| | | | | | | | | | Axios Pro Rata | | By Dan Primack · Dec 21, 2022 | | 🎉 Welcome to the year's final issue of Axios Pro Rata. Be sure to stay on top of the news at Axios.com, where I'll still be writing while the newsletter is on hiatus. These morning missives fire back up again on Jan. 3, 2023. Happy holidays!!!! | | | | | | Top of the Morning |  | | | Illustration: Aïda Amer/Axios | | | | The Phoenix Suns are about to get a new owner, in what could be one of the most consequential team sales in NBA history. Driving the news: Mat and Justin Ishbia yesterday announced that they've agreed to buy a majority sake in the Suns, and the WNBA's Phoenix Mercury, at a $4 billion valuation. Who? Mat Ishbia is CEO of UWM, a Michigan-based wholesale mortgage lender that in early 2021 went public via a Gores Group SPAC. At the time it was the largest-ever SPAC deal, at a $16.1 billion enterprise value. But that figure has since fallen south of $10 billion, as UWM's stock has been stuck in the $3-$4 range for most of 2022. - Mat Ishbia also has some basketball cred, as a walk-on for the Michigan State team that won the national championship in 2000. He's since become a top donor to the program.
- Justin Ishbia is founding partner of Shore Capital Partners, a Chicago-based private equity firm focused on microcap companies.
Why it matters: This is a record-shattering price for a franchise that plays in just the 11th-largest U.S. media market, doesn't own its arena and has never won a league title. - This price massively increases the value of all other NBA teams, possibly spurring new deals. It also could help Marc Lore and Alex Rodriguez finish finding their financing to buy out the Minnesota Timberwolves, since they're now getting in at a veritable bargain.
- It's also an ROI validation for private equity, given that Dyal Capital bought a small stake in the Suns last year at just a $1.55 billion valuation.
- Finally, it helps the NBA rid itself of Suns owner Robert Sarver, who recently was suspended by the league for one year after an independent investigation found instances of the Suns owner repeatedly saying the N-word and engaging in "inequitable conduct toward female employees."
- Finally, the deal comes just days after ESPN reported that the Suns' workplace issues go far beyond just Sarver.
Backstory: Other Suns suitors are pretty pissed off right now, per multiple sources. Sarver had hired Moelis & Co. to run a process through which second-round bids were due next month, but the Ishbias executed an end-run. - This basically ends the era of bank-led team auctions, or at least of bidders following the proscribed rules. Want to buy a franchise? Go straight to the seller.
Deal details: Sarver controls the Suns, but doesn't own a majority position. Instead, he's believed to have around a 35% stake. So the Ishbias are buying out him, Dyal and some other small stakeholders. - Word is that they've got agreements to buy around 60%, and that they spent yesterday seeking financing partners so as to afford an even larger stake. Dyal is believed to be the only minority owner with tag-along rights.
- No information yet on who else is in their investment group, although the NBA recently agreed to allow pension and sovereign wealth funds to buy in.
The bottom line: This is a slam dunk for NBA owners, and for the one dealmaking niche that isn't being depressed by economic uncertainty. |     | | | | | | The BFD (bonus edition) | | Source: Giphy I asked each of the Axios Pro Deals newsletters to share their BFD for 2022: 🌎 Climate tech: Electric Last Mile Solutions liquidates just a year after going public via SPAC at a $1.4 billion valuation. - Why it's the BFD: Listed electric vehicle companies have hemorrhaged market cap, as the industry struggles to meet delivery targets. This applies both to top makers like Tesla, and a slew of upstarts that went public via SPAC.
💰 Fintech: Binance's abandoned takeover of FTX. - Why it's the BFD: The bailout that never happened became the final nail in the coffin for FTX, leading to the global exchange's collapse, Sam Bankman-Fried's arrest and a loss of mainstream confidence in crypto.
🚑 Health tech: Amazon acquires One Medical for $4 billion. - Why it's the BFD: $4 billion is a drop in the bucket for Amazon, but this deal reignited the race to own primary care and gave the tech giant a key building block for its growing health empire.
🎮 Media: Microsoft's $69 billion bid for Activision Blizzard. - Why it's the BFD: Although we all love gawking at Elon/Twitter, Microsoft's largest-ever deal for the Call of Duty developer not only upends the gaming world, but will serve as a bellwether for just how much luck Biden's antitrust team will have in reigning in Big Tech.
🛒 Retail: Kroger's proposed acquisition of rival Albertsons for nearly $25 billion. - Why it's the BFD: Size? Check. Private equity? Check. Antitrust scrutiny? Check. Divestitures? Check. Dividend drama? Check. Political hot button issues? Check. This deal has it all.
