 Welcome, welcome, welcome to the deal room. This is my debut. This isn't Anthony. If you're not watching on YouTube, Piers Curran here, stepping in for Anthony Chung to join Steven to chat all things M&A. So welcome to the latest episode. Hi, Steven, how's it going? Pretty well. Good to see you, Piers. I was just discussing, we've just dated our, and I've got the newest version of the Amplify T-shirt which I'm quite proud of. I've actually been wearing it every day this week. And you've got the other one. What's going on there? Well, you know, as I said, I like to go retro every now and then. I've actually got, I think, I'm the only owner of the original Amplify T-shirt, which dates back over a decade. I'm pretty sure not even Will has one of those. So as collectible items go, that's right up there. I would say valuable. Yeah, yeah, I think that's a good asset that we could probably borrow against in the future. We can probably talk about that a little bit later on. Yes, indeed. But look, let me lay out the sort of, well, kind of three broad talking points for today. So we're going to talk, well, J.D., this is a Chinese monster conglomerate. And well, they've decided to split up, split up into seven different parts. It kind of suspiciously in some ways comes on the coattails of Allie Barbar announcing pretty much the exact same thing a few days prior, where they're looking to break up into six parts. So yeah, we're going to talk about, I guess, unlocking value through spin-outs, but thinking about the logic of conglomerates and this thing called verticalization. And then the logic of breakups and spin-outs, and does it make sense? So we'll discuss and tackle that. Number two, we're going to go UK mobile phone networks. You might have heard in the news that Vodafone is looking to merge with three. Three is actually owned by a company called CK Hutchinson, Hong Kong-based company, actually. But look, these two are looking to merge. The issue is this will create the world's, sorry, the world's, the UK's biggest mobile network. If they did merge, I think they'd have 28 million customers. So yeah, we'd love your thoughts, Stephen, on what this means from the regulators and the competition commission's point of view. And really what size market share is appropriate and is it a good thing for the UK mobile phone network that we get such a giant player or not? And will it get through the regulators' scrutiny or not? And then finally, we're gonna chomp into a bit of subway and talk buyouts because we've got certain suitors weighing up, I think it's a three billion securitization sort of buyout fund. So we're gonna talk about that and really delve into things like capital structure and use this as a sort of case study to talk about leverage financing and so on. So there are kind of three big topics. But yeah, let's talk, let's talk JD. And before you wade into it, there's a thing called 618, which is a Chinese dropping day. You might have heard of Singles Day, which is the number one retail event of the year in China, Singles Day. I think, is that in November? Correct me if I'm wrong. Am I right in saying it's in November? I'm wrong. I think it is, but, and this is the day where, yeah, comfortably the largest amount of money gets spent on online shopping. Just behind that in terms of biggest shopping days of the year is the 618 day. It's the 18th of June. And again, it's used as this kind of monster, kind of marketing excuse for the e-commerce giants to run campaigns and try and drive traffic to their sites and get people snapping up bargains and kind of stuff like this. It's a bit genius, I have to say, because JD are behind this 618 thing, phenomenon, it's actually their anniversary as a company. They were founded in 1998 by this guy called Liu Guangdong. And they were founded between the 18th, 1998. And they managed to kind of basically use their birthday as an excuse to flog a load of stuff at cut-down prices. And it kind of gathered momentum to the point where all other retailers then jumped on the bandwagon. And it's just exploded to become this kind of massive sort of national annual event. But yeah, so JD are kind of behind that big event, which was of course earlier this week. So they've used this anniversary to also make a big announcement. So what are they up to? They're gonna break up, what's going on? No, no, good, I didn't know that about the 618. So that's really interesting. Reminds me of the invention of Valentine's Day. It's apocryphal, but the marketing executives in 1950s America thinking we need to generate some cash between Christmas, that head spot between Christmas and Easter, let's create something. So be genius, as you said. But this is, yeah, I love this story because it's a story of conglomerates. And it's also a story that links back to if you did economics at A level or even at university. This is all about economies of scale. And it's all about specialization and focus and all of these really interesting business principles. So, a little bit of background on what a conglomerate is and some examples of pretty famous conglomerates. So conglomerate is essentially a holding company, a company that sits above a number of different subsidiaries that either wholly or partially owned by the holding company can exist in almost every different or