Good morning. Remember that time you almost traded your life savings for a luxury music festival experience, only to end up with a cheese sandwich? Well, brace yourselves folks, because the master of mishaps, Billy McFarland, is back with an encore. Yes, the man who once promised us a Caribbean paradise and delivered a logistical nightmare is now tempting fate with "Fyre Festival II." And guess what? There's no date, no location, and no lineup. But hey, why let minor details like those get in the way of a good time, right?

After a short stint in prison for fraud (just under four years, but who's counting?), our boy Billy has emerged with a tantalizing offer: the first 100 presale tickets for his sequel festival at a mere $499. But wait…there's more. If you miss out on that deal, you can always snag a ticket later for a cool $7,999. Bargain, right?

Queue George Bush and his famous “fool me once” speech: “There's an old saying in Tennessee—I know it's in Texas, probably in Tennessee—that says, 'Fool me once, shame on...shame on you. Fool me—you can't get fooled again.”

Let’s jump into today’s storylines.

In today’s digest:

• Subway finds a buyer

• Headline Hustle: Meta’s Threads releases web version, IBM sells weather business, Microsoft’s second dance with UK regulators

• Amazon’s AI scammers

• Pulse Points: What’s Trending

BUSINESS

Subway’s $9 billion sammy

Hi, can I get a sandwich chain, with everything on it?

That’ll be about $9 bln-plus.

The deal’s bread and butter

Private equity firm Roark Capital is making waves as it takes the lead in acquiring the sandwich giant, Subway, for a whopping sum of over $9 billion. But there's a catch: Roark isn't just handing over the cash. They've attached some strings, or should we say, "condiments" to the deal. These conditions, known in the financial world as an "earn-out," mean that a portion of the payment will be deferred. For the full price to be handed over, Subway's cash flow needs to hit certain milestones within a specified timeframe post the deal's closure.

Why the conditions? The DeLuca and Buck families, the proud owners of Subway, had initially hoped to bag more than $10 billion from the sale, banking on Subway's strong brand and international growth. However, private equity firms, including Roark, had a different valuation in mind. They felt that Subway's U.S. business had reached its saturation point. Add to that the challenging financing environment for leveraged buyouts, thanks to soaring interest rates, and you've got yourself a valuation gap.

To bridge this gap, Roark proposed the earn-out structure. Here’s the thing, this isn't a unique proposition; these structures are becoming increasingly common in the M&A world to reconcile price differences.

The competition heats up...as Roark isn't the only one eyeing Subway. A consortium comprising TDR Capital, Sycamore Partners, and Goldman Sachs' private equity arm has also thrown its hat in the ring. They too have proposed an earn-out structure, albeit at a lower offer than Roark. But they have a trick up their sleeve. This consortium is trying to play the antitrust card, suggesting that a deal with Roark might face U.S. antitrust risks given Roark's ownership of other restaurant brands, including sandwich chain Jimmy John's. However, the families owning Subway seem unfazed. They believe the restaurant market is too fragmented for any antitrust concerns to arise from a deal with Roark.

Final thoughts. As the deal inches closer to completion, possibly as early as this week, one thing is clear: the world of mergers and acquisitions is as dynamic as ever. And while the final price tag on Subway might raise some eyebrows, in the grand scheme of things, it's just another day in the fast-paced world of business.

Headline Hustle

🧵 Meta’s Threads launches web version. Meta's recent venture, Threads, which made its debut last month, is now rolling out on the web. Initially launched as a mobile app, Threads quickly climbed the app rankings, getting 100 million signups in 5 days. Soon after, it faced a slight dip in growth and engagement as users became aware of its limitations. But Meta's not backing down. The company is set to release a web version of Threads, aiming to make it even more user-friendly and engaging. Mark Zuckerberg, Meta's CEO, announced in early August that the company was not only working on a web version of Threads but also adding a search function to enhance its usability. Advertisers and influencers had previously expressed that for Threads to truly rival X, it needs features like a search tool and desktop accessibility. Notably, many influencers and power users on X prefer using its desktop version to post and share content throughout the day.

