From a $35bn “Valentine’s Day love letter” to OpenAI’s mysterious $6.5bn hardware play, Anthony and Stephen break down the biggest deal stories shaking up markets this week.
They also dive into the private equity pullback as firms like Blackstone and KKR slump, why Goldman Sachs is going big on the Middle East, and how Victoria’s Secret is fighting off unwanted attention with lingerie and a poison pill.
Essential listening for anyone curious about the mechanics of mega M&A, private equity’s shifting playbook, and the strange overlap between fashion, finance, and billion-dollar drama.
(00:00) Intro & Key Themes
(01:43) The $35 Billion Love Letter
(09:36) OpenAI's Bold Acquisition
(16:42) The State of Private Equity
(23:23) Goldman Sachs in the Middle East
(27:14) Victoria's Secrets Poison Pill
(32:55) Google's $700 Million Gift
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Check out the AmplifyME Summer Analyst Training Programme https://amplifyme.com/summer-analyst-programme
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello, and welcome to the show. And we're going back to a
classic format with Steven and I, which is five stories in 5
minutes. So what can you expect?
Well, and a very expensive love letter.
And no, this isn't only fans getting sold potentially for $8
billion. This is the $35 billion deal
between Charter Communications and it's acquisition of Cox
(00:23):
Communications. So we're going to talk about
that one. Also open AI acquiring AI device
startup from Apple veteran Johnny I've and a 6 1/2 billion
dollar deal. We're going to also talk about
private equity because Blackstone are out with their
latest state of the market. Going to also talk about Goldman
Sachs extending its tentacles all over the world, but namely
(00:45):
as are a lot of banks looking toget into the Middle East and
streamlining in AIPAC. And of course, Victoria's Secret
couldn't go an episode without mentioning them.
And also poison pill. I mean, this is you couldn't
make these headlines up. Sexy lingerie and poison pills.
So this is what this show is allabout.
And then if we've got time, there's also a funny story to
(01:10):
finish as well about what could be a gift from your boss that
everyone would love to have. You'll just have to stay tuned
to find out what exactly who that is and what that that gift
was. So Stephen, how are you and and
what's this love letter that you've been telling me about?
Yeah. Thank you so much, Adam.
Well done for getting an only fans reference in so early.
(01:33):
We decided not to cover that $8 billion.
Gosh, yeah. Let's let's leave that one.
Let's park that one. As the as the as the consultants
say, let's, let's start with this $35 billion love letter.
I didn't. I didn't make up the the
headline. This was a, this was a Bloomberg
headline. And I'll go on and talk about
(01:53):
why we're referencing this love letter.
But just to give you a little bit of background on the
transaction, this is one of the biggest, if not the biggest deal
of the year, $34.5 billion acquisition by Charter
Communications, the large listedbroadband cable linear
television company based in the US.
(02:16):
Acquisition of Cox Communications, which is a
family owned, I think 4th or 5thgeneration communications
company started with wire with wireless and radio and now is in
a very similar space to Charter.And this tie up where Cox will
end up holding a 23% stake in the combined company.
(02:40):
This is a classic defensive merger.
Remember these types of companies, they are they are and
have been on the back foot ever since streaming became viable
and omnipresent and the likes ofComcast, which is obviously
Charter's biggest rival in the US.
(03:01):
You'll take a look at that shareprice.
It doesn't make particularly good viewing and Charter
Communications is not that dissimilar.
And just to give you a, just to give you an exact a good
representation of how much thesecompanies are struggling,
Charter Communications is buyingCox for the equivalent of 6.5
times it's next year's EBITDA earnings before interest, tax,
(03:26):
depreciation and multitization. 6.5 times is not a punchy
valuation, right? That is the valuation that you
put on a company that is that isdeclining slowly but declining.
So this is a real story of defensive.
Let's try and get together. There's expected to be $500
million worth of synergies, strength in numbers take on
(03:51):
Comcast, etcetera, etcetera. So it's a, it's not an
acquisition for massive growth, but it's certainly an
acquisition to to keep the lights on.
So look, everyone's interested in what's this love letter then
you've not explained yet. So what?
What's? This letter, yes.
So Chris Winfrey, the CEO of Charter Communications, wrote to
his counterparts at Cox, a guy called Alex Taylor, the CEO, to
(04:16):
basically say, look, you know, are you interested in combining
the two companies? The reason why this is a love
letter is that it was sent from CEO to CEO on Valentine's Day.
So there you go 44 and this is, I really like this.
So it was since on the 14th of February and there was a multi
page letter from Chris Winfrey basically saying, look, you
(04:39):
know, I know we flirted a littlebit.
I know we've chatted for a few years, but I just sensed that
the time is now and there couldn't be a better series of
circumstances for us to hook up now.
You know, it's a good bit of advice for any young person.
Taylor from Cox played hard to get Taylor didn't respond to the
(04:59):
letter for a month. Really, really quite cool, calm
and calculated. You know, when you're desperate
to reply to, to someone that youquite like, just play it cool.
Waited for a month and then as soon as he replied.
Bearing in mind that this company as I said is 127 years
old Cox and has been in the family for as I said 4
(05:20):
generations. This means a lot to Taylor.
And but once it once Taylor responded and they thought there
could be a bit of a shape of thedeal, this thing went super
quickly. So remember love letter was sent
on February the 14th, Taylor responded mid March.
What are we kind of edging towards the end of May.
Now this is just over 2 months for a $34.5 billion acquisition.
(05:47):
And I just want to give you a little bit of color.
This is really like the reporting on this, especially if
you're thinking about what a deal looks like as the momentum
builds. So the advisors, the advisors
include Lion Tree and City on the charter side and Allen and
Co, Evercore and Wells Fargo on the Cox side.
(06:09):
They basically set a five week accelerated due diligence
schedule, which the cherry on top was that the two CEO's
basically said, look, we, we really want to get an
announcement to the markets by 7:00 AM on Monday morning.
This is now last Monday. We're going to do everything we
(06:32):
can to get to hit that deadline,sorry, Friday morning to hit
that deadline of 7:00 AM. So to keep, I'm just going to
read from the article to keep everyone on track.
The night before the deal, lawyers for all of the
stakeholders fueled and at leastone out of office by late night
ice cream order agreed to check in with each other every few
(06:53):
hours. They work through the night and
the announcement hit the news wires 10 minutes before that
7:00 AM deadline. So a really nice representation
of actually real collegiality. Lawyers from both sides,
advisers from both sides, working towards getting some ice
cream, getting the pizzas in andgetting this deal across the
(07:15):
line in two months. And again, for a company that's
been owned for 127 years, that is pretty amazing work.
Fine. Just final thing, having lived
and breathed some of this environment yourself being on
the end of the receiving orders of Stephen, we've got, we've got
5 weeks. What's the first thing as a
(07:36):
lower ranked analyst that goes through your head?
