Everything from food to naxt to 30 00:01:17,959 --> 00:01:20,880 Speaker 1: party things to health, cleaning supplies and storage. B Man, 31 00:01:20,920 --> 00:01:22,280 Speaker 1: you name it, reject shops. 32 00:01:22,000 --> 00:01:22,240 Speaker 2: Got it. 33 00:01:22,560 --> 00:01:24,679 Speaker 1: It floated on the ASX in nineteen ninety four. 34 00:01:24,760 --> 00:01:26,480 Speaker 2: That be man at. The Reject Shop's gone through some 35 00:01:26,600 --> 00:01:29,080 Speaker 2: challenging times over the past decade as it tries to 36 00:01:29,120 --> 00:01:30,959 Speaker 2: find its niche in the market. 37 00:01:30,720 --> 00:01:33,959 Speaker 1: Particularly as kmart muscled into this space and more recently 38 00:01:34,080 --> 00:01:36,279 Speaker 1: she In and Timu as well. In fact, the Reject 39 00:01:36,280 --> 00:01:38,640 Speaker 1: Shop share price is just twenty percent of its past 40 00:01:38,760 --> 00:01:40,720 Speaker 1: price that it was at in twenty thirteen. 41 00:01:40,800 --> 00:01:43,440 Speaker 2: But now be Man Canadian retailer dollar Ama has made 42 00:01:43,480 --> 00:01:45,679 Speaker 2: an offer to acquire the Reject Shop, the two hundred 43 00:01:45,720 --> 00:01:47,160 Speaker 2: and fifty nine million. 44 00:01:46,840 --> 00:01:50,520 Speaker 1: Dollars Canada's biggest retailer of items, for five dollars or less. 45 00:01:50,680 --> 00:01:54,120 Speaker 2: Essentially the maple syrup covered cousin of the Reject. 46 00:01:53,720 --> 00:01:56,040 Speaker 1: Shop and Jazi Boy. This offer is a one hundred 47 00:01:56,040 --> 00:01:59,240 Speaker 1: and twelve percent premium to its previous closing price. 48 00:01:59,360 --> 00:02:01,840 Speaker 2: So man, it's no surprises here that the Reject Shop 49 00:02:02,000 --> 00:02:03,560 Speaker 2: encouraged shareholders to vote in. 50 00:02:03,600 --> 00:02:06,720 Speaker 1: Favor of the deal and Dollarrama would add the Reject 51 00:02:06,720 --> 00:02:09,600 Speaker 1: Shop to its sixteen hundred discount retailers in Canada as 52 00:02:09,600 --> 00:02:12,679 Speaker 1: well as it's nearly six hundred discount stores in Columbia 53 00:02:12,800 --> 00:02:15,680 Speaker 1: or Salvador and Peru, because a global presence is the 54 00:02:15,680 --> 00:02:18,919 Speaker 1: only way to compete in this new wide world of retail. 55 00:02:19,400 --> 00:02:20,760 Speaker 2: So what is the key learning here? 56 00:02:20,880 --> 00:02:23,640 Speaker 1: Takeovers aren't just about money, They're often about scale and 57 00:02:23,720 --> 00:02:24,880 Speaker 1: plain old survival. 58 00:02:24,919 --> 00:02:28,080 Speaker 2: Regia Shop's been fighting a tough battle against online budget 59 00:02:28,120 --> 00:02:29,720 Speaker 2: stores like she In and Timu and. 60 00:02:29,720 --> 00:02:31,440 Speaker 1: Does It Boy. It's been a challenge for the Reject 61 00:02:31,440 --> 00:02:34,600 Speaker 1: Shop because online retailers like she In, they sidestep the 62 00:02:34,600 --> 00:02:36,800 Speaker 1: traditional costs of physical stores. 63 00:02:36,520 --> 00:02:39,680 Speaker 2: No rent, no wages, no electricity bills. 