Isos Acquisition Corp.
PROPOSED BUSINESS COMBINATION: Bowlero Corp
ENTERPRISE VALUE: $2.616 billion
ANTICIPATED SYMBOL: BOWL
Isos Acquisition Corp. proposes to combine with Bowlero Corp, the world’s largest owner and operator of bowling centers as well as owner of the Professional Bowlers Association (PBA).
The transaction supports the continued expansion of Bowlero’s footprint in the $4.5 billion total addressable U.S. bowling market – which has grown 50% over last decade – while becoming the dominant player in the $11 billion global bowling market and grabbing a growing piece of the $100 billion global out-of-home entertainment market. Bowlero has a significant opportunity to accelerate already robust organic growth by developing greenfield locations, acquisitions and upgrading and converting current centers. The opportunity to upgrade about 180 of Bowlero’s centers which are yet to receive significant investment provides an ample runway for continued high returns on internal investments.
Bowlero has bowling centers in highly attractive markets across North America with 286 in the U.S., 7 in Mexico, 2 in Canada and another 26 signed or under a letter of intent. More than 70% of the firm’s revenue is generated in the top 25 metropolitan areas of North America or adjacent areas.
- Average revenue and EBITDA per center increased 8% and 13% per year, respectively, between fiscal year 2016 and pre-pandemic TTM Feb 2020.
- Store level margins for calendar year 2022 are projected to be 38.2%.
- Total company EBITDA margin for calendar year 2022 is projected to be 32.6%.
TRANSACTION
- The business combination values Bowlero at an implied $2.6 billion pro forma enterprise value.
- A $450 million fully committed PIPE transaction consisting of convertible preferred and common stock has been secured in consideration for $345 million in cash and $105 million of Atairos’ existing equity in Bowlero, anchored by investors including funds managed by affiliates of Apollo Global Management, Inc., Brigade Capital Management, Soros Fund Management LLC, The Donerail Group LP and Wells Fargo Asset Management.
- The perpetual convertible preferred stock has a 5.5% dividend and a conversion price of $13.00 and mandatorily converts into common stock after two years if the common share price is at least $16.90. The transaction will provide cash to repurchase a portion of its existing equity and leave Bowlero with adequate cash to fund its operations and growth.
PIPE
Common PIPE Offering
- An aggregate of 15 million shares of Class A common stock (the “Common PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $150.0 million
- Common Subscription Agreements of George Barrios, Michelle Wilson and LionTree accounting for an aggregate of $5.0 million of the Common PIPE Offering.
Preferred PIPE Offering
- An aggregate of 95,000 shares of Acquiror Preferred Stock (the “Preferred PIPE Shares”), for a purchase price of $1,000.00 per share and an aggregate purchase price of $95.0 million
FORWARD PURCHASE
- The subscribers agreed to increase the number of Isos units they are required to purchase on closing of Isos’s initial business combination to ten million units (for an aggregate purchase price of $100.0 million), and in connection with which Isos agreed to pay to certain subscribers a fee equal to an aggregate of $3.0 million, payable upon Closing.
EARNOUT
- An earnout equivalent to 20.75mm shares issued to the Company shareholders triggered in two parts equally at prices of $15.00 and $17.50 per share
- 1.61mm sponsor shares and 1.62mm private placement warrants subject to vesting conditions where 0.81mm
shares and warrants vested when share price >$15.00 and 0.81mm shares and warrants vested when share price >$17.50
LOCK-UP
- Isos and Bowlero entered into Lock-Up Agreements (each a “Lock-Up Agreement”) with Bowlero’s existing stockholders
- The securities held by such stockholders will be locked-up until the earlier of:
- (i) the 180 day anniversary of the Closing,
- (ii) the date on which the closing price of the Surviving Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), for any 20 trading days within any 30-trading day period following the Closing; provided that if such condition is satisfied prior to the 90 day anniversary of the Closing, such condition shall only be deemed to be satisfied on the 90 day anniversary of the Closing
- Sponsors subject to a lock-up period of twelve months following the Closing
NOTABLE CONDITIONS TO CLOSING
- The Closing Acquiror Cash being equal to or exceeding $520,000,000
NOTABLE CONDITIONS TO TERMINATION
- February 1, 2022 (the “Termination Date”)
ADVISORS
- J.P. Morgan Securities LLC is serving as financial advisor to Bowlero.
- Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Bowlero.
- Davis Polk is acting as legal advisor to Atairos, a significant current holder of Bowlero’s equity.
- Proskauer is acting as legal advisor to management. LionTree Advisors LLC is serving as financial advisor and placement agent to Isos.
- J.P. Morgan Securities LLC is acting as lead placement agent and capital markets advisor to Isos.
- Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to J.P. Morgan Securities LLC and LionTree Advisors LLC in their capacities as placement agents.
- Hughes Hubbard & Reed LLP is acting as legal advisor to Isos.
MANAGEMENT & BOARD
Executive Officers
Michelle Wilson, 55
Co-Chief Executive Officer; Co-Chairman
Prior to her current position, Ms. Wilson served as Co-President and Board member at WWE from February 2018 to January 2020. She served as Chief Revenue & Marketing Officer from November 2013 to February 2018, and Chief Marketing Officer from February 2009 to February 2018. From August 2001 to February 2009, she was Chief Marketing Officer of the United States Tennis Association where she was instrumental in making the U.S. Open the highest attended annual sporting event in the world with more than 700,000 fans in attendance every year. She was pivotal in the implementation of several innovations for the sport, including in-stadium video screens, blue courts, instant replay and the 2004 launch of the U.S. Open Series. From April 2000 to July 2001, she was Vice President of Marketing for the XFL. Earlier in her career, Ms. Wilson held positions at the National Basketball Association in its domestic and international consumer products groups as well as roles at Nabisco and Johnson & Johnson. Ms. Wilson holds a B.S.E. in Chemical Engineering from the University of Pennsylvania and an M.B.A. from the Harvard Business School.
George Barrios, 55
Co-Chief Executive Officer; Co-Chairman
Mr. Barrios most recently served as Co-President of the WWE from February 2018 to January 30, 2020. Prior to his current position, he was the Chief Strategy & Financial Officer of the WWE from November 2013 to February 2018, and Chief Financial Officer from March 2008 to November 2013. Before that, he was Vice President and Treasurer of The New York Times Company from January 2007 to March 2008. Mr. Barrios joined The New York Times Company in April 2002 as Chief Financial Officer of a subsidiary, which published, among other things, The Boston Globe. Prior to that, he was President and Chief Operating Officer of Netsilicon, Inc. from September 2000 to September 2001, a publicly held software development company, where he helped to stabilize the business prior to its merger with Digi International Inc. in 2001. From 1994 to 2000, Mr. Barrios served in several senior capacities for Praxair, Inc., a large supplier of industrial gasses. Earlier in his career, he held various leadership roles in strategy and operations at Time Warner Cable/HBO, Inc. Mr. Barrios holds a B.A. degree and an M.B.A. from the University of Connecticut.
Winston Meade, 42 [Appointed 4/29/21]
Chief Financial Officer
Mr. Meade, 42, has more than 20 years of mergers and acquisitions experience across several industries. Since February 2021, Mr. Meade has served as Managing Director of Isos Capital Management L.P. (“Isos Capital Management”), an investment firm focusing on the media, entertainment and sports industries. Prior to Isos Capital Management, Mr. Meade served as Managing Director at Stephens Inc. from March 2017 to December 2020 and served as a Managing Director with UBS Investment Bank from June 2000 to March 2017. Mr. Meade has a Bachelor of Arts degree in Economics from the University of Virginia.
Board of Directors
Derek Chang, 52
Director
Mr. Chang is a global media, sports, and entertainment executive. He was named one of the “Top 100 Executives in Cable” by Cablefax Magazine, and “50 Most Influential People in Sports Business” by Sports Business Journal. From June 2018 to May 2020, Mr. Chang served as Chief Executive Officer of NBA China. From April 2013 to June 2016, Mr. Chang served as Managing Director, Asia Pacific at Scripps Networks Interactive, Inc., an American mass media company which was acquired by Discovery, Inc. and Head of International Lifestyle Channels at Scripps, from July 2016 to April 2018. From March 2006 to December 2012, Mr. Chang served as Executive Vice President, Content Strategy & Development at DirecTV. Since July 2020, Mr. Chang has served on the Board of Directors and as the Chair of the Compensation Committee of Vobile Group Limited, a provider of software as a service solutions. Mr. Chang holds a B.A. degree in History from Yale University and an M.B.A. from the Stanford Business School.
