_{DEAL OF THE MONTH}

BlackRock Bets Big on Private Credit

Happy Tuesday, folks. While deal flow is slowing down as the year ends, leave it to the megafunds to drop one of the biggest deals of the year during the final stretch (RIP to whatever analyst cranked on this over Thanksgiving).

You are probably asking yourself how a non-food deal won Deal of the Month this month, but let me tell you - BlackRock paying $12 billion for HPS was too good of an offer for even me to pass up.

This acquisition combines HPS’s $148 billion in client assets with BlackRock’s existing $89 billion private debt platform, creating one of the most comprehensive private credit offerings in the market. The move positions BlackRock alongside private credit heavyweights like KKR and Apollo, significantly boosting its presence in the fast-growing alternative investments space.

The acquisition is a huge win for BlackRock as it will increase its Private Credit AUM by ~$14 billion, and drop BlackRock in the top five private credit firms by AUM.

Additionally, HPS will add ~$850 million of fees to BlackRock, and increase private market management fees by ~35% to over $2.5 billion.

There is also some solid strategic rationale for the deal, which interestingly includes relatively limited overlap in LPs - only 6% in private credit - (which given the size of BlackRock is shocking). Additionally, HPS adds a $20 billion retail private credit platform, which BlackRock intends to leverage as well.

BlackRock’s push into private capital is part of its larger strategy to diversify revenue streams beyond its core ETF and index fund business. The firm has been steadily building its alternative asset portfolio, including the $13 billion acquisition of Global Infrastructure Partners and the $3.2 billion purchase of Preqin earlier this year.

Even with this acquisition, BlackRock’s $400 billion alternative asset portfolio remains a small fraction of its $11 trillion in total AUM.

But private credit is a high-growth market and BlackRock’s move here aligns with broader industry trends as private capital valuations soar and investors seek higher returns in non-traditional asset classes.

All in all, this is a huge deal for BlackRock and an awesome deal for the HPS team. Hopefully the HPS guys get a well deserved celebration over the holidays, though they may not be able to margin loan their BlackRock shares yet.

_{PRESENTED BY SENSATE}

Investors: Don’t Sleep On This ‘Minicorn’ Opportunity

As the wellness economy outshines the green economy, IT, pharmaceuticals and even sports in market value, top VCs are backing Sensate’s sleep and relaxation product, called Innovation Of The Year (Time) and recipient of the Smart Sleep Award (Real Simple).

Why investors are lining up for this ‘minicorn’ of the wellness tech sector:

• Strong Demand: 65M+ Sensate minutes delivered in 50+ countries 

• High Subscription Engagement: A 50% attach rate and 2x engagement for the Plus subscription 

• Path to Profitability: Projected to achieve profitability with this fundraising round

• Revenue-raising: $17M+ in cumulative revenue ($5.32M net revenue in 2023)

Invest today and join Incisive Ventures, TenOneTen, Capital Factory, and other top VCs.

_{NEWS ROUNDUP}

Top Reads

• Apollo targets $25 billion fund

• TPG, Blackstone said to be bidding $14 billion for Bausch + Lomb 

• Sixth Street invests $4 billion in Affirm

• The drugs young bankers use to get through the day—and night

• Hawk Tuah meme coin crashes immediately after launch

• BlackRock launches private market funds aimed at wealthy investors

• Private equity group EQT backs six-a-side football competition

• British hedge fund trader jailed in Denmark over ‘cum-ex’ tax fraud

• Databricks nears record $9.5 billion VC raise

• Constellation Wealth Capital raises $1 billion to back financial advisers today

• Medical-apparel maker Figs gets takeover bid from private-equity firm 

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_{STRATEGIC DEAL OF THE MONTH}

Northern Star Sees De Grey as a Golden Opportunity

G’day mate - welcome to the down under edition of Buysiders. Today we have an international deal all the way from the other side of the globe as gold prices continue to hum along.

What deal are our Australian friends putting on the barbie? A casual $3.3 billion acquisition as Northern Star acquires De Grey in an all stock transaction. Each De Grey shareholder will receive 0.119 new Northern Star shares, which implies a 37.1% premium to the last close, or a ~44% premium to the 30-day VWAP.

Let’s take a closer look at the two players. Northern Star is one of Australia’s largest gold producers, with a diversified portfolio of high-quality, low-cost mines in Western Australia and a stake in a more adventurous project in Alaska.

De Grey, on the other hand, is a rising star in the gold sector, with its flagship Hemi gold project positioning it as one of the most exciting junior mining companies in Australia. De Grey has made a name for itself with its exploration success and the potential of Hemi to become one of Australia’s largest undeveloped gold assets.

De Grey adds the Hemi project to Northern Star’s portfolio, which is located in Western Australia located near Northern Star’s existing assets.

In mining, the key item investors focus on is the cost curve. The reason why investors are so focused on it is because in a commodity business you are a slave to the price, so the only thing that you can control is the costs of your operations.

The Hemi project is expected to be in the first quartile of the cost curve, which means that prices could basically halve and this project should still generate cash flow (though in reality, this almost never happens).

Pro forma for the transaction, De Grey shareholders will own ~20% of the combined Northern Star, and it’s clear that all shareholders are supportive of this deal. Northern Star and De Grey have traded up above the increase in gold price, implying that there have been company level successes beyond the impact of pricing. No but seriously, De Grey is up 85% in the past 6 months.

The gold market has pretty frequent M&A as junior project developers are acquired by larger producers / developers who look to snap up projects after the initial exploration is done. This deal is pretty large though, which implies that the gold market may be heating up, and we are excited to see if any other M&A follows suit.

_{UNSOLICITED BID OF THE MONTH}

Mondelez is Hungry for a Deal

What did you think I was going to go two weeks without talking about food? In this economy? Please.

This has been a huge year in food, especially snacks, with the Mars / Kellanova deal a serious contender for deal of the year, and this potential deal did not disappoint either.

Mondelez, maker of America’s favorite cookie - the Oreo - made an unsolicited offer for Hershey’s which caused Hershey’s to trade up to ~$41 billion, or ~16% to the unaffected share price.

Mondelez, on the other hand, fell ~3% on the news down to an ~$82 billion market cap. If successful, this merger would create a snack empire with combined annual sales of nearly $50 billion, cementing Mondelez’s dominance in the U.S. chocolate market.

What adds complexity here is Hershey’s split ownership structure. The Hershey Trust Company, established by Milton Hershey in 1905, controls ~80% of the voting power and ultimately has the final say. True to form, the Trust has already rejected this offer, just as it did back in 2016 when Mondelez made a $23 billion bid. Talk about a tough cookie to crack.

While analysts are divided on the strategic merits of the deal, there’s no denying the challenges Mondelez faces. The Hershey Trust’s focus on preserving Milton Hershey’s legacy and its philanthropic mission—funding the Milton Hershey School—makes selling a hard pill to swallow. Meanwhile, Hershey’s rising cocoa costs and shifting consumer preferences toward healthier snacks further complicate the equation.

One of these snack companies seriously needs to throw us a sponsorship since we cover every deal they make—but until then, we’ll be watching closely to see if Mondelez can finally sweeten the pot enough to win over the Hershey Trust.