Is it great I get to get anothernotch on my belt, get this deal
accelerated and I can work on the next one?
Or is it first thing is, Oh my goodness, Like that is so
radical fast. That's my life gone for five
weeks. Like how?
What do you think? Yeah, the first thing you do is
(07:56):
you clear the diary, right? You, you text your text your
girlfriend, you text your mum and dad and say sorry, it's
probably not looking great for the next 5 weeks.
Any nice holiday that you've got, Probably forget about it.
You probably have that low. You have that moment where
you're like, oh gosh, here we go.
This is going to be brutal. And then as you kind of get
stuck in, it's like with any job, right?
(08:18):
The almost the starting is the hardest part.
But when you're in and you've got a few people around you and
you can see that deadline comingup and there's momentum that is
being built. The worst thing is when you're
working really, really hard and you just don't think the deal is
going to get done. You think there's going to be a
roadblock or someone's going to come in and and gazump you or
what, or direct or it's going tobe have some kind of regulatory
(08:41):
issue. If you know that you're working
towards this thing and the CEOs are chatting and the price has
been agreed in principle, then it can be quite fun, right.
You know, you know that that five weeks, it's a Sprint to the
finish line, get the ice creams in and then and then, you know,
enjoy the the announcement that comes out on that Friday and
(09:01):
say, actually, yeah, that was that was that was me.
Would they would they slightly give you a couple days off after
that? I mean, how does it work?
Yeah, you would. You would for a, for a Sprint of
that nature, you'd definitely get, you know, certainly you
wouldn't get staffed on anythingnew for a while.
So you might come into the office, but it would be like
dot, you know, dotting IS and crossing T's and you know,
(09:24):
catching up on the things that maybe you you slipped a little
bit on and on the previous five weeks.
Maybe a good opportunity to do that kind of mandatory training,
you know, office health and safety kind of stuff.
OK, cool. Well, let's move on.
Let's talk a little bit about Open AI.
It feels like we've gone at least two months without
mentioning them, so unsurprisingly, they're back in
(09:46):
the news again. But for what reason?
Yeah, this is a really interesting one.
I'm absolutely fascinated by this.
So the headline is open AI acquires AI device startup from
Apple veteran Johnny I've in the$6.5 billion deal I posted.
I put a little photo of them in my notes.
If you Scroll down and you'll beable to see it does look like an
(10:07):
AI generated hug between Johnny,Johnny I've and Sam Altman.
I think there's been there's there's been some ChatGPT going
on there. It doesn't look, doesn't look
real somehow. But maybe Sam Altman isn't real.
Who knows? That's that's another question.
But anyway, so it took me a bunch of time just to figure out
what exactly open AI is acquiring.
(10:30):
So Johnny, I've absolute legend,right?
You know, the, the designer, thebrains or the kind of the
creative skill in partnership with Steve Jobs behind the
iPhone, the iPad, the MacBook, all of the most significant and
and important pieces of consumertechnology, though, that we've
(10:54):
seen over the last 20 years. So he retired from Apple a few
years ago and set up a consultancy, but he also set up
this company IO Lowercase. It's a terrible name.
So $6.5 billion acquisition. We don't know what IO has done.
We don't know what they've created.
(11:14):
We don't know really what they've been working on.
But Sam Altman and Open AI felt compelled to buy this company
for $6.5 billion. Now just to give you a little
bit of stats because this in my,in my reckoning, without knowing
all of the details, this is one of the most expensive AQUI hires
(11:38):
I think I've ever seen in my life, right.
So an acquisition in order to hire, you know, some legends
within that company, basically what Sam Altman saying he's
like, I, I'm willing to pay 6.5 billion for Johnny I've and the
55 engineers that he's assembled.
That works out at $118 million per hire.
(12:02):
So you might be thinking, well, one might be thinking this is
totally bonkers ludicrous payingthis much money.
But again, you know, if, if Johnny I've can contribute to a
piece of hardware that Open AI uses that becomes as legendary
and as important as the iPhone, then $6.5 billion is a drop in
(12:26):
the water. And you know, when we're looking
back and open AI is the 1st $10 trillion company would think
that that's an absolutely geniusmove if Johnny I still has it as
it were. Yeah.
Well, I'm just wondering like, what does this say about what we
thought we knew about open AI strategy?
Because talking hardware there, that seems a world away from
(12:50):
what people were thinking, right?
Yeah, this has always been the criticism, especially of of Meta
actually. So Meta's always been, there's
always been a business model risk at Meta that they don't
own. They don't own a piece of
hardware to house their, to house their software, to house
(13:12):
their apps, to house their social media.
They rely on the iPhone, they rely on Android and Google
devices and Samsung, etcetera. And they've tried and tried and
tried with Oculus and with Meta Ray Bans and with the Facebook
phone way back in 2015. But it's always seemed to be a
bit of a structural weakness in their business model.
Apple, obviously, you know, it'sgot the hardware and the
(13:35):
software. Google, it's got the hardware
with their Google Chromebook andwith their Google phones and
things like that. And they've got the software
that seemed to be a kind of vertical stack and very
defensive. So what, you know, this, this to
me is just right out of the Apple Playbook.
You need to, in order to be a trillion dollar company in this
(13:57):
space, you need to own that software layer, the kind of data
layer and the hardware layer. And I have no idea what this
thing is going to be. A few, you know, the rumours
have come out that it's going tobe screenless and unobtrusive.
Whatever that means is it's not probably going to be a wearable
or a smartphone. I think people, you know, Sam
(14:20):
Altman and Johnny, I believe that that that's done.
You know that that thing is onlygoing to incrementally improve.
So I don't know, look, if anyonewants to put a comment in the
YouTube or on Spotify, what is this thing that is going to be
created that leverages the powerof open AI and ChatGPT, But it's
not a watch and it's not a smartphone and it might not even
(14:42):
have a screen. What is it going to be?
It's going to be an implant. I'm going to get this stuck in
my head. I was thinking exactly that as
you were talking, but it's interesting how with a lot of
big tech, like when Apple had the AI big announcement probably
10 months ago, something like that.
And it's really not come to fruition.
(15:02):
And it's kind of like the cars with Google.
They, they tend to talk about these infantile texts that are
world away, but really big it up.
Whereas this is the complete opposite.
It's like 0 transparency. So the tactic is like, I, I, I
quite enjoy the difference in tactic here.
It's kind of like, let it be abstract and obscure and
(15:23):
undefined. And therefore, can you actually
make that really valuable in terms of how the outside
perception of it will be? Well obviously Open AI is not a
listed company. I would be very interested to
see if it were a listed company,how much the share price would
have risen when the name Johnny I've is associated with that
company. Because what we do know is that
(15:45):
Apple shares dropped 2.3% on theannouncement of this deal.
It's not that Johnny I currentlyworks at Apple.