64 00:02:39,440 --> 00:02:42,560 Speaker 1: And they offer ultra cheap products delivered two year door. 65 00:02:42,639 --> 00:02:44,440 Speaker 1: And that's why it's so challenging for the Rejao Shop. 66 00:02:44,440 --> 00:02:47,240 Speaker 1: For example, their net profit margin last year was just 67 00:02:47,320 --> 00:02:49,960 Speaker 1: over three percent, and me Man, the Regia Shop couldn't 68 00:02:49,960 --> 00:02:52,920 Speaker 1: match the scale and efficiency of the global giants. So 69 00:02:53,000 --> 00:02:55,320 Speaker 1: these days bricks and mortar stores need scale and a 70 00:02:55,360 --> 00:02:57,520 Speaker 1: strong global supply chain to survive. 71 00:02:57,320 --> 00:02:59,800 Speaker 2: Something that the Regia Shop didn't have by itself. 72 00:03:00,240 --> 00:03:04,160 Speaker 1: For our second story, Jean's West, the Aussie clothing retailer, 73 00:03:04,280 --> 00:03:08,000 Speaker 1: has entered administration. With ninety stores to close and hundreds 74 00:03:08,000 --> 00:03:09,240 Speaker 1: of jobs to be lost. 75 00:03:09,320 --> 00:03:11,640 Speaker 2: Jean's West no longer fits best be Man, So what 76 00:03:11,840 --> 00:03:12,480 Speaker 2: is going on here? 77 00:03:12,600 --> 00:03:16,280 Speaker 1: Jeans West's first store opened in Perth in nineteen seventy two, 78 00:03:16,440 --> 00:03:18,800 Speaker 1: and it grew to become an Aussie go to for 79 00:03:18,880 --> 00:03:20,239 Speaker 1: denim and other clothing as well. 80 00:03:20,360 --> 00:03:22,960 Speaker 2: Yeah, since it's humble Perth beginnings, Jeans Wes grew to 81 00:03:23,000 --> 00:03:25,919 Speaker 2: nearly one hundred and fifty stores around Australia by twenty twenty. 82 00:03:25,919 --> 00:03:28,120 Speaker 1: But the retail industry just isn't the same as it 83 00:03:28,200 --> 00:03:28,440 Speaker 1: used to. 84 00:03:28,440 --> 00:03:31,520 Speaker 2: Be and many retail brands have been feeling the economic heat. 85 00:03:31,760 --> 00:03:35,000 Speaker 1: So now juzzy Boy Jean's West finds itself in a 86 00:03:35,000 --> 00:03:38,560 Speaker 1: pickle tighter than freshly washed skinny jeans. 87 00:03:38,960 --> 00:03:41,600 Speaker 2: It's entered administration with the plan to shut down all 88 00:03:41,640 --> 00:03:43,240 Speaker 2: of its remaining ninety stores. 89 00:03:43,400 --> 00:03:46,520 Speaker 1: And this isn't Jean West's first time under administration either. 90 00:03:46,600 --> 00:03:49,240 Speaker 2: Huber Gardens has been trying their best to revive Jean's 91 00:03:49,240 --> 00:03:51,080 Speaker 2: West over the past five years, but it. 92 00:03:51,040 --> 00:03:53,240 Speaker 1: Wasn't to be. And now Jean's West will close all 93 00:03:53,280 --> 00:03:54,240 Speaker 1: of its ninety. 94 00:03:53,960 --> 00:03:56,160 Speaker 2: Stores, as well as up to six hundred jobs that 95 00:03:56,200 --> 00:03:56,760 Speaker 2: will be lost. 96 00:03:56,840 --> 00:03:59,200 Speaker 1: And when a business goes into administration, all of its 97 00:03:59,200 --> 00:04:01,600 Speaker 1: creditors will be chasing debts. So what is the key 98 00:04:01,680 --> 00:04:02,120 Speaker 1: learning here? 99 00:04:02,160 --> 00:04:05,119 Speaker 2: When a business collapses, there's a very specific pecking order 100 00:04:05,200 --> 00:04:06,360 Speaker 2: for who gets paid first. 