The increasing popularity of so-called lifestyle sports (think: cycling, skateboarding, surfing, snowboarding, martial arts, lacrosse and so on) has made them lucrative targets for buyout shops. More specifically, the growing number of licensing and advertising opportunities related to the various sports' competitions and tours are ever more attractive to the private equity set.
“Lifestyle-based sports entertainment is seeing unprecedented growth due to the unique interactive experience it provides attendees, sponsors and licensees,” said Robert Perille, managing director of Shamrock Holdings, in a statement.
Shamrock – originally founded as the Roy E. Disney family's private investment firm – recently agreed to acquire professional beach volleyball firm AVP for $36.9 million. AVP produces, markets and distributes volleyball events worldwide and has more than 18 US events planned this year. Burbank, California-based Shamrock fills its portfolio with media, entertainment and communications companies and sees its acquisition of AVP as an investment in the aforementioned industries – not in a sport, per se.
Spire Capital Partners feels similarly about its recent foray into what it calls “the most exciting sport on dirt”. The New York-based firm recently purchased Professional Bull Riders – an organisation that has four associated US bull riding tours and numerous televised events – for an undisclosed amount.
“It's a multimedia platform with a great sport at its core,” says Spire Capital's Rick Patterson. “This is about where the present and future is for advertisers and sponsors.”
The attraction for private equity firms, he says, is in lifestyle sports' ad-supported revenue component. With specific regard to Spire's bull riding organisation acquisition, he says, the various live and televised events generate “content that can be monetised in a whole variety of ways”.
Bull riding, Patterson adds, “has a large audience, in this case almost 20 million folks. It's one of the fastest growing sports in the United States”.
Likewise, private equity investment in lifestyle sports will increase, Patterson predicts.
“It's a trend,” he says. Lifestyle sports, Patterson adds, are “great, growing businesses that, I think, are a great hit for private equity”.
MIDOCEAN BUYS CEILING FAN FIRM
MidOcean Partners has completed its acquisition of The Hunter Fan Company from Lehman Brothers Merchant Banking Group. MidOcean partner Rob Sharp led the deal. Financial terms of the transaction were not disclosed, though financing was provided by JP Morgan and Goldman Sachs. Based in Memphis, Tennessee, the 120-year old Hunter Fan Company is best known for its ceiling fans. In 2003, Lehman Brothers Merchant Banking Group purchased a controlling stake in the company in a transaction valued at approximately $244 million. Commercial law firm Kirkland and Ellis provided legal advice to MidOcean, while KPMG International supplied accounting counsel.
OAK INVESTMENT BACKS REUNION.COM
Silicon Valley venture capital veteran Oak Investment Partners has invested $25 million (€18 million) in social networking site Reunion.com. The site is designed to help adults find and keep in touch with friends and family. Since its 2002 founding, the site has racked up 28 million users, with 1 million more added each month. The privately-owned Lost Angeles-based company was founded by Jeffrey Tinsley, former head of GreatDomains.com, and former MySpace chairman Richard Rosenblatt. Tinsley said Oak's funding would be used toward strategic add-on acquisitions.
ZELL WINS TRIBUNE BUYOUT
Billionaire investor Sam Zell has been selected to back the $8.2 billion privatisation of newspaper publisher and broadcaster Tribune Company, a transaction which involves the sale of a stake in a Chicago baseball team and an Employee Stock Ownership Plan. The Tribune deal, which received competing bids from a number of well heeled private investors, involves a $315 million investment from Zell. The company will be transferred to the ownership of an Employee Stock Ownership Plan with Zell holding a subordinate note and a warrant entitling him to acquire 40 percent of Tribune's common stock. As part of the deal, Tribune will sell the Chicago Cubs, a US baseball team, as well as a 25 percent stake in broadcast group Comcast SportsNet Chicago.
CARLYLE GROUP BUYS GOODYEAR DIVISION
The Carlyle Group has augmented its array of automotive-related portfolio companies with its $1.5 billion (€1.1 billion) acquisition of Goodyear Tire & Rubber's Engineered Products division. Engineered Products manufactures and markets products including hoses, conveyor belts, and power transmission products for industrial, military and consumer applications. The division has 32 facilities in 12 countries, and employs approximately 6,500 workers. Under terms of the agreement, Carlyle will be licensed to use the Goodyear brand and certain trademarks in connection with the Engineered Products business. The transaction is subject to closing conditions, regulatory approvals, and a labor agreement with the US Steelworkers union.
HELLMAN FRIEDMAN EXIT NETS $2BN
The San Francisco-based firm has nearly trebled its investment in DoubleClick with the sale of the digital marketing firm to Google for $3.1 billion (€2.3 billion). Hellman & Friedman, alongside San Diego-based venture firm JMI Capital, took DoubleClick private in April 2005. The two firms paid $1.1 billion for the company, which had $135 million in debt outstanding at the time. Following the take-private deal, DoubleClick – which specialises in online advertising, search engine and affiliate marketing, email marketing, database marketing, and data management – underwent some significant restructuring. Its chief executive stepped down, and a new board of directors and chairman were appointed. DoubleClick's sale to Google is subject to customary closing conditions, and is expected to close by the end of the year.
SALLIE MAE TO BE TAKEN PRIVATE FOR $25 BN
JC Flowers, Friedman Fleisher & Lower, JP Morgan Chase and Bank of America have agreed to buy US student loan giant Sallie Mae for $25 billion (€18.5 billion). The sale price of $60 per share represents a sizeable 50 percent premium on the share price prior to recent buyout speculation. JC Flowers and FFL are contributing about $4.4 billion in equity, leaving them with a 50.2 percent stake, while the two banks will each invest just under $2.2 billion for a 24.9 percent stake. They will also provide the necessary debt financing. Sallie Mae had net income of $1.2 billion last year and manages nearly $89 billion in student loans. The deal, subject to regulatory and shareholder approval, is expected to close in late 2007.