It's just an adjacency and a kind of a potential reflection
on the back seat that Apple has taken in this AI revolution.
(16:05):
I think there was a thought thatat least Apple could be the
hardware that the people access AI through, even if it doesn't
have the great AI level and is having to, you know, having to
rely on open AI and ChatGPT. But this really reduces
dependence. If it is the product that people
hope it will be, this might really reduce dependence on on
(16:29):
Apple and on its smartphone and and things like that.
So let's watch this space. I think it's going to be really,
really interesting. But look, 180 million, $118
million per person, that's probably the world's most
expensive Aqua. OK.
Well, look, this next segment isprobably going to be incredibly
useful for a lot of students whoare thinking about applications
(16:49):
pending and things of that nature.
So the state of the market through the eyes of Blackstone.
Yeah. Well, look, I tell you what this
this is actually I tell you what, this is a bit of a non
story, but I wanted to raise it anyway.
The actual story that I was going for, I was just looking at
Blackstone share price again, big private equity firm and it
is dropped eight days in a row. This is this is this is what I
(17:11):
wanted to raise the attention ofthe audience.
So year to date, I'm just going to give you a little bit of a
summary. Year to date, Blackstone's down
21%. Year to date, KKR is down 21%.
Year to date, Carlisle's down 14%.
Year to date, Apollo's down 21%.You know, you might, you might
well be thinking they do a very,very similar thing, these four
(17:33):
companies and B is obviously in massive trouble.
And it's definitely worth knowing a little bit about this
even if you're not applying PE roles, but it's a very, very
significant part of the M&A in the deal making market.
So just just a reference. Q Eights, managing director of
the one trillion, their $1 trillion sovereign wealth fund.
(17:55):
Sheikh Saud said last week that the clock is ticking for private
equity. He is really, really worried
about this notion of continuation vehicles.
I call it the kind of pass the parcel.
You have a fund that holds and owns a company that can't exit
it to a strategic or through an IPO at an appropriate valuation.
(18:18):
So the so the organization that owns the fund, the Carlyle or
the KKR, they start a new fund where that fund buys the company
of the old fund, returning capital to the limited partners
of the old fund, but still basically keeping the asset from
actually exiting the ecosystem of that firm.
So super, super bearish on private equity.
(18:41):
And the biggest issue, the biggest issue if you read any
report in private equity at the moment is this to use a trading
term, the bid ask spread. So the way, the way that funds,
private equity funds report their performance to their
(19:02):
limited partners is that they, you know, they value the
holdings of the companies that they own and they are
incentivized to keep the valuations at a certain, not
necessarily inflated, but very optimistic level to show
returns, even though they're paper returns and show, hey,
(19:25):
this funds, you know, 2020 vintage has had 15% IRR or, or,
or returns or whatever it might be year on year.
But then when it actually comes to exiting, they want, you know,
15 times EBITDA for this companyand the market's only willing to
pay 12 times EBITDA. That's when you get that bid ask
spread that is causing all of this problem, all of these
(19:48):
problems. So it's a structural problem
within private equity and what it's led to this is another
really, really interesting part because we teach a lot of
leveraged buyouts and we took wetalk a lot about the role of
leverage in private equity. And the way that we've
previously taught it is, you know, back in the day if KKR was
(20:10):
to do a buyout, it would stuff 70 or 60 or possibly even 80%
debt and put a little bit of their own funds equity into the
deal. This is way of juicing the
equity. Upside in a private equity
transaction, but really, really interesting the the latest
really big deals have come with very, very little debt and a
(20:33):
heck of a lot of equity. So just to give you a couple of
examples of recent transactions.And again, if you're speaking in
an interview environment, this is the level that you need to
get to. So KKR's acquisition of Biotage,
a Swedish drug discovery company. 80% equity, 20% debt.
Sinven acquired Nutrissend, withonly a third expected to be
(20:57):
debt. In fact, KKR publication said
that overall in PE, the percentage of debt in capital
structures over the last five years has fallen from 60% to
35%. So less debts being used by
companies and more equity. Super interesting.
And those interest rates, you know, just looking at the UK for
(21:18):
example, last week you had higher 15 month high in UKCPI
retail sales is absolutely blowing out the water in a
positive sense. Consumer sentiment seemingly as
well in a GGFK reading is still holding up and pretty solid and
interest rate cut expectations have reduced to just one now in
(21:39):
the UK from multiple. So not helping this situation,
right? Not helping this well yeah, it's
it's super interesting why it's definitely one of the reasons
why these private equity buyout funds have swept more to equity
relative to debt. So the yeah, the reasons are
(21:59):
pricey debt. You know it's more expensive
than it was a few years ago and and it isn't going down cost of
debt, cost of borrowing. It's not going down as quickly
as as maybe people thought. The flip side of that is there's
just so much dry powder. I equity ready to invest.
The needs to find a place, right?
(22:20):
It needs to be it needs to be deployed.
So whereas previously the scarceasset or the scarce resource was
equity within a fund, now the scarce resource is low price
debt and equity is abundant. And I guess maybe just around
this off to give a third reason,if you are, you know, if you are
(22:41):
quite uncertain about the futureof the market, whether you're
worried about tariffs, volatility, recession, whatever
it might be, the last thing you want to do is be pumping a load
of debt into a capital structuremakes the company extremely
fragile and extremely susceptible to a downturn in
(23:01):
trading. So maybe you just want to you
want to hold that extra buffer. You maybe you would put 50% debt
into this company and your interest charge would be quite
high. Instead, you're only going to
put 35 giving that little interest, you know, interest
payment or interest service buffer so that you can sleep a
little, a little bit better at night.
(23:23):
All right, well, let's let's move on to Goldman Sachs and
interested to know why are they looking to scale in in the
Middle East? Yeah.
So again, this is a story we've covered a couple of times, but
it's just again at another reiteration of how the Middle
East is becoming the place whereinstead of you're just growing
(23:46):
at 2, three, 4% as a bank or your investment banking
business, which is basically in line with economic growth, maybe
plus or minus a little bit. In the Middle East.
There seem to be a market awash with investable cash, but
without the maturity of an ecosystem or a banking and
(24:08):
advisory ecosystem that is hard to penetrate.
So it's almost that kind of perfect storm.
Add that to the fact that if youremember our main man, Mr.
Trump, doing his tour of the Middle East, getting pledges, I
think over $2 trillion of firepower to be put to work in
the US from Middle East investors.
(24:29):
I don't know if that's, you know, I don't know if that's a
viable number. But if there are these pledges
and the bridge is being built, the investment bridge is being
built between the Middle East and the US Middle East of money
going into US investments, US money going into Middle East IP,
(24:51):
OS and you know, and, and thingslike that, then it makes total
sense to have a big enough presence to manage this growth
in the Middle East as well as inNew York.
