_{DEAL OF THE MONTH}

Sometimes It’s Good to be a Dick

ED pills, Dick’s and feet - what kind of newsletter am I writing here?

Dick’s recently did some sole searching, and at the end, it arrived on a $2.5 billion buyout of Foot Locker.

While the scale of the deal itself isn’t crazy, it does have some interesting consideration similar to other deals we have looked at recently. Dick’s is giving Foot Locker shareholders the option to elect receiving either $24 / share in cash or 0.1168 shares of Dick’s per share of Foot Locker.

Even in an all-cash scenario, they’re not sweating leverage, they’re upsizing their revolver to $2 billion and staying committed to maintaining their IG rating (unlike, say, the U.S. government).

What is really raising eyebrows though is the valuation…

The deal is being done at a 6.3x TEV / EBITDA multiple, which is pretty much market standard. While the multiple itself isn’t offensive, the premium is. I think even your marketing girlfriend can tell you when the deal was announced based on the below share price graph.

Yes, you are reading that correctly. Foot Locker’s share price went up 85%(!!!) on the back of this announcement. Whoever said brick-and-mortar was dead clearly underestimated the power of Dick’s.

On the other hand, Dick’s is down ~14% since the merger was announced, which isn’t totally shocking. After all, a near 100% premium can be tough to swallow.

This deal is genuinely fascinating simply because of the hefty premium paid. Some hedge fund analyst probably feels like a genius right now, but I just hope that Dick’s doesn’t suffer from any Earnings Dysfunction as a result of this deal. Additionally, congrats to the Foot Locker shareholders on proving what OnlyFans girls realized a long time ago go - people will pay up for foot stuff.

_{NEWS ROUNDUP}

Top Reads

• Charter Communications Announces $21.9 Billion Acquisition of Cox Communications

• Blackstone Acquires Electricity Provider TXNM Energy for $11.5 Billion

• Robinhood’s Big Move into Canada: A $179M Deal for WonderFi

• iCapital Snaps Up Citi’s Alternative Fund Platform in Latest Wealth Power Play

• Private-Equity Firm TSG Consumer to Buy Budget Gym Chain in Latest Fitness Deal

• US Credit Rating Downgraded by Moodys

• US Consumer Sentiment Falls on Tariff Fears

• Pan American Silver Acquires MAG Silver for $2.1 Billion

• Michael Burry Sells All Holdings Except Estée Lauder

• Blue Owl Capital Raises $7 Billion Digital Infrastructure Fund

• DigitalBridge To Be Acquired by Josh Harris’ 26North and Mercuria

• Perplexity AI raises $500 million at a $14 billion valuation

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_{STRATEGIC DEAL OF THE MONTH}

Sunoco Takes a Stroll Through the Park(land)

So how about them deals, eh? While Trump is out here trying to annex Canada, Sunoco just skipped a step and acquired one of the largest oil companies in Canada for $9.1 billion.

The consideration will be a mixture of cash and shares. Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 / share. This represents a 25% premium to the 7-day VWAP prior to announcement.

The split of consideration is $3.0 billion of equity issued, $2.6 billion of cash funded by a bridge facility which will be replaced by a permanent facility in due course, and the assumption of $3.5 billion of net debt.

To make this work, Sunoco is creating a new parentco (SUNCorp) so that distributions can flow more cleanly. The result: the largest fuel distributor in the Americas and third-largest globally.

The pro forma company will be the largest fuel distributor in the Americas and the third largest in the world, bumping Sunoco up from its 5th spot currently.

The deal is expected to be synergistic beginning in year 1 with $250 million of run rate synergies expected by year 3, which represents ~10% accretion.

In terms of share price  - obviously Parkland has traded up materially, up ~23% in the past month. Again, it is important to remember that M&A target share prices usually don't trade up to the exact acquisition price as some risk of not closing is usually baked in. 

In a time of high tensions between the US and Canada, I would argue there is material risk to this deal not closing. Resource nationalism is growing and Parkland is one of Canada's largest fuel providers, so with tensions this high, there are some serious risks this deal doesn’t close.

Sunoco's share price is relatively flat since announcement which, given these turmoil markets and potential deal risks, I would call a win.

Overall, this deal might not be a total walk in the park because of the regulatory hurdles it may face, but for $9.1 billion, it is the largest cross border deal we've seen since Trump liberated America of free trade, which gives me some hope that M&A will continue to get done as the market adjusts to a new reality.

_{EXIT OF THE MONTH}

CVC Dreams of a Perfect Match

PE firms used to invest in real companies, now, they are investing in the games I play while on diligence calls.

CVC just acquired a majority stake in Dream Games - the maker of Royal Match - for $2.5 billion, implying a $5 billion valuation. Yes, the Candy Crush knock off you get an ad for every 3 seconds on YouTube, that one. Great, now that I did all of this research on the company, my ads are going to be so much more targeted. 

CVC is buying out the Turkish company's early venture investors - undoubtedly a nice return - and also includes a sizable debt package provided by BlackRock and other institutional lenders.

I'll be honest, with the amount of ads I saw for this game, I assumed it was straight up fraud that turned my phone into a Bitcoin mining device for some Russian oligarch; however, it turns out that Royal Match is the #1 puzzle game globally by revenue. In February 2025 alone, Royal Match generated ~$125 million of revenue. 

If you run rate that, that implies a total revenue of ~$1.5 billion for 2025. At a $5 billion valuation, that gives a TEV / Revenue of ~3.3x. We have seen crazier tech deals this year, but this one certainly isn't cheap.

Given the rapid expansion of Royal Match, this could be a good deal for CVC; however, apps come and go. After all, I remember playing Doodle Jump when I first got an iPhone (probably just dated myself there) and now my most used app is Outlook.

Regardless, I can't wait for some poor analyst to have to swipe through all the levels of Royal Match on every device CVC owns until the ad revenue puts them in carry.