Global Blood Therapeutics sold for $5.4 billion

Pfizer to acquire Global Blood Therapeutics for $68.50 per share in cash

Pfizer (PFE) and Global Blood Therapeutics (GBT) announced the companies have entered into a definitive agreement under which Pfizer will acquire GBT, a biopharmaceutical company dedicated to the discovery, development and delivery of life-changing treatments that provide hope to underserved patient communities, starting with sickle cell disease.

Under the terms of the transaction, Pfizer will acquire all the outstanding shares of GBT for $68.50 per share in cash, for a total enterprise value of approximately $5.4B, including debt and net of cash acquired.

The Boards of Directors of both companies have unanimously approved the transaction. Pfizer expects to finance the transaction with existing cash on hand.

The proposed transaction is subject to customary closing conditions, including receipt of regulatory approvals and approval by GBT’s stockholders.

Due to the proposed transaction, GBT will not hold its previously scheduled conference call to discuss its second quarter 2022 financial results. The company will file its quarterly report on Form 10-Q for the quarter ending June 30, 2022 with the U.S. SEC announcing those results on August 8.

Global Blood Therapeutics, Inc., a biopharmaceutical company, engages in the discovery, development, and delivery of treatments for underserved patient communities with sickle cell disease (SCD). The company offers Oxbryta tablets, an oral, once-daily therapy for SCD.

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Emerson Electric to sell InSinkErator to Whirlpool for $3B

Whirlpool confirms pact with Emerson Electric to acquire InSinkErator for $3B

Whirlpool (WHR) announced that it has entered into a definitive agreement with Emerson Electric (EMR) to acquire InSinkErator, the world’s largest manufacturer of food waste disposers and instant hot water dispensers for home and commercial use, in an all-cash transaction for $3B.

The acquisition is expected to be immediately accretive to Whirlpool Corporation’s margins, adding approximately $1.25 EPS accretion in fiscal 2023.

Whirlpool also expects to generate revenue upside by capitalizing on InSinkErator’s leading consumer brand preference, an installed base that is five times larger than the rest of the industry driving a recurring sales profile, the strong underlying secular tailwinds of the U.S. housing market, and the expansion of the InSinkErator brand into new markets and product offerings.

Whirlpool plans to initially fund the acquisition through available liquidity, with new debt put in place at a later date.

The acquisition, which has been approved by the Board of Directors of both companies, is subject to customary closing conditions, including regulatory approvals, and is expected to close in the fourth quarter. Whirlpool’s 2022 guidance remains unchanged.

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Hey Alexa vacuum my room!

 iRobot to be acquired by Amazon for $61/share in deal valued at $1.7B

Amazon (AMZN) and iRobot (IRBT) announced that they have entered into a definitive merger agreement under which Amazon will acquire iRobot. Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt. 

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We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, SVP of Amazon Devices.

“Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive-from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin.

Customers love iRobot products-and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”

iRobot makes the popular Roomba

Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.

Completion of the transaction is subject to customary closing conditions, including approval by iRobot’s shareholders and regulatory approvals.

On completion, Colin Angle will remain as CEO of iRobot.

 In light of the transaction with Amazon.com, iRobot will not hold its Q2 financial results conference call, which was originally scheduled for August 10.

In addition, iRobot has withdrawn its prior 2022 financial expectations issued in early May, as well as its long-term financial targets provided in December 2021. Given the ongoing disruptions and uncertainty that could impact the company’s outlook, iRobot is suspending its practice of providing financial guidance.

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Rig Counts decline as oil retreats!

Baker Hughes reports U.S. rig count down 3 to 764 rigs

Baker Hughes (BKR) reports that the U.S. rig count is down 3 from last week to 764 with oil rigs down 7 to 598, gas rigs up 4 to 161 and miscellaneous rigs unchanged at 5.

U.S. Rig Count is up 273 rigs from last year’s count of 491 with oil rigs up 211, gas rigs up 58 and miscellaneous rigs up 4.

The U.S. Offshore Rig Count is down 1 to 16, up 2 year-over-year.

The Canada Rig Count is down 1 from last week to 203, with oil rigs up 3 to 140, gas rigs down 4 to 63.

The Canada Rig Count is up 47 rigs from last year’s count of 156, with oil rigs up 45, gas rigs up 3 and miscellaneous rigs down 1.

