Wanda Sports Group has announced it has entered into a definitive stock purchase agreement to sell its Ironman business to Advance Publications, the American media company that owns Condé Nast and holds a significant shareholding in Discovery.
The all-cash transaction values the triathlon business, which is comprised of a global portfolio of mass participation sports events across triathlon, running, trail running, cycling and mountain biking, at $730m (€667m/£610m).
As part of the takeover, private equity company Orkila Capital is to co-invest in Ironman. Jesse Du Bey, managing partner at Orkila, will re-join the Ironman board of directors. Du Bey was previously managing director at Providence Equity Partners and led the private equity firm’s investment in Ironman 12 years ago.
The sale, subject to regulatory approval, is expected to close in the second quarter of 2020. WSG said it intends to use the net proceeds from the sale to repay the principal amount of $230m and related interest and fees of a Credit Suisse term loan and $50m outstanding under a promissory note issued to Wanda Sports & Media, the Hong Kong-based holding company.
WSG said it intends to use all, or a substantial portion, of the balance from the proceeds to fund dividends or share buy-backs, subject to shareholder approval.
The Chinese firm, part of billionaire Wang Jianlin’s Dalian Wanda Group, bought Ironman in 2015 from Providence Equity Partners for $650m, plus the assumption of debt. The company was left disappointed in the middle of last year as its debut on the Nasdaq stock exchange raised a total IPO of $190.4m, down sharply on initial targets.
Shares in WSG have suffered in recent weeks as the Covid-19 pandemic continues to take effect, but have rallied this week. They have risen by around 20 per cent in the last two days and were trading as high as $2.00 today, giving the company a market capitalization of just under $271m.
New York-based company Advanced Publications’ portfolio of companies includes Condé Nast, Advance Local, Stage Entertainment, American City Business Journals, the Leaders Group, Turnitin, 1010data, and POP. Advance is also among the largest shareholders in Charter Communications, Discovery and Reddit.
Hengming Yang, president and CEO of Wanda Sports Group, said: “This transaction represents a great outcome for both parties. Advance is acquiring the world’s largest organiser of mass participation sports events and a portfolio of brands synonymous with excellence, and we will unlock significant value for our shareholders.”
Wanda has retained the rights to operate the Chinese stops on the Ironman, Ironman 70.3, Rock ‘n’ Roll Marathon Series and Epic Series circuits under an exclusive licensing agreement.
Andrew Messick, president and CEO of Ironman, said: “We thank Wanda Sports Group for its support over the past four years and are proud of what we have accomplished together. We look forward to continuing our work in China with Wanda Sports Group in the coming years. Further, we are excited to join forces with Advance and benefit from its breadth of expertise as we continue to deliver the exceptional experiences for which we are known.”
Advance said that it is “committed to the future of The Ironman Group and believes in the long-term strength of its well-recognised brands and the dedication of its athletes, communities, employees and fans”.
WSG said in a statement that it will continue to operate three business segments – Mass Participation, Spectator Sports, and Digital, Production, Sports Solutions (DPSS).
For its international mass participation business, the company, through Infront, stated its intention to continue to organise, operate and license a broad portfolio of mass participation sports events for amateur athletes, with the focus on running, hiking, road cycling, fitness competitions, and obstacle course racing.
In China, the company has a combination of an existing portfolio of city marathons, such as the Chengdu Marathon and Shenyang International Marathon, and races and events that the company has rights to under the exclusive license agreement with The Ironman Group.
Yang added: “Looking ahead, we will continue to leverage the strengths of our Infront and Wanda Sports China businesses to expand our global sports, media and marketing platform.
“Our focus remains on ensuring our long-term partners get the most out of every event by increasing appeal, reach and fan engagement, organising, operating and licensing popular mass participation events, and strengthening our foothold in China to serve the large and fast growing sports market. We will also benefit from a stronger balance sheet as we execute our strategy and create shareholder value.”
WSG announced the details of its new Credit Suisse loan facility last week.
In early March this year, WSG confirmed it had held meetings with private-equity buyers to discuss a sale of the Ironman business.
In September last year, the Professional Triathletes Organisation launched an audacious bid to acquire the series and WSG’s wider mass participation business. This was rebuffed by WSG and the World Triathlon Corporation, which organises the events.
The PTO then made a renewed bid to engage with Wanda in February after securing funding from Crankstart Investments, a vehicle led by British venture capitalist and billionaire Michael Moritz.
This second bid was also rejected by WSG with the company telling SportBusiness that it was not prepared to engage in discussions with the PTO due to a “lack of clarity and specifics” in its offer.
In an open letter in early March, the organization, which counts leading triathletes such as the Brownlee brothers and Paul Findlay among its members, warned WSG that the value of Ironman could be adversely affected if it didn’t engage the PTO in any sale process.
Credit Suisse acted as the exclusive financial advisor and Reed Smith LLP acted as the legal advisor to Wanda Sports Group in the Ironman transaction. Advance was advised by BofA Securities and Sullivan & Cromwell LLP.