101 00:04:06,480 --> 00:04:09,200 Speaker 1: In this case, Jeans West has appointed picture partners who 102 00:04:09,280 --> 00:04:11,960 Speaker 1: might try to restructure the finances and sell off some asset, 103 00:04:12,000 --> 00:04:14,120 Speaker 1: but not everyone gets paid at the first instance. 104 00:04:14,320 --> 00:04:16,440 Speaker 2: Nope, there's a strict order of business when it comes 105 00:04:16,480 --> 00:04:17,440 Speaker 2: to debt repayments. 106 00:04:17,480 --> 00:04:19,240 Speaker 1: Secured creditors they get paid first. 107 00:04:19,279 --> 00:04:21,320 Speaker 2: Yeah, they're the ones who've got legal rights over the 108 00:04:21,400 --> 00:04:22,520 Speaker 2: specific assets. 109 00:04:22,600 --> 00:04:24,919 Speaker 1: Think of banks who have lent the business of money 110 00:04:24,960 --> 00:04:28,640 Speaker 1: and taken property as a guarantee. Then you have preferential 111 00:04:28,720 --> 00:04:32,720 Speaker 1: unsecured creditors. Usually employees will fall under this category. They'll 112 00:04:32,720 --> 00:04:35,160 Speaker 1: get any of the remaining funds after the first group 113 00:04:35,160 --> 00:04:37,719 Speaker 1: has been paid, next unsecured creditors. 114 00:04:37,279 --> 00:04:40,200 Speaker 2: That's customers, contractors, suppliers. 115 00:04:39,680 --> 00:04:42,480 Speaker 1: And the last one is the equity shareholders. 116 00:04:42,600 --> 00:04:45,120 Speaker 2: Yep, so be Man Pitcher Partners is still crunching numbers 117 00:04:45,120 --> 00:04:46,920 Speaker 2: to figure out how much money there is for all 118 00:04:46,960 --> 00:04:48,440 Speaker 2: of these different groups of creditors. 119 00:04:48,440 --> 00:04:51,480 Speaker 1: For our third and final story, Australian super has sold 120 00:04:51,480 --> 00:04:54,400 Speaker 1: its entire stake in tech giant wise tech Global after 121 00:04:54,480 --> 00:04:57,279 Speaker 1: serious concerns over the founder and board's conduct. 122 00:04:57,320 --> 00:04:59,479 Speaker 2: The Australians people are walking with their wallets, be Man, 123 00:04:59,520 --> 00:05:00,719 Speaker 2: So what going on here? 124 00:05:00,760 --> 00:05:03,920 Speaker 1: Well? Wistech was founded in nineteen ninety four and specializes 125 00:05:04,000 --> 00:05:07,840 Speaker 1: in logistics software that is actually used around the world. 126 00:05:08,160 --> 00:05:10,240 Speaker 2: And over the past few years, wistech has made over 127 00:05:10,320 --> 00:05:12,880 Speaker 2: forty acquisitions to grow into one of the biggest tech 128 00:05:12,880 --> 00:05:13,960 Speaker 2: companies in Australia. 129 00:05:14,080 --> 00:05:17,200 Speaker 1: And jasiboy wis Tech's founder Richard White. He still owns 130 00:05:17,279 --> 00:05:18,880 Speaker 1: thirty six percent of the company and. 131 00:05:18,839 --> 00:05:20,440 Speaker 2: You may remember being Man. Over the last few months, 132 00:05:20,520 --> 00:05:23,800 Speaker 2: there's been some serious allegations against Richard White, the founder. 133 00:05:23,560 --> 00:05:26,599 Speaker 1: Of Talking Undisclosed Relationships, conflicts of interest. 134 00:05:26,400 --> 00:05:29,360 Speaker 2: And be Man. Last month, four of their independent directors 135 00:05:29,400 --> 00:05:30,839 Speaker 2: resigned from the board. 