TheChek News Flow

The details

Garden Investments, founded by Ed Garden, has accumulated an almost 5% stake in Middleby, and is looking to continue buying more, the people said. It is the firm’s first investment.

Elgin, Ill.-based Middleby had a market value of almost $8 billion as of Thursday. Its share price has lagged well behind the broader market over the past three-year and five-year periods.

Middleby designs and manufactures cooking equipment for the commercial, residential, and industrial food-service markets. Its products are often seen in the kitchens at Chipotle, McDonald’s, Wendy’s, Starbucks and other restaurant chains. For instance, it owns the primary maker of ice cream machines used at McDonald’s. Its residential unit owns high-end appliance brands including Viking and La Cornue.

Middleby shares have lagged behind as the restaurant industry has faced lower traffic and higher food costs. The company has said customers are delaying investments in their facilities and closing more locations, weighing on its results.

The company has been active in pursuing mergers and acquisitions for more equipment makers, including chips and tortillas, baked goods and ice cream.

Garden Investments is planning to push a renewed focus on Middleby’s core commercial food service segment, while reviewing other parts of the business, including its residential segment, the people said.

Garden Investments also will seek board seats and a different capital allocation approach, the people said.

The context

Ed Garden departed Trian in June 2023 to establish his own family-office firm, The Wall Street Journal reported. He later officially launched Garden Investments alongside his former colleague Chad Fauser.

Garden co-founded Trian in 2005 with Nelson Peltz and Peter May. He was their chief investment officer and served on a number of boards over the years including Wendy’s. He still has a seat at GE Aerospace, a remainder of the once mighty conglomerate General Electric where Trian had invested and then helped break it apart after struggles.

Brian Jacoby, another member of Trian’s original investment team, has also joined Garden Investments. Jacoby has invested across the restaurant industry and previously served on the board of Dunkin’ Donuts parent Inspire Brands and as a formal board observer at Wendy’s.

The firm isn’t raising a fund but plans to partner with third-party investors to bolster Garden’s own investments, the people said.

Corrections & Amplifications

Brian Jacoby previously served as a formal board observer at Wendy’s. An earlier version of this article incorrectly said he served on the board. (Corrected on Jan. 23)

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The Holme is one of a few private residences located inside​​ Regent’s Park

The Regent’s Park mansion formerly owned by Saudi royals that fell into receivership nearly two years ago has sold for £139mn to a mystery buyer in one of London’s largest ever property sales.

The Holme, which sits in a four-acre private garden within ​​Regent’s Park in central London, has been sold to a UK subsidiary of Zedra, a corporate service and wealth management firm that runs trusts on behalf of various clients, according to UK land records.

The £138.9mn sale vies with billionaire Adar Poonawalla’s roughly £138mn purchase of Aberconway House in Mayfair in 2023 as the second most expensive house ever sold in London.

“This is a once-a-decade kind of property . . . a mini stately home in the middle of London, in its own parkland,” said Roarie Scarisbrick, a buying agent at Property Vision. “This is not a house for the shy and retiring type.”

UK companies have to publicly register their beneficial owners. This requirement was extended to overseas companies that own property in the UK in order to increase transparency after Russia’s full-scale invasion of Ukraine.

But there are still gaps in the regime, which have drawn criticism from transparency advocates and some lawmakers. The individuals behind some properties can still be obscured through trusts, where information about the ultimate beneficiaries is disclosed to the government but not made public.

Proposing transparency measures in 2023, then-housing secretary Michael Gove said: “Trusts can be used for wholly legitimate reasons. But they can, and are, created with deliberately labyrinthine structures to obscure the ownership of assets and make it easier for corrupt individuals to operate.”

The company registered as the new owner of the Holme is controlled by a Luxembourg-based Zedra entity, according to corporate records.

The UK government has published new draft regulations that will allow anyone to apply for information about trusts held in the register of overseas property owners — with certain limits, for example, to protect information about minors. If approved, the regulations are expected to take effect in August.

The Holme came on the market in early 2023 seeking a price as high as £250mn after debts secured against the property expired. It was previously bought on behalf of Prince Khaled bin Sultan al-Saud of Saudi Arabia and his family in 1991 via a Guernsey-registered company called Quendon Ltd, which later listed five of Prince Khaled’s children as beneficial owners.

The 207-year-old villa, which is owned on a long lease from the Crown Estate, would probably require complex and costly renovations given its heritage status, people familiar with the property said. One of a handful of private residences located inside the central London park, the Holme’s neighbours include the US ambassador’s residence at Winfield House.

Public records show the property was sold in mid-December by Trinity Investments, an Irish company managed by London-based hedge fund Attestor. The fund is known for its debt strategies, and made a multimillion pound loan to Quendon secured on the property.

Attestor and Zedra declined to comment. Agents Knight Frank and Beauchamp Estates, who were appointed to sell the house, declined to comment.