Again, it's, it's staggering this, this, this amount of money
that's swirling around in the Middle East, $4 trillion in
assets are held by the 6th largest sovereign wealth funds
(25:11):
in that region. So it's, it's, it's the place to
be. Goldman Sachs are doubling down
in terms of head counts and opening more regional offices
outside of Abu Dhabi. UBS is planning to open a new
office in Abu Dhabi. JP Morgan's adding more than 100
staffers to its business across the Middle East.
(25:32):
It's, I wouldn't necessarily sayit's the new gold rush, but it's
certainly the area where you know, growth is happening.
How do you play this if you're Goldman Sachs or any of these
banks in terms of who you send? So these are, there's a lot of
potential on the table here for fees, but how does it work in
terms of who you would want going to that region and the
(25:55):
appetite of that person to be inthat region and not in New York
or London? It's a very good question.
You would get as you would get the best people that you
possibly can to, to, to go with the highest credibility and
status. I think there's a very important
status element here. You don't just send a bunch of
(26:16):
junior bankers. It's it just doesn't work like
that in this region. Yeah, you pay them incredibly
well. You would leverage the fact that
you'd probably be based in a 0 tax environment and you would
say five years, make hay, off wego.
You know, the pay packet, the incentives are going to be
extremely strong. Don't pay tax.
You know, we'll send your kids to school wherever and, and, and
(26:39):
give it a go. And you will get, I can
guarantee you, you will get enough, enough bankers of a
certain level of seniority that will be interested in that
proposition. And again, there's money to be
made. And for any banker that's
enterprising and there's a little bit kind of gosh, all
right, New York list of companies, they've got their
(27:01):
favorite bankers, very, very hard to break into new markets.
This is the opportunity, right? Yeah, yeah, young upstart, this
is your time to shine. All right, well, look, last one
and we've talked about this before actually a couple of
times, but this is over the caseof several months and I'm.
I'm sure we've got new listeners.
(27:22):
So perhaps this last story aboutVictoria Secrets poison pill
could start with the definition of what is a poison pill as a
reminder. Yeah, absolutely.
Poison Pill is a classic defensive strategy.
Protecting and defending a company and its shareholders
against either a hostile takeover or a a shareholder
(27:47):
adjutant is probably, the way that I would put it, Poison
pill. The structure is relatively
straightforward. It is a dilution, A dilutive
mechanism that makes it really, really difficult for a potential
acquirer who's growing their stake in the business to
actually end up acquiring that company.
(28:09):
And this is how it works. So a company that's worried
about a shareholder building up a stake and eventually
potentially building up a big enough stake that they can
launch a hostile takeover, they will enact what's called a
shareholder rights plan, also known as a poison pill, let's
say, and this is the case in Victoria's Secret.
(28:32):
As soon as an investor acquires that 15% threshold ownership in
a company, it triggers the shareholder rights plan, which
effectively gives existing owners of the common stock,
excluding the 15% owners, the right to buy more shares at a
discount, which dilutes the ownership stake of the adjutant,
(28:55):
making it much harder and much more expensive to gain control.
So if everyone wants this shareholder rights plan was
enacted, if all of the shareholders took up their
discounted share offering, you're effectively turning that
15% stake into a 7.5% stake. You're diluting the ownership of
(29:18):
the adjutant. So in this instance, this
concerns the lingerie company. Victoria's Secret stops falling
43% this year. It's struggling with a lot of
competition and a relatively expensive physical store base.
(29:39):
BBRC International. So this is an Australian entity
controlled by the billionaire Brett Blundy, great name
Australian businessman previously the owner of bras and
things that was his that this isthis was his Australian
equivalent has been building up a 13% stake.
(30:00):
Now This is why the poison pill has been enacted.
But what's interesting about this story is that isn't, I
don't know whether the management and the the board of
Victoria's Secret believed that BBRC and Brett Blundy actually
want to launch a hostile takeover.
(30:20):
They just are really, really an upset and believe that BBRC has
violated US laws with regards topurchases of shares.
You know, and I think it says BBRC bought Victoria's Secret
shares for nearly three years without the required filings,
which was in violation of US antitrust laws.
(30:41):
So it's more like, look, we don't want this bad actor that I
think has probably been breakingthe law to go above 15% because
we don't want this this dude hanging around our company.
Surely he's not breaking the lawbecause he can't be spending
that level of money to pick up that 13% stake at putting at
(31:05):
risk that he's breaching the law.
Like, surely it's too much moneyat stake to take that type of
risk. Yeah, who knows?
Who knows? And I think we'll probably get
updates on this story over the over the next few months.
I, I don't know whether this wasa kind of shot across the
bowels, this was, or this was a kind of a proxy story where the
(31:26):
actual worry is that there's going to be a hostile takeover.
Maybe this was the, the headlineexcuse given for enacting A
shareholder rights plan, but thereal excuse, the real reason is
that they don't want a an aggressive acquirer.
So yeah, there's lots of stuff to dig into here.
I totally agree with you, though.
You know, you're, you're buying.It was 10.3 million shares, 13%
(31:47):
of the company. You're going to want to do that,
right? I don't know, maybe there's
going to be a junior that gets fired somewhere, who knows?
Is there any kind of success rate of poison pills?
Yeah. So interestingly enough, I think
we covered this and maybe we canre release this episode in a,
you know, in a future week. We covered this a number of
(32:09):
months ago. Often poison pills are used as a
negotiating tactic as opposed toa hard stop.
So we are going to introduce a shareholder rights plan in order
to bring the adjutant, the shareholder who's growing their
stake to the table with a more favorable offer, almost moving
(32:31):
something from hostile to friendly, because there's no way
that this this shareholder can do the hostile takeover.
So you might as well come to us and be friendly.
So it's it's definitely one of the tools that you can use to
bring a party to the table. Cool.
And then just quickly to finish,you mentioned what I mentioned
at the top of the show about a very expensive gift that was
(32:52):
issued by a a very famous businessman.
Yeah, So I, I love, I love theselittle headlines.
I think if you read too many of these headlines, they've become
quite normalized. So I just wanted to bring this
out. So this was a, again, a
Bloomberg headline. Google's Sergey Brin give shares
worth $700 million as a gift. Now, we don't know who he's
(33:17):
given that $700 million to. He sold 4.1 million shares,
bearing in mind he's got a personal fortune of over 140
billion. And he's been doing this for the
last few years. In 2023, he offloaded $600
million worth of shares. He did $100 million last
November. And he's obviously got loads of
(33:39):
fingers in different pies. But I just love that concept of
gifting $700 million. There's a little present, a
little pick me up, you know, at the end of a hard week, There
you go. And $700 million doesn't happen
at amplifier, unfortunately. Well, look, he can.
He can pump 700 million into ourpodcast.
And then, yeah, you could see see this show go to a new, new
(34:01):
dimension here. Come on.
Well, you could replace me. You could replace me with AI,
You could, you could get Johnny.I've on it.