any different industry. So the traditional old school conglomerate, and I think an example is, you know, the Hong Kong conglomerate Swire and Jardines. So Swire, it's an old school conglomerate that sits atop Cathay Pacific, which is an LA. Swire Properties, which is a property company. They own a shipping division. They own a part four courts and our sales distributors. You know, what is the rationale between this diverse mix, this hodgepodge of different industries? You'd even say Barcha Hathaway is a bit of a conglomerate in that sense, right now? The reason why you would find conglomerate is a kind of holding company, kind of two reasons. Firstly, you can access the capital at a cheaper price because you're a bigger entity and therefore you can borrow cheaply and distribute down to any part of that holding company that you wish. Obviously, there are potential issues with where you put that money, but you have these economies of scale, you know, in terms of the cash flow going up to the holding company. The second is diversification. If Cathay Pacific's not doing well one year, then maybe it will get onto balance by why property's doing very well the next year. So you've got this kind of portfolio element as an owner, as a holding company, that's quite attractive. So to bring it forward to JD.com, it's exactly the same story with Alibaba. You start off with a really nice kernel of a business, the e-commerce business, okay? And then, you know, as you grow, as you get more excited about scale, as you recognize different areas of opportunity in different adjacent business areas, you start thinking, well, you know, I've done this job pretty well. Why don't I just start a business here? You know, why don't I just start a logistics business? Why don't I just start a health business? Why don't I just start a property business? Why don't I just start an industrial business? You know, and these are all businesses that JD.com has started. But there comes a point where sound business sense, you know, if I'm an e-commerce company, maybe it makes a lot of sense to own a logistics company because I'm owning a different chunk of the supply chain and taking margin. But does it really make sense to own an industrials company? You know, is that too adjacent to be core to the business model and also the pitch that you make to investors as they're looking to invest in you and obviously increase the share price. So JD.com and Alibaba basically become kind of slightly ugly monsters in the sense that they've got these sprawling business units employing hundreds of thousands, actually over a million people. And there's not necessarily a lot of logic to some of these business units. And Piz, you'll know this really well. If I'm an investor, I've probably got a remit or a mandate or a sector or a theme that I'm looking at. Right. You know, with, you know, a company needs to have minimum percentage revenues in X area in order for me to kind of include it in my universe. These big conglomerates start looking a little bit unwieldy and they start falling out of buckets instead of into buckets. Yeah. Furthermore, what happens, you know, this happens across startups and big businesses. What happens when you're basically running seven businesses, you lose focus. So what's happened with JD.com and Alibaba and we might counterpoint this to Amazon in a separate discussion. What's happened with JD.com and Alibaba is, you know, due to macro events but also due to internal business model their share prices have been absolutely falling off down 60, 70% since highs in 2021. Now again, that's partly macro. That is partly because investors are trying to figure out where growth is coming from. So when JD announced that it is spinning its business into seven different business units or majority of the owned by the holding company. So this isn't them getting rid of the family silver. This is them creating these individual nimbler leaner business units that can go out, you know, IPO, raise separate funds, you know, be hungry and take market share in those businesses. When they announced that they were splitting and spinning off, you know, getting rid of maybe the diseconomies of scale that they were seeing, JD.com share price popped by 7%, Alibaba's when they announced it and actually popped by 14%. So investors are kind of breathing a sigh of relief and going suddenly, you're doing something that makes sense and potentially unlocking a lot of value because these are good businesses just in a relatively unwieldy structure. Okay, so like when you see a headline, like Alibaba or JD are breaking up into seven entities. Okay, when you get under the skin of it and that's not actually, so if the holding company maintains majority ownership of the new seven entities, then I guess it's the best of both worlds and so much as they're retaining some of those economies of scale elements, not just from, I guess, well, I don't know, a financing point of view with each of the seven entities now go out and raise funds individually, maybe they would, maybe they wouldn't, but I guess that there are other economies of scale factors, like, you know, you can have centralized functions, right? And so I assume they can retain functions like, I don't know, HR or finance or whatever and maybe they can retain all the good stuff