Wanda sells Ironman to US media firm Advance
By Tariq Saleh
Advance Publications, the US media company, has today announced an agreement with Wanda Sports Group, the sports arm of Chinese conglomerate Dalian Wanda, to acquire the Ironman triathlon business, in a deal worth $730 million.
Wanda described the agreement as “a great outcome for both parties” while Advance said it is “committed to the future of the Ironman Group and believes in the long-term strength of its well-recognised brands.”
Based in New York, the private, family-owned business owns, operates and invests in several media and technology companies and holds a stake in Discovery and Charter Communications, as well as being a majority shareholder of online social platform Reddit.
Private equity firm Orkila Capital will co-invest in Ironman while Jesse Du Bey, the company’s managing director, will rejoin the board of directors alongside Advance, and Ironman president and chief executive Andrew Messick.
Du Bey was previously a managing director at US private equity firm Providence Equity Partners and led its 2008 investment in Ironman before it was sold to Wanda
Wanda acquired Ironman parent World Triathlon Corporation from Providence in a $650-million deal back in 2015, but was prepared to listen to offers for the business after a Nasdaq listing of Wanda Sports last July raised a smaller-than-expected $190.4 million.
It emerged last month that Wanda was considering a sale, and it held talks with several private equity buyers who had expressed an interest in acquiring Ironman/WTC.
Wanda Sports has reportedly placed a $1-billion valuation on its mass participation business.
part of the transaction, Wanda will continue to operate the Ironman and Ironman
70.3 triathlon series, Rock 'n' Roll Marathon Series and Epic Series of
off-road mountain bike races in China under an exclusive licence agreement.
Ironman said the transaction has no financing condition and is subject to customary regulatory approvals, with closing anticipated in the second quarter of 2020.
Messick said: “Today is an important milestone for the Ironman Group. We are pleased with this partnership, which is a testament to Advance’s belief in the company.
“We remain confident in our future; our focus and objectives are unchanged; and we are ready to face the opportunities and challenges ahead. Together with Advance and Orkila, we will navigate through the turbulent and uncertain period in front of us and continue to deliver the exceptional experiences for which we are known.”
He added: “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.”
Wanda, which owns international sports agency Infront, posted a loss of €31.2 million ($34.1 million) for the third quarter of 2019, with the New York listing having an impact, but revenue came to €245.2 million, up 8 per cent year-on-year and up 33 per cent when excluding the impact of reimbursement revenue.
This week, Wanda Sports’ share price rose by 18 per cent to $1.98 in New York trading, giving the company a market value of about $271 million.
Prior to this increase, the company’s shares were down 79 per cent from its IPO and it is believed to have total debt of close to $1 billion.
Hengming Yang, president and chief executive of Wanda Sports Group, 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.”
Following the sale, Wanda Sports Group said it will continue to operate three business segments – mass participation, spectator sports, and digital, production, sports solutions.
The deal with Advance will come as a blow to the Professional Triathletes Organisation, a body involving leading competitors in the sport, which had publicly stated its intention to acquire Ironman and looked to enter negotiations with Wanda on more than one occasion.
Earlier this month, the PTO released a second letter it had sent to the board of directors at Wanda in which it stated that failure to discuss a deal could diminish the value of the Ironman business.
The PTO had initially sent a letter to Wanda in early February, when it made a renewed bid to acquire the business on the back of a funding injection by Crankstart Investments, a vehicle of UK billionaire Michael Moritz.
In a recent interview with Sportcal, the PTO chairman Charles Adamo claimed Ironman was in the “wrong ownership structure” and Dalian Wanda's debts mean it is restricted in how much it can invest in the property, which he feels is impacting on the attractiveness of the brand.
The PTO today declined to comment on the agreement between Wanda and Advance.
Earlier this month, Wanda Sports Group, signed a $240 million senior term loan facility with Credit Suisse, the Switzerland-based financial services giant.
The company said the loan agreement would enable it to refinance and repay its existing senior 364-day loan facility, dated 15 March 2019, increase its liquidity and reducing financing costs.