☁️ IBM’s weather business: a change in forecast. IBM, the tech giant known for its innovations, has decided to part ways with its weather unit. This includes popular platforms such as The Weather Channel mobile app, Weather.com, Weather Underground, and Storm Radar. The buyer? Francisco Partners, a tech-centric private equity firm. They're planning to give the weather business a facelift, focusing more on the consumer side and aims to introduce new tools related to health and well-being. But IBM isn't cutting all ties. They'll still have access to the company's weather data, which powers some of their AI models sold to enterprise clients.

🎮 Round 2: Microsoft vs. UK regulators. Microsoft, not one to back down from a challenge, has thrown its hat back in the ring with a revamped proposal for the Activision Blizzard takeover. After the UK's Competition and Markets Authority (CMA) gave a thumbs down to their initial $69 billion offer, Microsoft's come back with a few tweaks. The new deal? Microsoft won't get cloud rights for Activision's current and upcoming games for the next 15 years. Instead, French game publisher Ubisoft will take the reins before Microsoft's big buyout. The market's reaction was…positive. Ubisoft's shares jumped by over 9%, while Activision and Microsoft saw modest rises.

TECH

Scamming in style: The tale of 2 brothers, Amazon, and a lavish Italian wedding

In a world where e-commerce is booming, two brothers, John and Roman Cresto, claimed to have cracked the code to success on platforms like Amazon and Walmart. Flaunting their luxurious lifestyles on social media, they painted a picture of e-commerce mastery. But as the saying goes, if it's too good to be true, it probably is.

The deets

The Federal Trade Commission (FTC) has unveiled a complaint against the Cresto brothers, alleging that their e-commerce consultancy empire was built on a foundation of deception. The brothers charged clients hefty sums, ranging from $10,000 to $125,000, promising to manage their online stores and guaranteeing success along the way. However, by June 2022, less than 10% of the stores they managed actually made sales. And by October 2022, Amazon had suspended or terminated most of these stores for policy violations. Despite all of this, the Crestos continued to promote their "successful" business model, raking in over $1.5 million in commission fees.

But where did all the money go? The FTC claims that the Crestos splurged on luxury cars, extravagant vacations, and even a lavish wedding in Italy's Lake Como. And just when you thought the story couldn’t get any better, the brothers launched a new venture, Automators AI, which promises to teach consumers how to use artificial intelligence for online selling.

The dream is free. The hustle is sold separately.

As the Crestos' empire began to crumble, they attempted a quick exit, selling their business to Florida businessman Daniel Cohen. However, Cohen soon realized he had been duped and is now suing the brothers.

After all is said and done…one thing is clear. While the brothers may have mastered the art of deception, their days of scamming unsuspecting clients are numbered.

Pulse Points

Musk’s new game plan for X. Elon Musk is shaking things up again by removing headlines from links to news articles. While this might seem like a minor tweak, it could have major implications for news publishers, potentially affecting their ability to attract readers.

Mario’s voice is saying ‘ciao’ after three decades. Charles Martinet, the iconic voice behind Nintendo's superstar plumber Mario, is hanging up his overalls. After giving life to Mario's cheerful "It's-a me, Mario!" for almost 30 years, Martinet is stepping back. But don't fret, he's not disappearing into a warp pipe just yet. Nintendo has crowned him as a Mario ambassador, where he'll spread the joy of Mario at global events.

Meta’s Marketplace sells recalled baby products. Marketplace is in hot water as of late. They've been caught red-handed selling recalled baby products linked to over 100 infant deaths. Despite the Consumer Product Safety Commission's persistent nudges (read: about 1,000 requests a month since 2022) to remove items like the Boppy lounger and the Fisher-Price Rock ’n Play, these products keep popping up for sale. Read more about it here.

NYSE hits pause on WeWork warrants. The New York Stock Exchange (NYSE) has decided to take a break from trading WeWork's warrants. The reason? An "abnormally low" trading price. But that's not all – NYSE is also gearing up to delist these warrants altogether. WeWork, the flexible workspace provider, shared this news with the public on Tuesday.

Thank you for reading! Let us know what you thought about this edition by replying to this email.