London’s most expensive house sale, the 45-room mansion at 2-8a Rutland Gate, was secretly agreed just before the Covid-19 pandemic and involved a British Virgin Islands company buying the property for £210mn from a Curaçao-registered entity. The Financial Times revealed in 2022 that the buyer was Evergrande founder Hui Ka Yan, once China’s richest man.

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Len Blavatnik pumps further $800mn into creating ‘Spotify of sport’

Commitment takes billionaire’s investments in DAZN to more than $6.7bn since the streaming service was founded in 2016

Billionaire Sir Len Blavatnik has pumped a further $827mn into his global sports streaming service DAZN as the London-based company seeks further investment from the Middle East to support its plans to become the “Spotify of sport”.

The latest commitment takes Blavatnik’s investments in DAZN to more than $6.7bn since it was founded in 2016, which has funded an unprecedented buying spree across top-tier European football, boxing, basketball, motor sports and American football’s NFL in more than 200 markets.

Shay Segev, DAZN chief executive, told the Financial Times that the flurry of deals would further the company’s ambition to become “the global home of sport”, adding that “we’re just getting started”.

However, financial results to be posted at the UK’s Companies House next week will show that the multibillion-pound bet on the future of sport broadcasting has yet to pay off financially.

While revenues rose to $2.7bn in 2023, from $2.2bn in 2022, DAZN recorded a widening loss to $1.4bn in the year to the end of 2023, from $1.2bn in 2022, according to the accounts seen by the FT.

Segev said that, although not reflected in the 2023 financial results, most of the top-ten markets in which DAZN operated were now profitable.

He said he expected revenues to surpass $6bn in 2025, driven in part by additional revenues from its acquisition of Australian pay television company Foxtel and the rights to Fifa’s expanded Club World Cup football tournament.

“We see a clear path to create massive shareholder value. We’re going to be the global home for sport. If you are a sports fan anywhere in the world, you are going to know DAZN.”

To achieve this it will seek to build on its app so that sports fans cannot only watch premium sports but also read news and analysis, bet online, socialise with other fans and purchase tickets and merchandise.

DAZN had about 300mn monthly customers around the world in 2023, according to company insiders, but only about 20mn paying subscribers. 

The company — now one of Britain’s largest private companies — has been “underpinned by very significant funding from the group’s principal shareholder, Access Industries”, the accounts say.

In its 2023 financial period, the company received $240mn through new ordinary and preference shares funding, with an additional $587mn “to support growth” in exchange for further preference shares since the year end. The accounts show that Access — Blavatnik’s investment group — has to date provided DAZN with a total of $6.7bn.

Rights costs in 2023 were $3.1bn, an increase of about a third compared with the previous year. The accounts also show that the group has future rights commitments of $9.3bn, showing the extent of the investment it has made in recent years. 

DAZN executives say the ambition was to create a $200bn media group that would offer subscribers the sporting equivalent of Spotify, the music streaming platform. 

DAZN has become one of the world’s largest sports streamers, adding French football to a roster of big European markets, including Germany, Italy and Spain. It has other sports rights spanning Japanese football and baseball to MMA fighting. 

In 2023, it acquired Eleven Sports, providing rights to sports in Belgium, Portugal and Taiwan, and also struck a deal to show the NFL Game Pass internationally.

Last year the broadcaster struck a deal with Fifa to show the Club World Cup around the world in a $1bn deal. Segev said the football tournament being held in June and July would be a big focus for DAZN, with the company expecting 1bn people to matches games between some of the world’s biggest club teams.

He said some matches would be offered to terrestrial broadcasters to show, while he hoped it would in particular help DAZN grow in the US, which is hosting the tournament.

In December, it struck its biggest deal yet, agreeing to buy Foxtel from Rupert Murdoch’s News Corp and Telstra in a A$3.4bn ($2.1bn) deal, which includes control of its portfolio of domestic and international sports broadcast rights including cricket, the Australian Football League and National Rugby League.

As a result of the deal, the former owners of Foxtel will take a 9 per cent stake in DAZN, becoming the second-largest shareholders in the company, which values the group at close to $10bn, according to people familiar with the terms. 

DAZN has also held talks about selling a stake in the business to the sports investment arm of Saudi Arabia’s sovereign wealth fund, according to people close to the talks.

They added that the group was also likely to bring in additional institutional funds as shareholders before pursuing a medium-term plan of listing the group on a stock market. 

Segev declined to comment on the Saudi talks — saying “we will need to see what happens” — but added that there had been more interest broadly in the business. 

It already has a close relationship with the kingdom, including coverage of boxing in Riyadh, and is planning to launch a localised app for the region in Arabic. DAZN recently broadcast the rematch between Britain’s Tyson Fury and Oleksandr Usyk of Ukraine in collaboration with Riyadh Season.

Commerzbank boss refused to meet UniCredit Andrea Orcel for deal talks

Bettina Orlopp insists on receiving written proposal from Italian lender ahead of engaging

Commerzbank chief Bettina Orlopp shot down an invitation from Andrea Orcel to hold informal talks about a potential tie-up with UniCredit, and has instead insisted on receiving a written proposal before engaging, according to people familiar with the situation.