Barbara Daniel, 55
Director
Ms. Daniel has been Senior Vice President and Head of Corporate Strategy at SiriusXM since September 2015. From 2010 to 2011, Ms. Daniel served as Senior Vice President, Corporate Treasurer at E*TRADE Financial Corporation, an electronic trading platform, and from 2006 to 2010, she served as Chief Financial Officer at CIFC Asset Management LLC, a corporate and structured credit investment firm. She currently serves on the Board of Directors for SiriusXM Canada Holdings Inc. and SoundCloud. Ms. Daniel holds a B.A. degree in Economics from William and Mary University and an M.B.A. from Cornell University – S.C. Johnson Graduate School of Management.
Jacqueline Hernandez, 54
Director
Ms. Hernández is a global strategist, brand builder and change agent. She was named among FORTUNE‘s Most Powerful Latinas, The Hollywood Reporter‘s Power 100 Women in Entertainment, and Advertising Age’s 100 Most Influential Women in Advertising. Ms. Hernández is Chief Executive Officer & Co-Founder of New Majority Ready LLC. Since May 2019, Ms. Hernández has served as Chief Executive Officer of NewMajorityReady, LLC, a marketing and content development firm. From October 2017 to April 2019, Ms. Hernández served as president of Combate Americas, an American mixed martial arts (MMA) sports franchise and media company. She previously served as Chief Marketing Officer, Hispanic Enterprises & Content at NBCUniversal from May 2014 to March 2017 and as Chief Operating Officer of NBCUniversal Telemundo Enterprises, from May 2008 to May 2014. Ms. Hernández also served as Publisher, Head of Business Operations, P&L and Revenue at People en Espanol from March 2004 to April 2008; and previously held various leadership roles at TIME, CNN and Turner. Ms. Hernández holds a B.A. degree from Tufts University and an M.B.A. from Baruch College.
Perkins Miller, 53
Director
Mr. Miller is an e-commerce & media tech executive. He has broad experience launching and operating complex ventures, including large-scale ecommerce, major media tech, and pure start-ups. Mr. Miller has served as the Chief Executive Officer of Fandom Inc., a global entertainment media platform, since February 2019. Previously, Mr. Miller served as General Manager of North America and Americas at StubHub, Inc., an American ticket exchange and resale company, from May 2016 to February 2019. Mr. Miller served as Chief Digital Officer and Head of Media Operations at NFL, from May 2014 to April 2016, and Executive Vice President of Digital Media at WWE, from August 2012 to April 2014. Mr. Miller previously served as Chief Operating Officer at Vocativ, an American media and technology company, and Chief Operating Officer at Universal Sports. Miller holds a B.A. degree from Middlebury College.
Dan Reed, 45
Director
Mr. Reed is a global sports and media executive with 20 years of experience driving innovation in disruptive environments. He was named among the “50 Most Influential People in Sports Business” by Sports Business Journal. Since June 2018, Mr. Reed has served as Vice President of Global Sports and Media Partnerships at Facebook, Inc. and previously served as Director, Global Sports Partnerships at Facebook from September 2014 to June 2018. From 2007 to 2014, Mr. Reed served as President of NBA G League and as a Management Consultant at Kearney, an American management consulting firm. Mr. Reed holds a B.A. degree in Economics and American Studies from Northwestern University and an M.B.A. from Harvard Business School.
John Rose, 63
Director
Mr. Rose is a consultant to a broad set of technology, media, and telecommunications companies. He led a multiyear effort with the World Economic Forum to define and address issues and opportunities related to big data. Mr. Rose has served as a Managing Director and Senior Partner (Media sector) at Boston Consulting Group since October 2004. He previously served as Executive Vice President, Strategy and Corp Development, New Media, Industry and Government Affairs, and Global Asset Management at EMI Group; and Director and Co-leader of the Global Media and Entertainment Practice at McKinsey & Company. Mr. Rose is currently the Non-Executive Vice Chairman of The Video Call Center, LLC, a media technology company. Mr. Rose holds a Master of Public Policy & Management from Yale University School of Management and a B.A. degree from Wesleyan University.