136 00:05:30,600 --> 00:05:35,000 Speaker 1: And Australian Super is the largest super fund in Australia. 137 00:05:34,440 --> 00:05:37,960 Speaker 2: But without a certain number of independent directors. Australian Super said, 138 00:05:38,160 --> 00:05:39,600 Speaker 2: we are out. 139 00:05:39,440 --> 00:05:42,279 Speaker 1: Yeap sold in entire five hundred and eighty million dollar 140 00:05:42,320 --> 00:05:44,640 Speaker 1: steak due to these governance issues. 141 00:05:44,240 --> 00:05:46,480 Speaker 2: And be man, it ain't just Australian Super who's concerned. 142 00:05:46,600 --> 00:05:49,560 Speaker 1: Since the board resignations, wise, Tech shares have dropped around 143 00:05:49,720 --> 00:05:50,440 Speaker 1: thirty percent. 144 00:05:50,640 --> 00:05:53,080 Speaker 2: Nothing like a bit of investor activism to get companies 145 00:05:53,080 --> 00:05:53,799 Speaker 2: to make changes. 146 00:05:54,040 --> 00:05:55,960 Speaker 1: So interesting, So what is the key learning here? 147 00:05:56,040 --> 00:05:59,279 Speaker 2: Investor activism is when investors use their equity stake to 148 00:05:59,320 --> 00:06:01,040 Speaker 2: push for chain within a company. 149 00:06:01,080 --> 00:06:04,279 Speaker 1: This includes pushing for better governance or better environmental or 150 00:06:04,279 --> 00:06:05,960 Speaker 1: social initiatives. 151 00:06:05,400 --> 00:06:07,760 Speaker 2: And even sometimes reshaping the leadership. 152 00:06:07,800 --> 00:06:10,520 Speaker 1: Now, in recent years superfunds they've become more vocal. 153 00:06:10,600 --> 00:06:13,680 Speaker 2: Yeah, they've attempts to use their big investments to influence 154 00:06:13,760 --> 00:06:15,000 Speaker 2: company behavior. 155 00:06:14,640 --> 00:06:16,760 Speaker 1: And Josey Boyd the Weis Tech case isn't the only 156 00:06:16,800 --> 00:06:20,520 Speaker 1: example of super funds trying to rally behind specific issues. 157 00:06:20,560 --> 00:06:24,120 Speaker 2: For example, super funds like Australian Retirement trusts, SEABAS and 158 00:06:24,200 --> 00:06:25,800 Speaker 2: HESTA have all rallied together. 159 00:06:25,920 --> 00:06:28,799 Speaker 1: They warned that they may vote out men on boards 160 00:06:28,839 --> 00:06:31,680 Speaker 1: if women don't occupy a minimum of thirty percent of 161 00:06:31,760 --> 00:06:32,719 Speaker 1: company board seats. 162 00:06:32,760 --> 00:06:35,560 Speaker 2: Interestingly, other super funds like Hest and Aware super are 163 00:06:35,600 --> 00:06:37,760 Speaker 2: choosing to stay invested in Wistech. 164 00:06:37,800 --> 00:06:39,240 Speaker 1: They claim this is so that they can do their 165 00:06:39,279 --> 00:06:41,160 Speaker 1: activism from within the company. 166 00:06:41,200 --> 00:06:42,880 Speaker 2: As an investor, Sam, if you want to start the 167 00:06:42,880 --> 00:06:45,160 Speaker 2: weekend with fifty bucks in your pocket, there is only 168 00:06:45,240 --> 00:06:47,800 Speaker 2: one place to go, the Flux app with your notifications on, 169 00:06:47,920 --> 00:06:50,560 Speaker 2: and be the first to answer three business questions correctly. 170 00:06:50,600 --> 00:06:52,880 Speaker 1: Thanks for listening and we'll see you on Monday.