on the economies of scale, but then they won't suffer from, yeah, they kind of fall out of these sector buckets because they're too unwieldy, as you said. So yeah, I guess makes sense. So I got two questions, I guess. Number one is, well, why now? And I'm a bit suspicious, why is it like, literally within sort of three days of each other, Ali Baba and JD have made pretty much the exact same announcement. So what is it about June 2023 that has suddenly triggered both to pull the trigger on this? Yeah, it's a really interesting question and it's one that I'm certainly not an expert on, but there's definitely a macro element to this, you know? So over the last few months, China, which has been shunning tech and kind of closing its door to these big, slightly maybe too big to control tech companies within the country, it started to kind of reopen the door and to invite Jack Ma back from wherever he was staying. And sometimes it'd be a bit more business friendly, right? And I think probably the macro quo, one can speculate that the reason why the door was shut on the likes of Jack Ma was because there was a concern that he was becoming better than the state and a bit of a statesman-like figure. You know, if he comes back and says, not necessarily groveling, but saying, look, actually would bring you more favor if we created a slightly more decentralized structure with individual CEOs and individual boards of directors, IPOing with their separate entity, would this make you feel more comfortable and would this make you feel more inclined towards supporting e-commerce and tech businesses? That is a pretty compelling argument to the Chinese government. So, maybe there's a macro element to this. I'm sure there's a lot of investor pressure when a lot of people bought into JD.com and Alibaba a few years ago and it's listed in the US, it's dual listed. So, US investors are thinking, where's my 70% gone? You used to be trading at X, now it's 70% off. There's going to be investor pressure hence why you saw both stocks jumping on the announcement. It just seems like good news. If and only if it can be done successfully. Well, that's it. I mean, it sounds good on paper and share prices pop. But I mean, what are the risks? I'm sure there's some pitfalls along the way here in terms of execution. Yeah, it's really interesting. So, we talk in the world of M&A about synergies, right? So, when one company acquires another company, we're very good on our spreadsheets to create these synergies from combining two entities, right? You know, post synergies, we might be able to combine our HR function as you mentioned. We might be able to combine a head office function, shut multiple one industrial manufacturing plant because we've got this bigger, more efficient one. And you save money and you add to your bottom line. When you're talking about a breakup or spin offs, the danger is you have the inverse of that, right? You've put synergies by unifying centralized functions and then you're going to have to, you know, from a regulatory and governance perspective, you're going to have to start to create these individual functions within these seven businesses. And suddenly the profit that you see at a top coat or a holding co-level, you know, which is, you know, which is relatively, relatively strong. I mean, daily.com's profits, you know, only $3 billion a year, but it's still in a kind of aggressive growth phase of its business. Suddenly you'll see that at least in the first few years, you'll see that strong as the business units. Hopefully it will be more than made up with renewed focus and, you know, and a look for market share and things like that. So I'd say that, you know, that has got to be, it's hard to break these things apart and it's going to cost money. Yeah. Well, I guess now you mentioned their profit because I think revenues are $150 billion, right? And they only generate around $3 billion of profit. That's a way that they're in margin, right? So when you start saying this could cost a bit to kind of, you know, one off costs fine, but still to kind of execute this. So yeah, there's not a lot of room there on the sort of bottom line to execute this without having a year of loss. Of loss. Yeah, it's a good opportunity to bring Amazon here, you know, maybe to bring this little piece to a close. To Amazon, Amazon is a brilliant case study of kind of semi-conglomerate through verticalization, lots of jargon in there, right? So Amazon has been the most amazing company looking at its costs. And I can just imagine Basel's back in the day going, you know, why are we paying so much for data centers? You know, why are we paying so much for cloud computing? Why don't we do it ourselves? Why are we paying so much for distribution? Why don't we do it ourselves? And actually Amazon's margin on, a profit margin on e-commerce is way for thing. Yeah. It's really, really hard, you know, they were loss making for over 20 years, but it's by verticalizing, by basically owning margin throughout the supply chain and Amazon has been able to jump its profit margin. We all know that AWS, Amazon Web Services is the key driver of growth for that company. So it's kind of, they own a lot of different business units, but they're all contributing to the margin and also contributing to the kind of logic