M&A wrap: Bruce Stein, David Rubenstein, Michael Jordan, Axiomatic, Jordan Co., GTCR

brucesetin
Bruce Stein, co-founder and chief executive officer of aXiomatic eSports, speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 3, 2017. The conference is a unique setting that convenes individuals with the capital, power and influence to move the world forward meet face-to-face with those whose expertise and creativity are reinventing industry, philanthropy and media. Photographer: Patrick T. Fallon/Bloomberg

A group led by Michael Jordan and Carlyle Group LP (Nasdaq: CG) co-founder David Rubenstein have invested in e-sports and video game startup Axiomatic, which is led by CEO Bruce Stein (pictured). Rubenstein is investing through his family office Declaration Capital. Jordan, who owns the NBA's Charlotte Bobcats, is remembered for winning six championships with the Chicago Bulls in the 1990's. Axiomatic was started in 2015 to capitalize on the e-sports industry, which features professional video-game players competing for prize money in front of large audiences. In 2016, Axiomatic acquired a controlling stake in Team Liquid, another e-sports company. “The next generation of sports fans are e-sports fans,” says Axiomatic co-chairperson Ted Leonsis, who also owns the NBA's Washington Wizards and the NHL's Washington Capitals. “E-sports is the fastest-growing sector in sports and entertainment, and aXiomatic is at the forefront of that growth." The e-sports industry is expected to generate about $906 million in revenue in 2018, according to research firm Newzoo. Also joining Jordan and Rubenstein on the investment are: Golden State Warriors and Los Angeles Dodgers part owner Peter Guber; Jeff Vanik, owner of the NHL's Tampa Bay Lightning; and Oaktree Capital co-founder Bruce Karsh. Axiomatic is not Jordan's first investment. He is also an investor in hiring startup Gigster; headphone maker Muzik; and sports data firm Sportradar. For more on athletes and their investments, see our list: Serena Williams and other athletes invest in healthy meals and more. Gibson Dunn & Crutcher advised Axiomatic.

Separately, a consortium that includes Axiomatic, Iconiq Capital, KKR & Co. (NYSE: KKR), Kleiner Perkins, Lightspeed Venture Capital, Smash Ventures and Vulcan Capital have invested about $1.25 billion in Epic Games, the maker of Fortnite. “Epic Games has fundamentally changed the model for interactive entertainment under the company’s visionary leadership,” says KKR director Ted Oberwager. Guggenheim Securities, the Raine Group and Smith Anderson advised Epic Games.

Deal news
The Jordan Co. has acquired a majority stake in Gladson from WIcks Capital Partners. The target produces digital content for brands, food companies and retailers. Lincoln International and Winston & Strawn advised Wicks. Kirkland & Ellis advised Jordan Co.

GTCR-backed Resonetics has bought Medelec and STI Laser Industries. The two targets make metal tubing and laser processing products for medical devices. Kirkland & Ellis and PricewaterhouseCoopers advised GTCR.

Cubic Corp. (NYSE: Cub) has acquired traffic software provider Trafficware from KRG Capital. Harris WIlliams and Hogan Lovells advised Trafficware.

For more deal announcements, see The weekly wrap: Expedia, Clearlake, Peak Rock.

For more on PE fundraising, see PE fundraising scorecard: Oaktree Middle-Market and TPG Asia.

Featured content
The Houston Texans defeated the Miami Dolphins 42-23 on Thursday night in NFL Week 8. Off the field, New England Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media, which has raised $3 million in venture capital funding from CourtsideVC and Advancit Capital. Many NFL players invest in companies. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Mergers & Acquisitions takes a look at star players who invest in companies through private equity, venture capital and other investment vehicles.

Mergers & Acquisitions identifies 15 cities as fertile communities for dealmaking. We look at metropolitan areas from Austin (where Michael Dell launched a PC business out of his dorm room back in the day and where thousands gather every year for SXSW) to St. Louis(home of private equity firm Thompson Street Capital Partners). Be sure to check out Milwaukee (with private equity firm Robert W. Baird & Co. and investment bank Clearly Gull) and Minneapolis (home of strategic buyers 3M, Best Buy, General Mills, Hormel and Target). And don’t forget Boston, Chicago, New York, San Francisco and Los Angeles and more. See our list, Dealmaker's guide to 15 cities where M&A thrives.

Why investors like diversity. "Companies that are inclusive and also diverse tend to outperform companies that aren't," says investor Lorine Pendleton of Pipeline Angels and Portfolia in this video interview shot at Exponent Exchange, a gathering of 200 female dealmakers. Watch the full video: M&A Insights: Inclusion investing.

Canada legalized recreational marijuana on Oct. 17, marking the first G7 nation and the second country in the world to enact full legalization. To investors in the still developing cannabis industry, many believe the market is just now approaching its own inflection point, as it transitions from a black to gray market, characterized by a more attractive risk profile and outsized growth potential. The sticking point is that as a Schedule I drug illegal under federal law, cannabis still presents imposing obstacles for traditional investors, ranging from capital markets that remain inaccessible to uncertainty over bankruptcy proceedings. Yet, ironically, it’s these very same obstacles that make the opportunity so appealing to investors willing to operate in an indefinite gray area to create an ecosystem for a market expected to reach $75 billion in size by 2030. Salveo Capital managing partner Jeffrey Howard shares advice about investing in cannabis in a guest article. Read the full story: How to seize M&A opportunities in marijuana’s gray market.

Events
ACG Chicago's Family Office Conference, held Nov. 8, at the Westin Chicago River North, brings deamakers together for a "deep dive" into family offices. The event features a keynote by Laurent Roux, Gallatin Wealth Management, and panels, including: Current State of Family Office Direct & Co-Investment Activity, with Gary Levenstein, Nixon Peabody; and Impact of Millennial Generation on Family Office Investment Strategy including Social Impact Investing, with Adam Lieb and Tony Oommen, Fidelity Family Office Services.

ACG Florida Capital Connection, held Nov. 12-14, at the Vinoy Renaissance St. Petersburg Resort & Golf Club, puts “sun and fun” into dealmaking for the middle market, bringing together hundreds of dealmakers. The keynote speaker is Forbes Media CEO Steve Forbes, and the featured speaker for the Women’s Forum is Valerie Crites Fowler, who served as a diplomat in the U.S. Foreign Service for over 29 years, reaching the rank of Minister Counselor in the Senior Foreign Service.

Middle Market Week, hosted by ACG New York and held Nov. 26-30 at various locations throughout New York, brings together leading global middle-market dealmaking professionals to develop and enhance their dealmaking activities, strengthen their long-term relationships, and provide numerous opportunities for networking all week long. Mark your calendar for the Private Equity Annual Wine Tasting Gala on Nov. 28 at Gotham Hall. The building was constructed in the 1920s as the headquarters of the Greenwich Savings Bank. The gala brings together the leading middle market private equity firms for an evening of fine wines and networking.

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