Oh, what's it called? Synthesis?
Is it the AI company? We could.
We could get 3D scans of our bodies.
Perfect. And then we could just, yeah,
kick. Back to the sunset, yeah.
The AI's do the work. What are we thinking?
(34:22):
Well, maybe we are actually a ISat the moment and we're just
we're just fooling everyone. But anyway, who knows?
On that note, thank you very much, Stephen.
Thanks everyone for listening and we will see you next week.
Take care. Cheers, Ann.
Hello, and welcome to the show. And we're going back to a
classic format with Steven and I, which is five stories in 5
minutes. So what can you expect?
Well, and a very expensive love letter.
And no, this isn't only fans getting sold potentially for $8
billion. This is the $35 billion deal
between Charter Communications and it's acquisition of Cox
(00:23):
Communications. So we're going to talk about
that one. Also open AI acquiring AI device
startup from Apple veteran Johnny I've and a 6 1/2 billion
dollar deal. We're going to also talk about
private equity because Blackstone are out with their
latest state of the market. Going to also talk about Goldman
Sachs extending its tentacles all over the world, but namely
(00:45):
as are a lot of banks looking toget into the Middle East and
streamlining in AIPAC. And of course, Victoria's Secret
couldn't go an episode without mentioning them.
And also poison pill. I mean, this is you couldn't
make these headlines up. Sexy lingerie and poison pills.
So this is what this show is allabout.
And then if we've got time, there's also a funny story to
(01:10):
finish as well about what could be a gift from your boss that
everyone would love to have. You'll just have to stay tuned
to find out what exactly who that is and what that that gift
was. So Stephen, how are you and and
what's this love letter that you've been telling me about?
Yeah. Thank you so much, Adam.
Well done for getting an only fans reference in so early.
(01:33):
We decided not to cover that $8 billion.
Gosh, yeah. Let's let's leave that one.
Let's park that one. As the as the as the consultants
say, let's, let's start with this $35 billion love letter.
I didn't. I didn't make up the the
headline. This was a, this was a Bloomberg
headline. And I'll go on and talk about
(01:53):
why we're referencing this love letter.
But just to give you a little bit of background on the
transaction, this is one of the biggest, if not the biggest deal
of the year, $34.5 billion acquisition by Charter
Communications, the large listedbroadband cable linear
television company based in the US.
(02:16):
Acquisition of Cox Communications, which is a
family owned, I think 4th or 5thgeneration communications
company started with wire with wireless and radio and now is in
a very similar space to Charter.And this tie up where Cox will
end up holding a 23% stake in the combined company.
(02:40):
This is a classic defensive merger.
Remember these types of companies, they are they are and
have been on the back foot ever since streaming became viable
and omnipresent and the likes ofComcast, which is obviously
Charter's biggest rival in the US.
(03:01):
You'll take a look at that shareprice.
It doesn't make particularly good viewing and Charter
Communications is not that dissimilar.
And just to give you a, just to give you an exact a good
representation of how much thesecompanies are struggling,
Charter Communications is buyingCox for the equivalent of 6.5
times it's next year's EBITDA earnings before interest, tax,
(03:26):
depreciation and multitization. 6.5 times is not a punchy
valuation, right? That is the valuation that you
put on a company that is that isdeclining slowly but declining.
So this is a real story of defensive.
Let's try and get together. There's expected to be $500
million worth of synergies, strength in numbers take on
(03:51):
Comcast, etcetera, etcetera. So it's a, it's not an
acquisition for massive growth, but it's certainly an
acquisition to to keep the lights on.
So look, everyone's interested in what's this love letter then
you've not explained yet. So what?
What's? This letter, yes.
So Chris Winfrey, the CEO of Charter Communications, wrote to
his counterparts at Cox, a guy called Alex Taylor, the CEO, to
(04:16):
basically say, look, you know, are you interested in combining
the two companies? The reason why this is a love
letter is that it was sent from CEO to CEO on Valentine's Day.
So there you go 44 and this is, I really like this.
So it was since on the 14th of February and there was a multi
page letter from Chris Winfrey basically saying, look, you
(04:39):
know, I know we flirted a littlebit.
I know we've chatted for a few years, but I just sensed that
the time is now and there couldn't be a better series of
circumstances for us to hook up now.
You know, it's a good bit of advice for any young person.
Taylor from Cox played hard to get Taylor didn't respond to the
(04:59):
letter for a month. Really, really quite cool, calm
and calculated. You know, when you're desperate
to reply to, to someone that youquite like, just play it cool.
Waited for a month and then as soon as he replied.
Bearing in mind that this company as I said is 127 years
old Cox and has been in the family for as I said 4
(05:20):
generations. This means a lot to Taylor.
And but once it once Taylor responded and they thought there
could be a bit of a shape of thedeal, this thing went super
quickly. So remember love letter was sent
on February the 14th, Taylor responded mid March.
What are we kind of edging towards the end of May.
Now this is just over 2 months for a $34.5 billion acquisition.
(05:47):
And I just want to give you a little bit of color.
This is really like the reporting on this, especially if
you're thinking about what a deal looks like as the momentum
builds. So the advisors, the advisors
include Lion Tree and City on the charter side and Allen and
Co, Evercore and Wells Fargo on the Cox side.
(06:09):
They basically set a five week accelerated due diligence
schedule, which the cherry on top was that the two CEO's
basically said, look, we, we really want to get an
announcement to the markets by 7:00 AM on Monday morning.
This is now last Monday. We're going to do everything we
(06:32):
can to get to hit that deadline,sorry, Friday morning to hit
that deadline of 7:00 AM. So to keep, I'm just going to
read from the article to keep everyone on track.
The night before the deal, lawyers for all of the
stakeholders fueled and at leastone out of office by late night
ice cream order agreed to check in with each other every few
(06:53):
hours. They work through the night and
the announcement hit the news wires 10 minutes before that
7:00 AM deadline. So a really nice representation
of actually real collegiality. Lawyers from both sides,
advisers from both sides, working towards getting some ice
cream, getting the pizzas in andgetting this deal across the
(07:15):
line in two months. And again, for a company that's
been owned for 127 years, that is pretty amazing work.
Fine. Just final thing, having lived
and breathed some of this environment yourself being on
the end of the receiving orders of Stephen, we've got, we've got
5 weeks. What's the first thing as a
(07:36):
lower ranked analyst that goes through your head?
Is it great I get to get anothernotch on my belt, get this deal
accelerated and I can work on the next one?
Or is it first thing is, Oh my goodness, Like that is so
radical fast. That's my life gone for five
weeks. Like how?
What do you think? Yeah, the first thing you do is
(07:56):
you clear the diary, right? You, you text your text your
girlfriend, you text your mum and dad and say sorry, it's
probably not looking great for the next 5 weeks.
Any nice holiday that you've got, Probably forget about it.
