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Illustration: Eniola Odetunde/Axios

Brand management firm Authentic Brands Group on Monday announced that a group led by private equity firms CVC Capital Partners and HPS Investment Partners acquired a significant ownership stake at an enterprise value of $12.7 billion.

Why it matters: The lofty price tag and the deal's structure are a departure from the kind of traditional leveraged buyouts that have been prevalent in the retail sector.

  • Creative dealmaking may be necessary going forward, in light of the high valuations companies can command on the public markets.

Inside the deal: The new investment totals $3.5 billion, at a valuation that works out to 17x pro forma EBITDA, according to a source briefed on the matter.

  • Pro forma EBITDA through September incorporates the financial performance of Reebok, the sneaker company Authentic Brands acquired for $2.5 billion in August.

Background: CVC, which had been a rival bidder for the sneaker brand, approached ABG in August about a potential investment. And there had been ongoing talks between HPS and Authentic Brands CEO Jamie Salter about an investment for years.

What’s next: Leonard Green & Partners and some members of ABG's leadership team sold shares in the transaction, though all remain stakeholders. Existing shareholder BlackRock Long Term Private Capital, which invested in 2019, did not sell.

  • While today's deal precludes an IPO for the time being, ABG, the parent of retail brands such as Brooks Brothers and Forever 21 is now aiming for a listing in 2023 or 2024, per a CNBC report.

Go deeper

Dan Primack, author of Pro Rata
Nov 24, 2021 - Economy & Business

For Toshiba, breaking up may be hard to do

Illustration: Sarah Grillo/Axios

3D Investment Partners, the second-largest Toshiba shareholder with a 7% stake, is objecting to the Japanese conglomerate's plan to split into three companies, per a letter obtained by Reuters.

Why it matters: This could set up a takeover battle for all of Toshiba, which was the target of a failed $20 billion bid earlier this year from CVC Capital Partners.

Biden administration makes first move on data privacy

Illustration: Sarah Grillo/Axios

The Biden administration is launching its first big effort on privacy policy by looking at how data privacy issues affect civil rights.

Why it matters: An administration perspective on privacy policy could be key in developing a long-awaited national privacy law by putting the White House stamp on how to regulate privacy.

Axios Investigates

Exclusive: Airbnb hosts Xinjiang rentals on land owned by sanctioned group

Data: Axios research, Airbnb, Australia Strategic Policy Institute's International Cyber Policy Centre; Map: Jacque Schrag/Axios

Airbnb has more than a dozen homes available for rent in China's Xinjiang region on land owned by an organization sanctioned by the U.S. government for complicity in genocide and forced labor, an Axios investigation has found.

Why it matters: The listings expose Airbnb to regulatory risk under U.S. law. They also land yet another American tech company in the crossfire between the U.S. and China.