of the business model. So it's just quite an interesting way, you know, you can do it well and you can certainly do it badly. Yeah. Well, interesting stuff. Well, let's shift across from China. Let's bring it home. And well, let's bring it semi-home because I guess we're going to have one foot still a little bit over in the Far East with the fact that Vodafone and three merging. I didn't quite realize, maybe we'll touch on this not immediately, but CK Hutchinson is a Hong Kong-based business. So I don't know if there's any political element to all of this from the regulators point of view, but before we kind of talk about politics of it all. Yeah, this is a really interesting one. I guess they've been China. There's been, I guess, ambitions of consolidation sort of right up the top of the tree of the UK's mobile network space for a long time and it's never quite happened. And so I guess this is the latest episode. So yeah, talk me through it. Vodafone and three merging. What's the rationale? Will it happen? Will it happen? Yeah, well, we can definitely talk about regulation. That's a big part of this story and we can talk about natural monopolies and oligopolies and things like that. All good stuff that we all remember studying. Way back in the day, just a little bit of a highlight on the deal because it was probably the major deal that was announced last week. So this is a 15 billion pound deal to merge Vodafone UK. This is not Vodafone PLC. Vodafone PLC operates across the world and generates a lot of its revenue in the EU. Vodafone UK and three, which is a subsidiary of Hutchison, which is the Hong Kong listed conglomerate, you know, going back to conglomerates. So this is a 15 pound deal where the equity of the two businesses is valued at nine billion and six billion of the enterprise value of the deal is going from debt from the existing entities fed into this merged entity. Again, enterprise value is not just equity value, it's also the value there. And this becomes a brand new new entity. It becomes a brand new entity. It is going to be owned 51% by Vodafone. And there's a reason why there's 51% by Vodafone, which we can talk to a little bit later with regards to regulation and 49% from Hutchison. And the rationale, you know, I thought a little bit about its rationale. So Vodafone, I don't know if you followed the story, but over the last year or two, there's been an activist shareholder campaign basically saying, look, Vodafone, you're not performing anywhere near what we expect you to be performing at. You're still investing money into loss-making businesses. You're not focusing on the real jewels in the crown of your business, just basically Germany, UK, Spain, et cetera. And A, we want to get your CEO out because we don't think he's good enough. Right, Reid. B, Reid's been responsible for a 20% decline in the share price. So something. So, you know, Vodafone had to make some moves, right? And by merging with three, what they're trying to do is create an entity that's got the firepower to invest across the 5G spectrum, which is, again, the big land grab in this industry, a bigger entity with more ability to raise capital and receive investment from the parent companies is going to give them a war chest to go out and what compete, E, E, et cetera, in this market. They also say that the deal is going to unlock two, this is quite staggering, the deal is going to unlock up to 7 billion pounds in synergies. Right. So 7 billion pounds in synergies, when you think about an equity value or an enterprise value of the business of 15 billion pounds, you're basically saying that this is going to be the world's greatest value creator by just unlocking all of these amazing synergies from things like marketing, unification, enhanced mass sharing capabilities, which is something that the industry does quite a lot of. So, again, who knows where that number came from and often these numbers are whatever they need to be in order to work from a deal rationale perspective. But I think that that is going to be 7 billion coming out of, coming out to you quickly. That's ambitious. Sounds like a lot of job losses. Which is going to be some job losses. Yeah. The regulators might feed into the kind of regulators list of things to be concerned about here. Yeah, this is really interesting. We can move on to regulation. And as you said, there have been four big players in the market, in the mobile phone operator market, EEO2, 3 and Vodafone. Already that's quite a concentrated market when it comes to choice, consumer choice. And back in 2016, the EEO regulators blocked just in its first attempt to link three with Vodafone 2. There's only four is okay. Three is too small a market to give consumers the choice that they need. But there are certain markets. There are certain markets that are naturally oligopolistic. That's a great word, by the way. Can you just say that? I try and say it about 10 times a day. So an oligopoly is a market with three or four major players. And sometimes that is a bad thing because it restricts competition, and places are driven up and consumers don't get choice. But often these markets, as goes the argument from Vodafone and Hudson, these markets can only support three or four big players because in order to be a big player in this market, you need