_{DEAL OF THE MONTH}

Keurig Dr. Pepper Spooks Investors with ~$1 Billion Acquisition of Ghost

Keurig Dr. Pepper (“KDP”) decided that this year for Halloween, they were going to give their investors a real fright and announced an acquisition of 60% of energy drink maker Ghost for $990 million, with a path to acquiring the remaining 40% in 2028 at a pre-arranged valuation.

In addition to the over $1 billion that KDP is paying for the equity, KDP will also have to invest $250 million beginning in mid-2025 to transfer all of Ghost’s distribution agreements to KDP’s delivery network.

Let’s do some basic math here - $990 million for 60% implies a 100% equity value of $1.65 billion. Is that reasonable? Is it not? I’ll leave that to you, but this is a ~3x TEV / revenue multiple…

Unfortunately, for my standard analysis, KDP released earnings the same day it announced the transaction, so it is impossible to say what change in share price was attributable to poor earnings vs. the transaction.

With that backdrop, it is reasonable to say that if investors loved the transaction, they may have overlooked the poor earnings, but considering KDP’s share price fell like me coming off a Dr. Pepper induced sugar high, I think it’s reasonable to say that the deal was not well received.

It’s not all bad though, the pro forma Company will be a significant player in the energy space, with several complimentary brands, including C4 that will generate ~$23 billion in sales.

It’s too early to tell if this deal will be a home run, or if KDP will be ghosting its head of Corporate Development, but one thing is for sure - KDP is no stranger to acquisitions. I mean seriously just think of the name Keurig Dr. Pepper, not two things that you would associate with each other, so this is in their DNA and we’d bet on them to make it work.

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_{PRIVATE EQUITY DEAL OF THE MONTH}

Butterfly Takes a Sip of Duckhorn

When you think of typical PE businesses you don’t immediately gravitate towards anything that could be considered controversial for LPs, so no drugs, limited alcohol, and probably no guns.

Well, Butterfly decided to throw that aside and acquire Duckhorn - a wine company based in Napa, California, for ~$2.0 billion.

Interestingly, this is not the first go around for being sponsor-owned for Duckhorn. Duckhorn was previously owned by TSG Consumer, who took it public in 2021.

So if another PE fund was a major shareholder, this must be a banger deal right? Well…yes and no.

The good: the purchase price of $11.10 / share represents an ~65% premium to the 90-day VWAP for Duckhorn.

The bad: Duckhorn went public at $19 / share, which makes this deal not a home run by any means.

The ugly: Prior to the announcement, Duckhorn was down 71% from its IPO, and is still down ~42% all time to-date.

The deal is subject to a customary 45-day go shop period where Duckhorn can go look for a better alternative to this deal, but let’s not kid ourselves and pretend that’s a real possibility.

All of this to say that Butterfly negotiated a great deal, and is buying in at a fantastic price for Duckhorn. Anytime you can acquire a company at a ~42% discount to what it went public for, you should probably at least think about it.  

Now for the fun part, let’s see if this deal ages like milk or like a fine wine.

_{FUNDING ROUND OF THE MONTH}

Waymo Gets Way-Mo’ Money

Google backed self-driving car company Waymo has closed a $5.6 billion funding round. 

Waymo currently is owned by Google (well, technically Alphabet but whatever). Google lead the series C investment alongside some huge names like a16z, Tiger Global, Fidelity, T. Rowe Price, and others.

To-date, Waymo has raised $11 billion in capital to fund its over 100,000 weekly trips for users in LA, Phoenix and SF. The Series C is by far the biggest round, coming in at over double the size of the Series B.

Additionally, Google reported that it would invest a further $5 billion into Waymo over the next few years to fund additional growth.

Waymo is not the only self-driving car company out there, but it is certainly a leader in the space, and even has a partnership with Uber in Austin to run a robotaxi service (sorry, Elon).

There isn’t a ton of information out there about the deal given the early stage nature of it, but as an NYC local, I would love for a self driving car to be able to shuttle me around, so count me in on the next round.

_{NEWS ROUNDUP}

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