Rig Counts Rise to a 2-year high

The Canada Rig Count is up 28 rigs from last year’s count of 126, with oil rigs up 22, gas rigs up 6.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

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West Texas Intermediate (WTI) is up 72 cents to $89.24 per barrel (down from a high of $123.70). Brent crude is up $0.90 to $95.04 per barre (down from a high of $127.98). Gasoline last traded at $2.869 per gallon (down from a high of $4.31 per gallon).

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What is FOMC’s next move?

The Fed says go, go, go, the markets’ say whoa, whoa, whoa

There is a lot of uncertainty on the Fed outlook and just how fast and how far will the FOMC go in hiking rates in orders to bring inflation down to the 2% average target.

Though Chair Powell gave no clear indication in last Wednesday’s press conference that the Fed was near done with its mission, the markets nevertheless heard what they wanted to hear, putting on a dovish spin and pricing in a pivot to rate cuts in the spring of 2023.

Fed Chair: Jerome Powell

But over the last week policymakers have been out in force, including several doves, strongly contradicting that outlook.

They have stressed the necessity of getting to restrictive territory while playing down the fear that the economy is already in recession.

Meanwhile, the U.S. ISM-NMI services index rose to 56.7 from a 2-year low of 55.3 in June that was last seen in February of 2021, translated to an ISM-adjusted ISM-NMI rise to 54.3 from a 2-year low of 53.7 in June.

Today’s rise joins big declines for the ISM, Chicago PMI, Dallas Fed and Philly Fed, but gains for the Richmond Fed and Empire State, to leave an 8-month producer sentiment pull-back from robust November peaks.

Surging interest rates and a flattening in real household spending as prices rise are aggravating the downtrend, though sentiment also faces support as businesses continue to restock.

The ISM-adjusted average of the major sentiment surveys in July fell to a 2-year low of 52 from prior lows of 53 in June and 54 in May. Analysts saw a 62 all-time high in both November and May of 2021. Analysts expect a 52 average in Q3, after averages of 55 in Q2, 57 in Q1, and 60 in Q4.

The futures are now repricing for about a 50-50 risk for a third straight 75 bp hike in September.

James Bullard
Federal Reserve Bank of St. Louis

Meanwhile, the hawk Bullard continues to look for a policy rate around 3.75% to 4% by year-end, though implied Fed funds still reflect a terminal rate in the 3.5% area.

Analysts continue to project a 50 bp boost in September followed by 25 bps in November and December to bring the median funds rate to 3.375%.

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JetBlue buys Spirit Airlines

JetBlue to acquire Spirit at $33.50 per share in cash or $7.6B enterprise value

JetBlue Airways (JBLU) and Spirit Airlines (SAVE) announced that their boards of directors have approved a definitive merger agreement under which JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of $3.8B and an adjusted enterprise value of $7.6B.

The transaction consideration of $33.50 per share implies an aggregate fully diluted equity value of approximately $3.8 billion and an adjusted enterprise value of $7.6 billion.

JetBlue expects to achieve $600M-700M in net annual synergies once integration is complete, driven in large part by expanded customer offerings resulting from the greater breadth and depth of the combined network.

The combined company is projected to have annual revenues of approximately $11.9 billion based on 2019 revenues. JetBlue expects the transaction to be significantly accretive to earnings per share in the first full year following closing.

JetBlue expects to maintain balance sheet flexibility with post-transaction leverage of 3.0-3.5x, well inside historical levels, and to continue its deleveraging trajectory as it captures synergies.”

“The completion of the acquisition is subject to customary closing conditions, including receipt of required regulatory approvals and approval of Spirit’s stockholders.

The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.

The four largest carriers control more than 80% of the market. Creating a low-fare, customer-centric challenger with size and scale is the best opportunity to disrupt legacy carrier pricing in the current landscape.

Even as the fifth-largest carrier, JetBlue, with Spirit, would have only 9% market share, compared to 13% for the fourth-largest airline and 23% for the largest carrier.

After the combination and with its committed upfront divestitures, the largest seat share a combined JetBlue-Spirit will have in any of its largest metro areas is 40%, compared to the 57-91% share legacy carriers have in their largest metro areas.

The airlines will continue to operate independently until after the transaction closes and their respective loyalty programs remain unchanged and customer accounts will not be affected in any way.