scale. You need to be a national operator with the infrastructure capabilities to run this network. You need to have access to significant capital to improve your network through time. There are not that many companies, sub-scale companies will not survive in this industry. And what Hutchison's saying is, since 2019, we've been operating, our profits have been below, not just capital. So cost to capital, how much it costs to raise new money, our profits are not basically covering that. That is a clear example of a sub-scale business. And what they're basically saying is, if you don't let us do this, then it will be three anyway because we won't be able to survive. So regulators, take a little look at this. And by the way, we are committed to investing 11 billion pounds in the 5G network, which you're already lagging the US and other countries in. So come on, please come back to the table, talk to us, take another look at this. Don't just say you're gonna block it because we think this is probably good for everyone. So what's your sense? If you had to put a bet on it today, what's, would you bet that this is gonna pass and they will merge and it will go ahead? Or do you think it'll get kiboshed like it did a few years back? So if you've asked me that yesterday when I was doing the research, I would have said, probably I would put it more likely that it would pass. I think they've got a relatively strong argument. And the murmurings are that the CMA may look slightly more favorably on this deal than they have on certain deals in the past. But then I started looking into, I started looking into this market. And so a lot of the argument for this combination is, look, two sub-scale businesses, we can't operate independently. We need to team up together in order to share resources, right? But actually in this industry, resource sharing already happens, right? So co-location is a big thing in this industry, basically sharing infrastructure. So mobile phone operators will team up together to share their masks and their cell sites. So they're already doing these deals to kind of benefit from shared capacity, which slightly, not completely, but slightly kind of undermines the argument that they need to merge together in order to do this kind of stuff, in order to realize these economies of scale, in order to realize these synergies. So whether the CMA lands on the side of, actually better three big beasts than three big beasts and a sub-scale beast. I'm on the fence, 50-50, come back to me in a year's time, because it will take a year plus, probably to go through. Right, yeah, I was gonna ask on timescale. So yeah, maybe a year, 18 months. So maybe finally then, 51% Vodafone, 49% Hutchinson. So why those numbers? Should we be reading anything into that? Yeah, so there's a couple of reasons for this. So the first is Vodafone, also they slightly want to be the senior partner because, well, they have an option that if the business, the combined business, reaches a certain enterprise value, they have the option to buy the whole thing. So if the business exceeds an enterprise value of 16.5 billion, which is not kind of inconceivable, they get the right to buy the whole business up three years. So they already kind of want to be the senior party in this. They're a slightly bigger network in the UK. They're actually putting in a little bit more equity as well. So there's that argument that they should be the senior party, but also from a national security perspective, it is seen as quite important that a critical piece of British infrastructure is owned from a percentage ownership and a control perspective by a UK DLC. So we're still in this Huawei national security. Let's try and make it as easy as possible to get this deal through, hence we'll make Vodafone the senior party. And I think it makes sense for a number of other reasons as well. Okay, interesting stuff. We shall track that story. As you said, it could be rolling for many, many months, a year plus. So we'll keep track of this as things play out. Let's move on to our final topic. And well, let's talk Subway. Did you know, fun fact, there are 37,000 Subway branches globally. That's a lot of one foot sandwiches that are getting sold there. So talk to us. What's going on? There's a buyout in the offering. Yeah, so Subway's up for sale. Subway's up for sale. There's a few more and there's a leading the sell side process to sell Subway. They initially wanted $10 billion for the organization, but they're now aiming to reach about $9 billion. There are a lot of private equity firms slipping around. The first round saw 20 PE firms interested. The way that a process like this will work is that you winner it down 20 down to five if you're preferred and then that's exclusive and then you get the transaction. So from 20, we now have four or five private equity firms that are interested in buying this company. And this company is a really interesting one. Obviously we all know it from virtually every high strength, but it is not just, it's a franchise or. So it doesn't run the company. It doesn't run at the stores. It is a franchise or that provides material, expertise, brand, marketing to individuals that want to set up and the franchisee pays a franchise fee to set up 10 to 15K. It's actually really quite low compared to McDonald's