You probably have that low. You have that moment where
you're like, oh gosh, here we go.
This is going to be brutal. And then as you kind of get
stuck in, it's like with any job, right?
(08:18):
The almost the starting is the hardest part.
But when you're in and you've got a few people around you and
you can see that deadline comingup and there's momentum that is
being built. The worst thing is when you're
working really, really hard and you just don't think the deal is
going to get done. You think there's going to be a
roadblock or someone's going to come in and and gazump you or
what, or direct or it's going tobe have some kind of regulatory
(08:41):
issue. If you know that you're working
towards this thing and the CEOs are chatting and the price has
been agreed in principle, then it can be quite fun, right.
You know, you know that that five weeks, it's a Sprint to the
finish line, get the ice creams in and then and then, you know,
enjoy the the announcement that comes out on that Friday and
(09:01):
say, actually, yeah, that was that was that was me.
Would they would they slightly give you a couple days off after
that? I mean, how does it work?
Yeah, you would. You would for a, for a Sprint of
that nature, you'd definitely get, you know, certainly you
wouldn't get staffed on anythingnew for a while.
So you might come into the office, but it would be like
dot, you know, dotting IS and crossing T's and you know,
(09:24):
catching up on the things that maybe you you slipped a little
bit on and on the previous five weeks.
Maybe a good opportunity to do that kind of mandatory training,
you know, office health and safety kind of stuff.
OK, cool. Well, let's move on.
Let's talk a little bit about Open AI.
It feels like we've gone at least two months without
mentioning them, so unsurprisingly, they're back in
(09:46):
the news again. But for what reason?
Yeah, this is a really interesting one.
I'm absolutely fascinated by this.
So the headline is open AI acquires AI device startup from
Apple veteran Johnny I've in the$6.5 billion deal I posted.
I put a little photo of them in my notes.
If you Scroll down and you'll beable to see it does look like an
(10:07):
AI generated hug between Johnny,Johnny I've and Sam Altman.
I think there's been there's there's been some ChatGPT going
on there. It doesn't look, doesn't look
real somehow. But maybe Sam Altman isn't real.
Who knows? That's that's another question.
But anyway, so it took me a bunch of time just to figure out
what exactly open AI is acquiring.
(10:30):
So Johnny, I've absolute legend,right?
You know, the, the designer, thebrains or the kind of the
creative skill in partnership with Steve Jobs behind the
iPhone, the iPad, the MacBook, all of the most significant and
and important pieces of consumertechnology, though, that we've
(10:54):
seen over the last 20 years. So he retired from Apple a few
years ago and set up a consultancy, but he also set up
this company IO Lowercase. It's a terrible name.
So $6.5 billion acquisition. We don't know what IO has done.
We don't know what they've created.
(11:14):
We don't know really what they've been working on.
But Sam Altman and Open AI felt compelled to buy this company
for $6.5 billion. Now just to give you a little
bit of stats because this in my,in my reckoning, without knowing
all of the details, this is one of the most expensive AQUI hires
(11:38):
I think I've ever seen in my life, right.
So an acquisition in order to hire, you know, some legends
within that company, basically what Sam Altman saying he's
like, I, I'm willing to pay 6.5 billion for Johnny I've and the
55 engineers that he's assembled.
That works out at $118 million per hire.
(12:02):
So you might be thinking, well, one might be thinking this is
totally bonkers ludicrous payingthis much money.
But again, you know, if, if Johnny I've can contribute to a
piece of hardware that Open AI uses that becomes as legendary
and as important as the iPhone, then $6.5 billion is a drop in
(12:26):
the water. And you know, when we're looking
back and open AI is the 1st $10 trillion company would think
that that's an absolutely geniusmove if Johnny I still has it as
it were. Yeah.
Well, I'm just wondering like, what does this say about what we
thought we knew about open AI strategy?
Because talking hardware there, that seems a world away from
(12:50):
what people were thinking, right?
Yeah, this has always been the criticism, especially of of Meta
actually. So Meta's always been, there's
always been a business model risk at Meta that they don't
own. They don't own a piece of
hardware to house their, to house their software, to house
(13:12):
their apps, to house their social media.
They rely on the iPhone, they rely on Android and Google
devices and Samsung, etcetera. And they've tried and tried and
tried with Oculus and with Meta Ray Bans and with the Facebook
phone way back in 2015. But it's always seemed to be a
bit of a structural weakness in their business model.
Apple, obviously, you know, it'sgot the hardware and the
(13:35):
software. Google, it's got the hardware
with their Google Chromebook andwith their Google phones and
things like that. And they've got the software
that seemed to be a kind of vertical stack and very
defensive. So what, you know, this, this to
me is just right out of the Apple Playbook.
You need to, in order to be a trillion dollar company in this
(13:57):
space, you need to own that software layer, the kind of data
layer and the hardware layer. And I have no idea what this
thing is going to be. A few, you know, the rumours
have come out that it's going tobe screenless and unobtrusive.
Whatever that means is it's not probably going to be a wearable
or a smartphone. I think people, you know, Sam
(14:20):
Altman and Johnny, I believe that that that's done.
You know that that thing is onlygoing to incrementally improve.
So I don't know, look, if anyonewants to put a comment in the
YouTube or on Spotify, what is this thing that is going to be
created that leverages the powerof open AI and ChatGPT, But it's
not a watch and it's not a smartphone and it might not even
(14:42):
have a screen. What is it going to be?
It's going to be an implant. I'm going to get this stuck in
my head. I was thinking exactly that as
you were talking, but it's interesting how with a lot of
big tech, like when Apple had the AI big announcement probably
10 months ago, something like that.
And it's really not come to fruition.
(15:02):
And it's kind of like the cars with Google.
They, they tend to talk about these infantile texts that are
world away, but really big it up.
Whereas this is the complete opposite.
It's like 0 transparency. So the tactic is like, I, I, I
quite enjoy the difference in tactic here.
It's kind of like, let it be abstract and obscure and
(15:23):
undefined. And therefore, can you actually
make that really valuable in terms of how the outside
perception of it will be? Well obviously Open AI is not a
listed company. I would be very interested to
see if it were a listed company,how much the share price would
have risen when the name Johnny I've is associated with that
company. Because what we do know is that
(15:45):
Apple shares dropped 2.3% on theannouncement of this deal.
It's not that Johnny I currentlyworks at Apple.
It's just an adjacency and a kind of a potential reflection
on the back seat that Apple has taken in this AI revolution.
(16:05):
I think there was a thought thatat least Apple could be the
hardware that the people access AI through, even if it doesn't
have the great AI level and is having to, you know, having to
rely on open AI and ChatGPT. But this really reduces
dependence. If it is the product that people
hope it will be, this might really reduce dependence on on
(16:29):
Apple and on its smartphone and and things like that.
