What You Need To Know For May 16th

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Headlines 🔍

• Red Lobster is on the verge of filing for bankruptcy and is shuttering at least 99 of its 650 stores. We flagged this a month ago when the bankruptcy rumors first started, Thai Union Group is the Sponsor, King & Spalding is the legal advisor, and Fortress is the lead lender. Their $20 Endless Shrimp offering was a terrible move that drove months of large operating losses, including $11mm in losses in 3Q23, due to customers not leaving the restaurant and wolfing down endless shrimp….

• OpenAI launched significant app improvements. This included translation where OpenAI was able to seamlessly translate from Italian to English in real time. Meanwhile, Google is continuing to iterate their AI offering Gemini, with an announcement Tuesday that improves latency and brings AI into Google Search

  • Secondly, OpenAI’s Co-Founder Ilya Sutskever is leaving the company. As a reminder, Ilya was the key player in the coup against Sam Altman that ultimately backfired, so his time was definitely limited…

• Roaring Kitty is BACK…and the market is eagerly awaiting his next move. While Kitty (or Keith Gil) continued posting niche meme videos, retail traders wasted no time sending Gamestop back up to the moon.

  • Why is he back after 3 years and what does he want?

    Well it’s possible Gil was under a gag order and couldn’t speak about the markets or specific stocks for a 3 year timeframe. It would explain why his disappearance from the internet shortly after congressional hearings was so sudden. Other than posting goofy videos on the internet, there doesn’t seem to be an agenda related to any specific stock.

  • How much have Short Sellers lost? How much have investors made?

    Short Sellers of GameStop and AMC over a two-day period reportedly lost $5B, but on Wednesday the “rational markets” acted. AMC was down 20% yesterday, but is up 73% over the past 3 days and was able to issue $250mm of new equity in order to pay down some debt. Meanwhile, Gamestop was down 18.9% yesterday, but is up 108% over the past 3 days.

• Permira is taking Squarespace private at a $6.9B Valuation. So who’s financing the deal? It’s another win for private credit. Blackstone (50% of the loan), Blue Owl (25%), and Ares (25%) will be providing $2.7B in senior secured financing. Squarespace’s take-private comes just months after public market discounts have driven public-to-private deals to a 16-year high

• FAT Brands' Twin Peaks and Smokey Bones confidentially file for IPO. This could come as soon as 2Q or 3Q of this year.

• The Bill Hwang Archegos trial continues: Three years after Archegos collapsed, Bill Hwang has gone from his goals to become the “richest person in the world” to fighting charges of fraud and racketeering in Manhattan federal court. Through his now-imploded family office, prosecutors allege, Hwang used swaps to pump up his personal fortune while concealing his trades from and manipulating the market

• US private equity portfolio company bankruptcies spiked to record high in 2023

• Private equity healthcare bankruptcies are on the rise (up 112.5% in the past five years). Fallout from defaults threatens more than just sponsors’ IRR – resulting in layoffs and closures that disrupt healthcare ecosystems, overburden providers, and threaten the stability of programs like Medicare … not to mention that PE acquisitions of hospitals are linked to significant declines in quality of care and increases in patient complications (HMS)

• Netflix will broadcast two NFL games on Christmas this season. This is a 3-season deal and will continue the push for the U.S.’s most popular sport into streaming. The two games this year will be the Chiefs vs. the Steelers and the Ravens vs. the Texans.

  • Additionally, Netflix announced they have a whopping 40 Million ad-supported plan members…

• Comcast to Launch a Streaming Bundle of Peacock, Netflix and Apple TV+….so glad we’re just reinventing cable but at higher prices. Pricing isn’t clear, but Comcast’s CEO said pricing will “come at a vastly reduced price to anything available today.”

• Sony and Apollo’s joint bid for Paramount bid may be faltering. You could say Shari Redstone’s sale of her media empire is certainly drawing parallels to the Waystar Royco x Gojo saga. Should the entertainment-PE duo of Sony and Apollo move forward, they’ll likely face some resistance from the Justice Department, concerned by the merger of two flagship Hollywood studios, and the Committee on Foreign Investment in the United States (CFIUS), charged with enforcing FCC rules that bar foreign entities from holding majority stakes in broadcast TV stations. This may require some level of divestitures, that may complicate a transaction more than Skydance’s proposal would. But Sony & Apollo plus Skydance continue to try to woo Shari Redstone into selling her media empire to them

• Vanguard names former BlackRock executive Salim Ramji as their new CEO

• Polymarket, a popular prediction market platform, raised a $45mm Series B, led by Founders Fund

• Berkshire Hathaway has bought nearly 26 million shares of Zurich-based Chubb for a stake worth $6.7 billion - per CNBC

• California Public Employees’ Retirement System (the largest U.S. pension fund) picked Scott Chan, former deputy CIO, to run the $333 billion portfolio

• After marking a series of record highs this year, cocoa futures plunged 19% this week (the largest single-day drop in 60 years) amidst concerns about rainfall

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Transactions: M&A 💭 

ZeroFox, a cybersecurity company, was acquired for $350.00M by Haveli Investments. Piper Sandler and Stifel Financial advised on the sale. 

As you saw above, Squarespace (NYS: SQSP), a provider of subscription-based website-building software, has entered a definitive agreement to be acquired for $6.9B by Permira.

I’rom Group (TKS: 2372), a Japan based company engaged in provision of medicinal treatment, was acquired for $225.74M by Blackstone (NYS: BX).

CoverFlexx Group, manufacturer and seller of automobile paint, has reached a definitive agreement to be acquired for $295.00M by Axalta Coating Systems (NYS: AXTA). Robert W. Baird & Co advised on the sale.

The Foodpanda Delivery Business unit of Delivery Hero (ETR: DHER) has reached a definitive agreement to be acquired for $950.00M by Uber (NYS: UBER).

Home Federal Savings Bank (NAS: HMNF), a stock savings bank holding company, has reached a definitive agreement to be acquired for $116.4M by Alerus Financial (NAS: ALRS). D.A. Davidson Companies advised on the sale.

Transactions: Private Placements 💭

The Bot Company, developer of an AI-based robotic platform, raised $150.00M of Seed Funding from Quiet Capital, Nat Friedman, and Daniel Gross at a pre-money valuation of $400.00M.

Lycia Therapeutics, operator of a biotechnology company, raised $106.6M of Series C venture funding led by Venrock.

ByHeart, operator of an infant nutrition company, raised $204.69M of venture funding led by Bellco Capital, Sonostar Ventures, and Two River Group.

WEKA, developer of software-defined storage technology, raised $140.00M of Series E venture funding led by Valor Equity Partners at a pre-money valuation of $1.46B.

Noteworthy Chart 🧭

Apple generated a lot of negative buzz for their iPad commercial where they smashed a bunch of art and creative tools together like a garbage disposal machine. Here’s a look at historical iPad revenue:

Best of YouTube ⌚️

Did you know Steve Jobs created the Podcast? I technically did not…

Meme Cleanser 😆 

In Other News

• Have you checked out Mainstreet yet? They allow individuals to invest in curated venture capital funds for low minimums. Subscribe to their Newsletter Automatically Here.

• Curious about the evolution of Private Credit? Business Breakdowns did an podcast interview with Josh Clarkson, MD at Prosek Partners. They cover history, demand, supply, products, regulation, & much more about the $2.1T industry.

  Until Next Time!