UniCredit’s chief executive met Orlopp in November at the sidelines of a JPMorgan Chase conference in London, the people said.

During that conversation, the Italian banker gave a broad outline of his vision for an enlarged lender, including views on potential job cuts, the location of its headquarters, branding and commitment to small and medium-sized businesses, also known as Mittelstand, according to one of the people.

Orcel suggested to Orlopp that the two chief executives hold a further meeting with a small group of staff at a “place that nobody knows over a weekend”.

The aim of the summit would have been to hash out key issues and attempt to ascertain each side’s red lines and potential room for compromise.

Orlopp rejected the idea, arguing she first needed a written proposal to decide if any further meeting made sense, the people said.

Commerzbank and UniCredit declined to comment on any potential interaction between Orcel and Orlopp.

“We have consistently signalled our willingness to engage in discussions and would review a proposal from UniCredit in the interest of all stakeholders,” Commerzbank told the Financial Times.

The German bank stressed that it had demanded “a specific proposal regarding the economic and structural terms of a transaction” before entering potential talks. “We have not received any [such] proposal yet.”

Commerzbank investors last year called on the bank’s management to engage with UniCredit, which since September built a 28 per cent exposure to its German rival.

Commerzbank said that it held a series of “investor talks” with its second-largest shareholder, discussing its operative performance and strategic objectives without addressing any potential transaction.

Commerzbank told the FT that UniCredit’s approach of “unilaterally building up and expanding a significant stake” was “hostile” and “unnecessarily antagonised many stakeholders on our end.”

People familiar with UniCredit’s internal discussions said the bank was unwilling to submit written terms ahead of talks because of fears they would be leaked in an attempt to derail the discussions.

The German government, Commerzbank’s management and its workers council have been highly critical of a potential transaction, citing concerns over job losses and lending to small and medium-sized businesses.

The Italian lender’s pursuit of Commerzbank has been paused by snap elections in Germany, due to take place next month, and it is likely to have to wait for a new government to form before trying to make further inroads.

“Without the support of the German government, it will be difficult [to strike a deal]”, Orcel previously told Frankfurter Allgemeine Zeitung.

UniCredit told the FT that as an investor in Commerzbank, “we hope that management are taking every opportunity to seriously engage in a way that gives them full transparency around what a possible offer would entail”.

The Italian bank had made it “very clear” it was “available at any time to sit around a table to discuss keys topics and try and reach an agreement in the interests of all stakeholders”, it added.

Apple sauce

Yesterday we presented a tidy theory of the Magnificent Seven’s underperformance in the past month or so. Considered as an asset class, the seven are the new defensives stocks — companies with great brands that can grow even in a slowing economy. But the market at the moment, far from playing defence, wants exposure to economic growth through cyclical stocks.

There’s a little problem, though: most of the decline in the seven comes down to one company. Apple is down 14 per cent since Christmas. Tesla is down 11 per cent, but is only a third of Apple’s weight in the S&P 500. The rest of the seven are meandering along, a bit above (Nvidia) or below (Alphabet) the performance of US big caps, generally.

We could repurpose our argument to be just about Apple, which very clearly is a defensive stock, rather than all the Magnificents. But there are specific things going on with the company that explain its even steeper decline.

In April of last year, after another bout of underperformance from the iPhone maker, we wrote a piece called “What’s wrong with Apple?” We considered six explanations:

We were not too impressed with any of those arguments then. Our instincts turned out to be good: the stock rose 50 per cent from when we wrote the piece to the end of the year. But now, all six worries have gotten worse.

Even after the recent sell-off, the stock’s price/earnings valuation is a third higher than it was back in April. The sales growth and AI issues have come together: consumers have not demonstrated wild enthusiasm for AI-enabled phones in general, and the perception that Apple is lagging behind Android on that tech has grown. This casts doubt on the idea that AI will drive a big iPhone upgrade cycle. As Craig Moffett of MoffettNathanson research sums up:

Not only have we not seen any sign of an upgrade cycle . . . we have seen growing evidence that consumers are unmoved by AI functionality (not just Apple’s but indeed everyone else’s as well). Meanwhile, fully agentic AI, the foundation of any real bull case for Apple, seems further away now than it did even five months ago.

The weakness of defensives we discussed yesterday. An ascendant and aggressive Trump increases the odds that Apple will not get a tariff exemption for iPhones (Edison Lee of Jefferies estimates 90 per cent of which are made in China), and makes it more likely that Chinese consumers will become more hostile to the company’s products.

The legal issues are perhaps the most acute risk. The judge in the Google search antitrust case has ruled the company’s payments to Apple for search traffic are illegal. These payments amount to perhaps $16bn or more a year, more than 10 per cent of Apple’s operating earnings in the US. CFRA Research’s Nicholas Rodelli put 60 per cent odds on the legal remedy cutting the payments by at least half.

Apple still looks expensive to us. Let us know what you think.