Following completion of the acquisition, the combined airline will be based in New York and be led by Robin Hayes. As previously announced, Spirit has terminated its prior merger agreement with Frontier. JetBlue has terminated its previously announced all-cash tender offer to acquire Spirit common stock.”

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Unity Buys IronSource, Shares Tumble

Unity Software, IronSource to merge in a$4.4B all-stock deal

Unity (U) and ironSource (IS) announced that they have entered into a definitive agreement under which ironSource will merge into a wholly-owned subsidiary of Unity via an all-stock deal, where each ordinary share of ironSource will be exchanged for 0.1089 shares of Unity common stock.

Once closed, current Unity stockholders will own approximately 73.5% and current ironSource shareholders will own approximately 26.5% of the combined company.

The companies’ complementary offerings create a unique end-to-end platform that allows creators to create, publish, run, monetize, and grow live games and RT3D content seamlessly.

The proposed all-stock transaction has been approved by the boards of directors of both companies, is expected to close during Unity’s fourth quarter of 2022 and is subject to customary closing conditions, and regulatory and shareholder approval.

The combined company is expected to generate a run rate of $1B in Adjusted EBITDA by the end of 2024.

Six Months Chart of Unity

Unity Cuts Guidance

Unity Software cut FY22 revenue view to $1.3B-$1.35B from $1.35B-$1.425B – FY22 consensus was for $1.47B. Cites current assessment of macro trends, product launch and competitive dynamic with the monetization business.

Unity expects second quarter financial results to be slightly higher than the top end of the guidance range provided during its first quarter earnings call.

Needham

Needham analyst Bernie McTernan downgraded ironSource (IS) to Hold from Buy after the company announced its intent to merge with Unity (U) in an all-stock transaction. The analyst notes that ironSource shares trade at a 8% discount to the implied takeout price.

McTernan adds that the companies’ complementary platform fit, plus profitability that ironSource provides, were reasons for the large premium paid and will likely prevent smaller players from making an over-the-top offer as consolidation continues to be a theme in the mobile ad-tech space.

Piper Sandler

Piper downgrades Unity to Neutral, says ironSource deal creates overhang – Piper Sandler analyst Brent Bracelin downgraded Unity (U) to Neutral from Overweight with a price target of $34, down from $55, after the company announced a deal to merge with ironSource (IS).

While stating that the pending merger “appears to be a highly strategic acquisition that not only adds material scale and product breadth to the gaming segment but could also help improve profitability,” Bracelin cut his rating based on the near-term overhang that he sees the merger creating as well as increased execution risk over the next six to nine months.

DA Davidson

DA Davidson analyst Franco Granda lowered the firm’s price target on Unity (U) to $60 from $85 and keeps a Buy rating on the shares. The company’s deal to acquire ironSource (IS) is “very attractive” due to the confluence of revenue and cost synergies, attractive valuation, and highly complementary tech stack amidst a backdrop of privacy-driven platform changes and macro pressures, though his reduced price target reflects lower broader market multiples, the analyst tells investors in a research note.

Ark Investments

Cathie Wood’s ARK Investment bought 1.02M shares of Unity on Wednesday.

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Rig Counts Rise to a 2-year High !

Baker Hughes reports U.S. rig count up 13 to 753 rigs

Baker Hughes reports that the U.S. rig count is up 13 from last week to 753 with oil rigs up 10 to 594, gas rigs up 3 to 157 and miscellaneous rigs unchanged at 2.

The U.S. Rig Count is up 283 rigs from last year’s count of 470 with oil rigs up 222, gas rigs up 59 and miscellaneous rigs up 2.

The U.S. Offshore Rig Count is flat at 16, up 2 year-over-year.

The Canada Rig Count is down 2 from last week to 154, with oil rigs flat at 104, gas rigs down 2 to 50.

Rig Counts Rise to a 2-year high

The Canada Rig Count is up 28 rigs from last year’s count of 126, with oil rigs up 22, gas rigs up 6.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is up $2.20 to $106.47 per barrel. Brent crude is up $2.02 to $112.17 per barrel. Gasoline last traded at $3.82 per gallon up 5 cents on the day.

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Oil Prices Soar on EIA report!

OPEC, Russia-led group agree to increase oil production

WTI prices extended earlier gains following the bullish EIA inventory report that overshadowed the boost in production announced by OPEC+.