So let's watch this space. I think it's going to be really,
really interesting. But look, 180 million, $118
million per person, that's probably the world's most
expensive Aqua. OK.
Well, look, this next segment isprobably going to be incredibly
useful for a lot of students whoare thinking about applications
(16:49):
pending and things of that nature.
So the state of the market through the eyes of Blackstone.
Yeah. Well, look, I tell you what this
this is actually I tell you what, this is a bit of a non
story, but I wanted to raise it anyway.
The actual story that I was going for, I was just looking at
Blackstone share price again, big private equity firm and it
is dropped eight days in a row. This is this is this is what I
(17:11):
wanted to raise the attention ofthe audience.
So year to date, I'm just going to give you a little bit of a
summary. Year to date, Blackstone's down
21%. Year to date, KKR is down 21%.
Year to date, Carlisle's down 14%.
Year to date, Apollo's down 21%.You know, you might, you might
well be thinking they do a very,very similar thing, these four
(17:33):
companies and B is obviously in massive trouble.
And it's definitely worth knowing a little bit about this
even if you're not applying PE roles, but it's a very, very
significant part of the M&A in the deal making market.
So just just a reference. Q Eights, managing director of
the one trillion, their $1 trillion sovereign wealth fund.
(17:55):
Sheikh Saud said last week that the clock is ticking for private
equity. He is really, really worried
about this notion of continuation vehicles.
I call it the kind of pass the parcel.
You have a fund that holds and owns a company that can't exit
it to a strategic or through an IPO at an appropriate valuation.
(18:18):
So the so the organization that owns the fund, the Carlyle or
the KKR, they start a new fund where that fund buys the company
of the old fund, returning capital to the limited partners
of the old fund, but still basically keeping the asset from
actually exiting the ecosystem of that firm.
So super, super bearish on private equity.
(18:41):
And the biggest issue, the biggest issue if you read any
report in private equity at the moment is this to use a trading
term, the bid ask spread. So the way, the way that funds,
private equity funds report their performance to their
(19:02):
limited partners is that they, you know, they value the
holdings of the companies that they own and they are
incentivized to keep the valuations at a certain, not
necessarily inflated, but very optimistic level to show
returns, even though they're paper returns and show, hey,
(19:25):
this funds, you know, 2020 vintage has had 15% IRR or, or,
or returns or whatever it might be year on year.
But then when it actually comes to exiting, they want, you know,
15 times EBITDA for this companyand the market's only willing to
pay 12 times EBITDA. That's when you get that bid ask
spread that is causing all of this problem, all of these
(19:48):
problems. So it's a structural problem
within private equity and what it's led to this is another
really, really interesting part because we teach a lot of
leveraged buyouts and we took wetalk a lot about the role of
leverage in private equity. And the way that we've
previously taught it is, you know, back in the day if KKR was
(20:10):
to do a buyout, it would stuff 70 or 60 or possibly even 80%
debt and put a little bit of their own funds equity into the
deal. This is way of juicing the
equity. Upside in a private equity
transaction, but really, really interesting the the latest
really big deals have come with very, very little debt and a
(20:33):
heck of a lot of equity. So just to give you a couple of
examples of recent transactions.And again, if you're speaking in
an interview environment, this is the level that you need to
get to. So KKR's acquisition of Biotage,
a Swedish drug discovery company. 80% equity, 20% debt.
Sinven acquired Nutrissend, withonly a third expected to be
(20:57):
debt. In fact, KKR publication said
that overall in PE, the percentage of debt in capital
structures over the last five years has fallen from 60% to
35%. So less debts being used by
companies and more equity. Super interesting.
And those interest rates, you know, just looking at the UK for
(21:18):
example, last week you had higher 15 month high in UKCPI
retail sales is absolutely blowing out the water in a
positive sense. Consumer sentiment seemingly as
well in a GGFK reading is still holding up and pretty solid and
interest rate cut expectations have reduced to just one now in
(21:39):
the UK from multiple. So not helping this situation,
right? Not helping this well yeah, it's
it's super interesting why it's definitely one of the reasons
why these private equity buyout funds have swept more to equity
relative to debt. So the yeah, the reasons are
(21:59):
pricey debt. You know it's more expensive
than it was a few years ago and and it isn't going down cost of
debt, cost of borrowing. It's not going down as quickly
as as maybe people thought. The flip side of that is there's
just so much dry powder. I equity ready to invest.
The needs to find a place, right?
(22:20):
It needs to be it needs to be deployed.
So whereas previously the scarceasset or the scarce resource was
equity within a fund, now the scarce resource is low price
debt and equity is abundant. And I guess maybe just around
this off to give a third reason,if you are, you know, if you are
(22:41):
quite uncertain about the futureof the market, whether you're
worried about tariffs, volatility, recession, whatever
it might be, the last thing you want to do is be pumping a load
of debt into a capital structuremakes the company extremely
fragile and extremely susceptible to a downturn in
(23:01):
trading. So maybe you just want to you
want to hold that extra buffer. You maybe you would put 50% debt
into this company and your interest charge would be quite
high. Instead, you're only going to
put 35 giving that little interest, you know, interest
payment or interest service buffer so that you can sleep a
little, a little bit better at night.
(23:23):
All right, well, let's let's move on to Goldman Sachs and
interested to know why are they looking to scale in in the
Middle East? Yeah.
So again, this is a story we've covered a couple of times, but
it's just again at another reiteration of how the Middle
East is becoming the place whereinstead of you're just growing
(23:46):
at 2, three, 4% as a bank or your investment banking
business, which is basically in line with economic growth, maybe
plus or minus a little bit. In the Middle East.
There seem to be a market awash with investable cash, but
without the maturity of an ecosystem or a banking and
(24:08):
advisory ecosystem that is hard to penetrate.
So it's almost that kind of perfect storm.
Add that to the fact that if youremember our main man, Mr.
Trump, doing his tour of the Middle East, getting pledges, I
think over $2 trillion of firepower to be put to work in
the US from Middle East investors.
(24:29):
I don't know if that's, you know, I don't know if that's a
viable number. But if there are these pledges
and the bridge is being built, the investment bridge is being
built between the Middle East and the US Middle East of money
going into US investments, US money going into Middle East IP,
(24:51):
OS and you know, and, and thingslike that, then it makes total
sense to have a big enough presence to manage this growth
in the Middle East as well as inNew York.
Again, it's, it's staggering this, this, this amount of money
that's swirling around in the Middle East, $4 trillion in
assets are held by the 6th largest sovereign wealth funds
(25:11):
in that region. So it's, it's, it's the place to
be. Goldman Sachs are doubling down
in terms of head counts and opening more regional offices
outside of Abu Dhabi. UBS is planning to open a new
office in Abu Dhabi. JP Morgan's adding more than 100
staffers to its business across the Middle East.
(25:32):
It's, I wouldn't necessarily sayit's the new gold rush, but it's
certainly the area where you know, growth is happening.