or something like that in hundreds of thousands of dollars. And then they pay 12.5% of gross sales minus tax every week back up to several, right? So Subway, the business model, a franchise business model is quite a nice one if it works. You're up there, you're doing the marketing, you're giving the important, you're helping stores upgrade, you're making sure that quality standards are uniform but you're not actually taking on the risk of an individual store, that's the franchisee. And you get these nice royalty payments, franchise payments every single week, filtering up. So it's an interesting business model and it's important this business model because it goes into how this thing is going to be fired. So when private equity firms or any acquirers are looking at buying an asset, buying a business, they have a range of options available to them in terms of how to finance this. And we've spoken previously on the part about the blend of debt and equity and you possibly want as much debt as possible so that your equity could be multiplied upon exit. But actually the reality of a capital structure is much more complicated. So the way it works is it's all about risk of return. So at the very, very top of a capital structure and I say capital structure basically the 100% of financing that goes into a business that the very, very top, the most risky form of capital that you can put into a business is ordinary equity. The reason why that's most risky is because if the company goes fast, they are the last people to get the dreads of the business. They are paid out the last. So that is proper risk capital. Right down at the bottom of the spectrum, the most secured, the most safe asset capital is what we would call senior secured lender. This is where a bank or an institution lends to a company but is secured on the assets that that company has. Bit like taking out a mortgage. The bank lends me money but they are secured against the value of my property. So I'm pretty safe. I don't get a great deal of upside. The equity only has got the big upside if this thing goes into space, grows very quickly but I'm pretty safe. And then all the way in between you have these different levels of risk and return from senior secured all the way to like common stock, ordinary equity. And why this is important for the subway story is because they have got a really interesting source of revenues that can be what we call securitized. So the article that came out in Bloomberg a couple of days ago was about this thing called whole business securitization. And the fact that potential buyers of subway can get access to up to $3 billion, up to $9 billion purchase price in whole business securitization. What this means is that banks will lend to these private equity firms, these private equity buyers banks will lend at based on the royalty payments or the franchise payments that are filtering up to the business. So every week there is some certainty that instead of 7,000 stores are going to pay 12.5%. That's the thing that can be securitized. I've got access to that security. I'm pretty confident that that thing is gonna get given. And if subway goes bust, I still get those fees coming to me as a business. So I can lend you a lot more than you would otherwise be lent because I've got security through those royalty streams. Whole business securitization doesn't exist outside of a kind of royalty fee model. You can have secure businesses but this notion of whole business securitization is quite unique. And I think why it's quite an interesting story when we're trying to learn a little bit more about capital structure. So can I ask then? So that sounds like, so let's just take that franchisee who's operating their business. They're at the coal face, customer facing, coming in, trying to sell sandwiches, whatever, right? But so they're a business like a normal business they're generating sales and revenue and a portion of that's getting sent up to find the subway business. But I don't understand like from a bank who's lending, why would they see that royalty fee? Why is that less risky than a normal company's revenue and therefore profits? Is it just because there's a, you've got 37 pounds and off them. So perhaps the risk is therefore diluted. Is that how it works? Yes, it's a really good question. It's quite a tough one to unpack. So if I was a bank and I was looking at these royalty payments, I would see the agreement between the franchisee, the individual store and the franchisor as an asset. That long-term agreement, five to 10 years, 12.5% relatively stable income streams across a 37,000 portfolio. As I could see that as an asset, I would be willing to lend against. So that if the top go went bust, I still can get that revenue stream because those companies are still existing underneath. So the kind of the risk is certainly spread and the contract length is quite visible. So there's visibility of income. And what you're essentially doing is you are packaging millions of subway customers into 37,000 consistent revenue streams. As a bank, I would feel so much more confident lending against than lending against the 2.5 million buyers of a subway sandwich every lunch. So it's just a different risk profile. And it has it mirrors a little bit of the mortgage-backed securities kind of combinations