The Energy Information Administration (EIA) is the statistical agency of the Department of Energy. It provides policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy, and its interaction with the economy and the environment.

Crude prices have climbed a whopping 6-handles on the day, surging to $117.27 from an overnight low of $111.20. This is the highest since March.

The market has been whipped recently, with prices climbing on news EU would sanction some Russian oil imports, only to tumble on reports OPEC+ was considering excluding Russia from production quotas which suggested increased output from Saudi and UAE to make up for the loss.

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Then overnight there was talk that the cartel would boost production between 500 M and 700 M barrels, which saw prices dip to the lows, but only briefly.

Prices rallied and remained elevated into the $114 area, even after OPCE+ confirmed the production increase by some 50% or 648k bpd in July and August, as there were doubt the increased output can be effected.

There is also skepticism supply will be able to meet demand down the road. The market also was likely pricing in an inventory shortfall, which the EIA confirmed with crude stocks falling 5.1 M barrels, while distillates and gas stocks declining too.

WTI is up $1.43 to $116.67 per barrel. Brent is up $1.22 to $117.52 per barrel. Gasoline is up 0.126 to $4.199 per gallon. Note that dollar is weaker today which is also helping oil prices. Euro last traded at $1.08 after hitting a low of $1.06 on the day.

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Silicon Motion sold for $8B

MaxLinear to acquire Silicon Motion for $114.34 per share consideration

MaxLinear (MXL) and Silicon Motion (SIMO) announced that they have entered into a definitive agreement under which MaxLinear will acquire Silicon Motion in a cash and stock transaction that values the combined company at $8B in enterprise value.

Combined revenues are expected to be more than $2B annually and are supported by the technology breadth to address a total market opportunity of roughly $15B.

The transaction is expected to generate annual run-rate synergies of at least $100M to be realized within 18 months after the transaction closes and is expected to be immediately and materially accretive to MaxLinear’s non-GAAP earnings per share and cash flow.

Under the terms of the definitive agreement, the transaction consideration will consist of $93.54 in cash and 0.388 shares of MaxLinear stock for each Silicon Motion ADS and $23.385 in cash and 0.097 shares of MaxLinear common stock for each Silicon Motion ordinary share not represented by an ADS.

Upon closing of the transaction, MaxLinear shareholders will own approximately 86% of the combined company and Silicon Motion stockholders will own approximately 14% of the combined company.

Based on the closing price of MaxLinear shares on May 4, the implied value of the total transaction consideration for Silicon Motion is $3.8B. MaxLinear intends to fund the $3.1B of cash consideration with cash on hand from the combined companies and fully committed debt financing from Wells Fargo Bank, N.A.

The transaction is not subject to any financing conditions and is expected to close by the first half of calendar 2023, pending satisfaction of customary closing conditions, including Silicon Motion shareholders’ approval and regulatory approvals in various jurisdictions.

Silicon Motion Technology Corporation designs, develops, and markets NAND flash controllers for solid-state storage devices. It offers controllers for computing-grade solid state drives (SSDs), which are used in PCs and other client devices; enterprise-grade SSDs used in data centers; eMMC and UFS mobile embedded storage for use in smartphones and IoT devices; flash memory cards and flash drives for use in expandable storage; and specialized SSDs that are used in industrial, commercial, and automotive applications.

SIMO last traded $96.52. MXL last traded at $44.26.

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FOMC Raises Rates

Fed boosts rates 50 basis points, says ongoing raises ‘appropriate’ 

The Federal Reserve said in today’s statement, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate.”

Federal Reserve to reduce Treasury, debt holdings on June 1 – The Federal Reserve said in today’s statement, “The Committee decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in conjunction with this statement.”

Fed says inflation remains elevated, Ukraine impacts ‘highly uncertain’ – The Federal Reserve said in today’s statement, “Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks.”

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Drill, Baby, Drill,

Baker Hughes reports U.S. rig count up 3 to 698 rigs

Baker Hughes (BKR) reports that the U.S. rig count is up 3 from last week to 698 with oil rigs up 3 to 552, gas rigs unchanged at 144 and miscellaneous rigs unchanged at 2.

The international offshore rig count for April 2018 was 194. Stockwinners

The U.S. Rig Count is up 258 rigs from last year’s count of 440 with oil rigs up 210, gas rigs up 48 and miscellaneous rigs unchanged at 2.

