_{DEAL OF THE MONTH}

Charter and Cox Tie the Knot

OnlyFans, Dick’s, and Cox have announced $45 billion of transactions this month.

At this point, I’m half convinced Dick’s and Cox saw the OnlyFans valuation and just tried to ride the gravy train. Stranger things have shown up in pitch decks - trust me.

That said, somewhere on a Blade to the Hamptons is a banker who just had a career defining deal after advising Charter on its $34.5 billion acquisition of Cox Communications.

Cox Communications is part of Cox Enterprises, a privately held conglomerate that also owns a smattering of other unrelated businesses — none of which are part of this deal. For handing over its cable division, Cox Enterprises will receive:

• $4 billion in cash

• $6 billion of convertible preferred units at a 6.875% coupon

• ~33.6 million common units in Charter at an implied value of $11.9 billion.

• Oh, and just for fun, Charter is also assuming Cox’s $12 billion of outstanding debt.

When the dust settles, Cox Enterprises will own roughly 23% of Charter’s fully diluted share count (as of March 31, 2025).

This has to be a home run for Charter, right? The strategic rationale is a beefed-up footprint in streaming and advertising to take on Big Tech. I’m sure the execs in SF are quaking in their Allbirds. Not.

Charter expects $500 million of cost synergies achieved within three years of close, mostly from overhead savings. Said differently, Charter will be cutting the cord with a lot of duplicative email signatures.

Charter stock has had a solid year, but dipped ~5% since the deal was announced. Not shocking given the scale and anticipated dilution. But to Charter’s credit, the purchase price is not egregious - the deal being struck at 6.4x 2025E EBITDA, which these days is pretty reasonable compared to some of the multiples we have seen these past few weeks.

Sure, this deal has strategic value. But let’s be honest - in cable, Cox size does matter.

_{NEWS ROUNDUP}

Top Reads

• Mark Cuban sports-focused $750 million private equity fund launches

• Salesforce to acquire Informatica in $8 billion deal

• Hailey Bieber's makeup brand sold to e.l.f. in $1bn deal

• US Government to receive golden share in US Steel x Nippon Merger

• William Sonoma acquires Dormify’s intellectual property

• Gemspring Capital acquires Goodyear’s chemical business for $650 million

• C5 Capital raises $750 million nuclear energy fund

• NYC Pension System sold $5 billion of private equity holdings on the secondaries market

• Foreign LPs begin to pull pack from US private equity

• ChatGPT o3 model refuses shutdown in test, raising safety concerns

• Levi Strauss to sell Dockers for $311 million

_{PRESENTED BY PACASO}

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_{STRATEGIC DEAL OF THE MONTH}

NRG Gets Gassy

I’ve missed deals in unsexy industries. We’ve been drowning in tech and consumer fluff, it’s time to roll up our sleeves, get dirty, and remember that sometimes the biggest price tags show up where you least expect them.

In a move reminiscent of your VP’s motto in college - go big or blackout - NRG is dropping $12 billion to acquire LS Power’s natural gas portfolio and virtual power plant platform.

The haul includes 18 natural gas-fired plants across nine states, generating 13 gigawatts of power — effectively doubling NRG’s capacity to ~25 gigawatts.

The deal’s consideration breaks down to $2.8 billion in common stock, $6.4 billion in new debt, and $3.2 billion in assumed net debt. And yes, all modeled with zero synergies. That’s about as conservative as it gets in this market

The deal is expected to be immediately accretive beginning in 2025 and ludicrously accretive through 2029. I’ll believe that when I see it, but the near term synergies do check out.

I’ve harped on this before, but it bears repeating: in old economy industries like gas-fired power, investors seek capital returns, not vibes, not narratives, not everyone’s favorite two letters “AI,” just cold, hard cash.

With that in mind, you would think that adding some debt to the balance sheet would scare shareholders, but interestingly the capital returns to shareholders remain unchanged under the acquisition - likely due to the additional cashflow provided by the LS Power assets.

Now for everyone’s favorite segment - what happened to the acquirer’s share price? Well, let’s just say NRG shareholders were gassed up about the deal. Shares rocketed 25% on the day of announcement and the price is up ~44% over the past month. No notes, great execution. 

This is an absolutely transformational deal for NRG, and one we will be watching closely to see how it plays out. All signs point to it being a home run, but in power markets (and baseball) - it’s not over till the blackout.  

_{SPONSOR DEAL OF THE MONTH}

Blackstone Bets on YEEBITHAW

First they came for your sandwiches. Now they’re coming for your light bill.

Next time you leave Jersey Mike’s crying because there’s a line item for “Blackstone carry” on your receipt, just know, it’s also coming to your power bill.

Blackstone is scooping up TXNM in an $11.5 billion all-cash deal at a 23% premium to the unaffected share price. Generously, they’re even letting TXNM keep paying dividends through closing.

Blackstone’s also throwing in $400 million in equity via 8 million new shares of TXNM in June 2025, maybe that’s why they kept the dividends flowing. TXNM will tack on another $400 million in equity pre-closing, but notably, no incremental debt is being issued to fund the buyout.

The deal isn’t exactly controversial. Blackstone has big dollars and needs big targets, so picking up a large utility in the Southwest checks out.

This is also a pretty standard infrastructure play driven by consistent cashflows. If you need proof, TXNM has paid dividends since May 1996, meaning its dividend history is older than most of your VPs’ hairlines.

While this deal may not seem like anything special, it is a perfect example of what I mentioned last week, how target stocks are increasingly pricing in regulatory risk.

TXNM has traded up, but only to $56.72, well below the $61.25 offering price that Blackstone is proposing.

I would hazard a guess that the main reason for this is the level of approvals required to get this deal done. There are so many approvals, in fact, that the deal likely will not close until H2’26. 

In M&A, you usually anticipate that you may have to deal with some anti-trust filings that may hinder deals, but in most cases, those used to be a formality, though that is changing in recent years due to US government policy.

When you buy a utility, however, you are almost guaranteed to spend more on lawyers than you’ll earn in carry.

No seriously, this deal has to get approvals from state level regulators in New Mexico and Texas, the Federal Energy Regulatory Commission (notoriously slow), the Department of Justice, the Federal Communications Commission, and even the Nuclear Regulatory Commission.

If that alphabet soup of agencies doesn’t scare you, there are plenty of law firms looking for good antitrust associates to toil away in the layers of bureaucracy.

Blackstone’s clearly factored in the risks but I still wish their associates luck as they navigate filings across six federal agencies, all with Word templates last updated sometime between Chernobyl and Y2K.