that we saw back in the dark days, pre-2008. So I guess then thinking back to your capital structure, then this comes, it's more down towards the sort of senior secured debt end of the spectrum. And therefore I would assume then that the interest rate on that level that the interest rate on that loan is lower. Absolutely, absolutely. And you will be able to potentially borrow more. Right. So the article goes, there's potentially up to 3 billion available in whole business securitisation and an additional 2 billion available in traditional bonds and loans. So you're getting five nights of your capital structure potentially in debt. And actually weirdly enough, just to kind of move this onto the second interesting part of the story, that five billion number is the amount of money that JP Morgan, remember JP Morgan is advising subway, not advising the buyers, is the amount of money that JP Morgan is offering as what's called staple or bridge financing. So this is a really common thing in private equity or in deal-making in general. If I'm a bank with a big banner sheet active on behalf of Subway and we wanna get this sale done by July, I can sweeten it by saying, you're buying Subway, but you're also buying this $5 billion financing package that we as JP Morgan have bespokely put together for you for this acquisition. So the buyers don't need to scramble around certainly for the first year, thinking about that five billion, they just buy Subway and have the debt that's already arranged. And then JP Morgan can work with the eventual buyer to see how to, maybe turn that into a longer term debt instruments or whatever it might be. So really smart. So there's no like half of me wants to say, well, hang on, isn't there a bit of a conflict of interest there where JP Morgan wanna get this deal done ASAP really because of the fees they'll generate from the financing product which the buyers are gonna be paying for. And therefore a bit of a conflict maybe in terms of representing Subway the seller. Yeah, it's a really good point and you'll find this all the way through corporate finance. And you may not call it an explicit conflict of interest but the best representation of this kind of packaged offering is if you work for a big lender that isn't an amazing M&A advisor, you might well get a little ticket on the M&A deal not right at the top as the leader ranger but maybe somewhere, a little tune stone for your work even if your M&A team didn't do a great deal. It's because you're the biggest lender in the syndicate. So there is a little, well, there's definitely overlap. If I have to provide you the financing I wanna get a bit of advisory fee. If I'm gonna be the lead advisor well, why don't I help lead the financing as well? So it's not necessarily a conflict of interest but there's certainly J.P. Morgan is gonna benefit both from the advisory, the arrangement of the debt and then working with the buyer to sell down the debt and restruct it afterwards. So they've got a nice ticket here. They do and I guess, yeah. I mean, thinking back to like competition commissions and stuff is almost like J.P. Morgan. I mean, we're veering off into a different conversation here so we won't go down this path but J.P. Morgan, they're such a beast that they do have maybe that power to kind of demand whatever fees they want, right? Cause there's just no one else as big as them that can kind of pull off these deals. And I guess for Subway, thinking about the competition sorry, that point about them, the conflict of interest point, maybe I guess for Subway the attraction is we wanna just get this deal done. We wanna get it done. Now we've decided to sell, let's sell. I'm right. If J.P. Morgan can provide that financing bridge it just speeds up the deal, I guess. So that's the- I'd be more likely to get if I wanted a relatively quick efficient process why not go with J.P. Morgan if they're gonna provide the stable financing? Obviously J.P. is not the only organization that does this but they're certainly too big to fail as we've discussed before. Who owns Subway now? Is it, yeah, who's the current owner? Is it public, do you consider or is it? It's not publicly listed, private equity backed. Okay, so is private equity backed just wanting to cash in on, well, it's time to exit and return funds, I guess. So they're just kind of rolling it over to a new set of private equity firms. I see. It's actually owned by the DeLuca family. So it's kind of privately owned. Oh, okay, fine. Okay. It's not private equity but privately owned. So they obviously wanna cash out. Yeah, it's just time. Yeah. Cool. Well, very interesting. So next time I step into a Subway which I confess I don't do on a regular basis but I'll ask the franchise owner, not that I'm sure they won't be behind the counter but maybe they will, I'll ask them. I wonder what the franchise owner thinks about all of this. I guess for them it doesn't really matter, right? Who are the big bosses upstairs? You just gotta send them the money. Yeah. It could not care less. It could not care less. Cool. Very interesting stuff. Well, thanks very much for your insights and we'll leave it there for this week's Deal Room episode and we'll be back next week for more interesting insights. Thanks very much, Stephen. Take care. Bye. Thank you, Piers.