The U.S. Offshore Rig Count is up 1 to 14, up 1 year-over-year.

The Canada Rig Count is down 6 from last week to 95, with oil rigs down 3 to 45, gas rigs down 3 to 50.

The Canada Rig Count is up 44 rigs from last year’s count of 51, with oil rigs up 25, gas rigs up 19.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is up $1.10 to $106.39 per barrel. Brent crude is up $1.42 to $108.72 per barrel. Gasoline last traded at $3.474 per gallon flat on the day.

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Rail Traffic Declined Last Week!

North American rail traffic fell 7.5% for the week ending April 16

The Association of American Railroads, AAR, reported U.S. rail traffic for the week ending April 16.

For this week, total U.S. weekly rail traffic was 489,801 carloads and intermodal units, down 8.1% compared with the same week last year.

Total carloads for the week ending April 16 were 221,228 carloads, down 6.8% compared with the same week in 2021, while U.S. weekly intermodal volume was 268,573 containers and trailers, down 9.2% compared to 2021. North American rail volume for the week ending April 16 on 12 reporting U.S., Canadian and Mexican railroads totaled 319,064 carloads, down 6.8% compared with the same week last year, and 354,060 intermodal units, down 8.1% compared with last year.

Total combined weekly rail traffic in North America was 673,124 carloads and intermodal units, down 7.5%.

North American rail volume for the first 15 weeks of 2022 was 9,987,458 carloads and intermodal units, down 3.9% compared with 2021.

Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Kansas City Southern (KSU), Norfolk Southern (NSC), Trinity Industries (TRN), Greenbrier (GBX), Wabtec (WAB), FreightCar America (RAIL), Union Pacific (UNP) and GATX (GATX).

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American Campus sold for $12.8B

American Campus to be acquired by Blackstone for $65.47 per share in cash

American Campus Communities (ACC) announced that it has entered into a definitive agreement under which Blackstone (BX) Core+ perpetual capital vehicles, primarily comprised of Blackstone Real Estate Income Trust, alongside Blackstone Property Partners, will acquire all outstanding shares of common stock of ACC for $65.47 per fully diluted share in an all-cash transaction valued at approximately $12.8B, including the assumption of debt.

American Campus Communities, Inc. is the largest owner, manager and developer of high-quality student housing communities in the United States. The company is a fully integrated, self-managed and self-administered equity real estate investment trust (REIT) with expertise in the design, finance, development, construction management and operational management of student housing properties.

The purchase price represents a premium of 22% to the 90-calendar day volume-weighted average share price ending April 18, a premium of 30% over the closing stock price of February 16, the date immediately prior to the company disclosing receipt of an indication of willingness to offer to acquire the company, and a 14% premium to yesterday’s closing price.

The transaction has been unanimously approved by ACC’s board of directors and the independent Special Committee of ACC’s board and is expected to close in the third quarter of 2022, subject to approval by ACC’s shareholders and other customary closing conditions.

As a condition to the transaction, ACC has agreed to suspend payment of its quarterly dividend, effective immediately.

ACC shares are up $7.25 to $64.83.

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Epic Games receives $2B cash infusion

Sony, Lego holding group invest $2B in Epic Games

“Fortnite” maker Epic Games announced a $2B round of funding to advance the company’s vision to build the metaverse and support its continued growth.

This round includes investments from existing investor Sony Group Corporation (SONY) as well as KIRKBI, the family-owned holding and investment company behind The LEGO Group, with each party investing $1B respectively.

Epic continues to have only a single class of common stock outstanding and remains controlled by its CEO and founder, Tim Sweeney.

“As a creative entertainment company, we are thrilled to invest in Epic to deepen our relationship in the metaverse field, a space where creators and users share their time.” said Kenichiro Yoshida, Chairman, President and CEO, Sony Group Corporation.

Tim Sweeney, Epic’s CEO and Founder

“We are also confident that Epic’s expertise, including their powerful game engine, combined with Sony’s technologies, will accelerate our various efforts such as the development of new digital fan experiences in sports and our virtual production initiatives.”

Epic’s post-money equity valuation is $31.5B.

The closing of the investment is subject to customary closing conditions, including regulatory approvals. Other investors in Epic Games include Tencent (TCEHY), KKR (KKR), and Disney (DIS).

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