| | | | | | | | Venture Capital Deals | | 🚑 Biomica, an Israeli microbiome subsidiary of Evogene (Nasdaq: EVGN), raised $20m led by Shanghai Healthcare Capital. www.biomicamed.com • Deep Voodoo, an AI entertainment startup founded by "South Park" creators Matt Stone and Trey Parker, raised $20m led by Connect Ventures, a partnership between agency CAA and venture firm NEA. https://axios.link/3jfB8Xo • Mangomint, an LA-based provider of salon management software, raised $13m led by OpenView Venture Partners. https://axios.link/3VanToa • Opensee, a Paris-based business user analysis platform for financial institutions, raised €11m in Series A funding. Omnes Capital led, and was joined by Laurion Capital and Societe Generale Ventures. https://axios.link/3W8ZpwY • Arrakis Finance, a decentralized market-making protocol, raised $4m in a seed funding round from Uniswap Labs Ventures, Accel, Polygon Ventures and Robot Ventures. https://axios.link/3WtxBD8 • Aviva, a Mexican lender that enables voice-based credit applications, raised $2.2m in pre-seed funding. Wollef Ventures led, and was joined by Newtopia VC, Seedstars International Ventures, 500 Startups, Magna Capital VC and Xtraordinary VP. https://axios.link/3V7Ba0B | | | | | | | | A message from Axios | | The latest deals insights and analysis at your fingertips | | |  | | | | What you'll get: Unlock premium newsletters, events and breaking news analysis through Axios Pro: Deals. Use code PRO100 at checkout to get $100 off your subscription. | | | | | | Private Equity Deals | | • American Equity (NYSE: AEL) rejected a $3.9b, or $45 per share, all-cash takeover bid from rival insurer Prosperity Life (owned by Black Diamond Capital) and Elliott Investment Management. https://axios.link/3YxDDo2 • Level Equity acquired TeamDynamix, a Columbus, Ohio-based provider of work management software, from K1 Investment Management (which will retain a minority stake). www.teamdynamix.com | | | | | | | | Public Offerings | | • QuantaSing Group, a Chinese online learning company, filed for a $60m IPO. It plans to list on the Nasdaq (QSG), and reports a $33m net loss on $403m in revenue for its fiscal year ending June 30, 2022. Shareholders include DCM and Qiming Venture Partners. https://axios.link/3YIstNi | | | | | | | | SPAC Stuff | | • ECARX, a Chinese mobility tech company, completed its merger at an implied $3.82b equity value with COVA Acquisition Corp. (Nasdaq: COVA). It had raised over $400m from firms like Geely Automobile and China Reform Holdings. www.ecarxgroup.com ⚡ Sparks Energy, a Danville, Ala.-based provider of power infrastructure services like storm response, agreed to go public at an implied $475m valuation via 10X Capital Venture Acquisition Corp. III (Nasdaq: VCXA), a SPAC which previously terminated an agreement to buy Senegal-based alfalfa farm operator African Agriculture. https://axios.link/3YGyN7V | | | | | | | | More M&A | | • Australian antitrust regulators blocked TPG Telecom's (ASX: TPG) proposed spectrum purchase from Telstra Group (ASX: TLS). https://axios.link/3PGZLZb • Barilla Group of Italy agreed to acquire the Back to Nature granola and nuts brand from B&G Foods (NYSE: BGS). https://axios.link/3jgCcKK • Doing Things Media, an Atlanta-based parent company to several viral Instagram accounts, agreed to acquire social media content brand Overheard, per Axios. DTM last year raised Series A funding led by Volition Capital. https://axios.link/3WhmfTc • The European Commission is opening an antitrust investigation into Broadcom's (Nasdaq: AVGO) proposed $61b takeover of VMWare (NYSE: VMW). https://axios.link/3BPZhKu ⚡ ExxonMobil agreed to sell its Italian fuel and refining assets to IP. https://axios.link/3v78Q3U • Foodtastic, a Canadian franchisor of quick-service restaurant brands, acquired Toronto-based healthy fast-casual chain Freshii (TSX: FRII) for C$74.4m. https://axios.link/3hIfudZ • Grayscale said it would consider a tender offer to return some capital to shareholders in its Grayscale Bitcoin Trust, or GBTC, if it's unable to convert the fund into an ETF. https://axios.link/3Wc2f4k • Massy Holdings of Trinidad and Tobago acquired Jacksonville, Fla.-based grocery chain Rowe's IGA Supermarket for $47m. https://axios.link/3G6gcLg • Microsoft (Nasdaq: MSFT) is the subject of a private consumer lawsuit seeking to block its $69b purchase of Activision Blizzard (Nasdaq: ATVI), which also is the subject of an FTC antitrust suit. https://axios.link/3BNTEML | | | | | | | | Fundraising | | • Anthos Capital, a Santa Monica, Calif.-based growth equity firm, is raising its sixth flagship fund, per an SEC filing. It's currently investing out of a $1.57b fifth fund. | | | | | | | | It's Personnel | | • Carl Eschenbach is stepping down as a partner with Sequoia Capital to become co-CEO of Workday (Nasdaq: WDAY). He will become a venture partner with Sequoia, which he joined in 2016. - Eschenbach has been on Workday's board for nearly five years.
• American Pacific Group promoted Stephanie Gaufin to managing director. https://axios.link/3G92yaz • William Kallop joined William Blair as a managing director of consumer and retail investment banking. He previously was with Goldman Sachs. www.williamblair.com • Jennifer Kim (ex-Lever, founder of Startup Recruiting Bootcamp) and Shruti Shah (ex-Hello Alice, SVB) are joining Impressionism Capital as venture partners. https://axios.link/3BRvf9n | | | | | | | | Final Numbers |  Data: Axios Research; Chart: Axios Visuals Elsewhere in new sports deals: - Google's YouTube reportedly is in advanced talks to buy exclusive rights to NFL Sunday Ticket, which currently is carried by TPG-backed DirecTV for $1.5b annually.
- John Textor, executive chair of FuboTV, completed his takeover of French soccer club Olympique Lyonnais.
| | | | | | | | A message from Axios | | The latest deals insights and analysis at your fingertips | | | | | | | | What you'll get: Unlock premium newsletters, events and breaking news analysis through Axios Pro: Deals. Use code PRO100 at checkout to get $100 off your subscription. | | | | Thanks for reading Axios Pro Rata, and to copy editors Mickey Meece and Bryan McBournie! Please ask your friends, colleagues and elves on shelves to sign up. |  | | Your personal deals analyst is here. | | | | | | Axios thanks our partners for supporting our newsletters.
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