How do you play this if you're Goldman Sachs or any of these
banks in terms of who you send? So these are, there's a lot of
potential on the table here for fees, but how does it work in
terms of who you would want going to that region and the
(25:55):
appetite of that person to be inthat region and not in New York
or London? It's a very good question.
You would get as you would get the best people that you
possibly can to, to, to go with the highest credibility and
status. I think there's a very important
status element here. You don't just send a bunch of
(26:16):
junior bankers. It's it just doesn't work like
that in this region. Yeah, you pay them incredibly
well. You would leverage the fact that
you'd probably be based in a 0 tax environment and you would
say five years, make hay, off wego.
You know, the pay packet, the incentives are going to be
extremely strong. Don't pay tax.
You know, we'll send your kids to school wherever and, and, and
(26:39):
give it a go. And you will get, I can
guarantee you, you will get enough, enough bankers of a
certain level of seniority that will be interested in that
proposition. And again, there's money to be
made. And for any banker that's
enterprising and there's a little bit kind of gosh, all
right, New York list of companies, they've got their
(27:01):
favorite bankers, very, very hard to break into new markets.
This is the opportunity, right? Yeah, yeah, young upstart, this
is your time to shine. All right, well, look, last one
and we've talked about this before actually a couple of
times, but this is over the caseof several months and I'm.
I'm sure we've got new listeners.
(27:22):
So perhaps this last story aboutVictoria Secrets poison pill
could start with the definition of what is a poison pill as a
reminder. Yeah, absolutely.
Poison Pill is a classic defensive strategy.
Protecting and defending a company and its shareholders
against either a hostile takeover or a a shareholder
(27:47):
adjutant is probably, the way that I would put it, Poison
pill. The structure is relatively
straightforward. It is a dilution, A dilutive
mechanism that makes it really, really difficult for a potential
acquirer who's growing their stake in the business to
actually end up acquiring that company.
(28:09):
And this is how it works. So a company that's worried
about a shareholder building up a stake and eventually
potentially building up a big enough stake that they can
launch a hostile takeover, they will enact what's called a
shareholder rights plan, also known as a poison pill, let's
say, and this is the case in Victoria's Secret.
(28:32):
As soon as an investor acquires that 15% threshold ownership in
a company, it triggers the shareholder rights plan, which
effectively gives existing owners of the common stock,
excluding the 15% owners, the right to buy more shares at a
discount, which dilutes the ownership stake of the adjutant,
(28:55):
making it much harder and much more expensive to gain control.
So if everyone wants this shareholder rights plan was
enacted, if all of the shareholders took up their
discounted share offering, you're effectively turning that
15% stake into a 7.5% stake. You're diluting the ownership of
(29:18):
the adjutant. So in this instance, this
concerns the lingerie company. Victoria's Secret stops falling
43% this year. It's struggling with a lot of
competition and a relatively expensive physical store base.
(29:39):
BBRC International. So this is an Australian entity
controlled by the billionaire Brett Blundy, great name
Australian businessman previously the owner of bras and
things that was his that this isthis was his Australian
equivalent has been building up a 13% stake.
(30:00):
Now This is why the poison pill has been enacted.
But what's interesting about this story is that isn't, I
don't know whether the management and the the board of
Victoria's Secret believed that BBRC and Brett Blundy actually
want to launch a hostile takeover.
(30:20):
They just are really, really an upset and believe that BBRC has
violated US laws with regards topurchases of shares.
You know, and I think it says BBRC bought Victoria's Secret
shares for nearly three years without the required filings,
which was in violation of US antitrust laws.
(30:41):
So it's more like, look, we don't want this bad actor that I
think has probably been breakingthe law to go above 15% because
we don't want this this dude hanging around our company.
Surely he's not breaking the lawbecause he can't be spending
that level of money to pick up that 13% stake at putting at
(31:05):
risk that he's breaching the law.
Like, surely it's too much moneyat stake to take that type of
risk. Yeah, who knows?
Who knows? And I think we'll probably get
updates on this story over the over the next few months.
I, I don't know whether this wasa kind of shot across the
bowels, this was, or this was a kind of a proxy story where the
(31:26):
actual worry is that there's going to be a hostile takeover.
Maybe this was the, the headlineexcuse given for enacting A
shareholder rights plan, but thereal excuse, the real reason is
that they don't want a an aggressive acquirer.
So yeah, there's lots of stuff to dig into here.
I totally agree with you, though.
You know, you're, you're buying.It was 10.3 million shares, 13%
(31:47):
of the company. You're going to want to do that,
right? I don't know, maybe there's
going to be a junior that gets fired somewhere, who knows?
Is there any kind of success rate of poison pills?
Yeah. So interestingly enough, I think
we covered this and maybe we canre release this episode in a,
you know, in a future week. We covered this a number of
(32:09):
months ago. Often poison pills are used as a
negotiating tactic as opposed toa hard stop.
So we are going to introduce a shareholder rights plan in order
to bring the adjutant, the shareholder who's growing their
stake to the table with a more favorable offer, almost moving
(32:31):
something from hostile to friendly, because there's no way
that this this shareholder can do the hostile takeover.
So you might as well come to us and be friendly.
So it's it's definitely one of the tools that you can use to
bring a party to the table. Cool.
And then just quickly to finish,you mentioned what I mentioned
at the top of the show about a very expensive gift that was
(32:52):
issued by a a very famous businessman.
Yeah, So I, I love, I love theselittle headlines.
I think if you read too many of these headlines, they've become
quite normalized. So I just wanted to bring this
out. So this was a, again, a
Bloomberg headline. Google's Sergey Brin give shares
worth $700 million as a gift. Now, we don't know who he's
(33:17):
given that $700 million to. He sold 4.1 million shares,
bearing in mind he's got a personal fortune of over 140
billion. And he's been doing this for the
last few years. In 2023, he offloaded $600
million worth of shares. He did $100 million last
November. And he's obviously got loads of
(33:39):
fingers in different pies. But I just love that concept of
gifting $700 million. There's a little present, a
little pick me up, you know, at the end of a hard week, There
you go. And $700 million doesn't happen
at amplifier, unfortunately. Well, look, he can.
He can pump 700 million into ourpodcast.
And then, yeah, you could see see this show go to a new, new
(34:01):
dimension here. Come on.
Well, you could replace me. You could replace me with AI,
You could, you could get Johnny.I've on it.
Oh, what's it called? Synthesis?
Is it the AI company? We could.
We could get 3D scans of our bodies.
Perfect. And then we could just, yeah,
kick. Back to the sunset, yeah.
The AI's do the work. What are we thinking?
(34:22):
Well, maybe we are actually a ISat the moment and we're just
we're just fooling everyone. But anyway, who knows?
On that note, thank you very much, Stephen.
Thanks everyone for listening and we will see you next week.
Take care. Cheers, Ann.
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