u/oilman2013

De Beers spent ~80 years convincing the world that a common rock is priceless — and the machine is finally collapsing.

The part most people know is the monopoly: De Beers controlled about 90% of the world's diamond supply. But that was just step one. Diamonds were coming out of the ground faster than anyone wanted to buy them — a normal market lets the price fall. De Beers did the opposite: it locked the surplus in a vault and released only a trickle. Artificial scarcity, enforced by one company's warehouse.

Then the marketing. In 1938 they hired ad agency N.W. Ayer; within three years U.S. diamond sales were up 55%. In 1947 a copywriter named Frances Gerety wrote four words — "A Diamond Is Forever" — later named the greatest ad slogan of the 20th century. The trick: if a diamond is forever, you can never resell it. So a second-hand market never forms, and the scarcity stays fake-but-intact. A common stone, sold at an enormous markup, that you're socially forbidden from ever reselling.

What's finally killing it: lab-grown diamonds — not cubic zirconia, but chemically identical real diamonds, now cheap. The scarcity was always fake; now it's provable. The empire once valued around $18 billion is being sold for about $1 billion.

Full breakdown in the comments — one of the cleanest examples of a business model that was pure marketing, right up until the marketing stopped working.

On Aug 4 the EA take-private closed — $55 billion, the biggest leveraged buyout in history. A consortium led by Saudi Arabia's Public Investment Fund now owns ~93% of it.

The structure is the real story. ~$18B of that $55B is borrowed money, secured against EA's own assets and serviced by its game revenue (yes — Ultimate Team packs). EA's group now pays over $1 billion a year in interest before a single new game gets made.

And the debt gets packaged and sold to pension funds, insurers and private-credit funds, so ordinary savers end up holding pieces of it. Full breakdown in the comments — curious whether people think a deal like this makes the games worse, or if EA was actually a decent LBO candidate.

On Aug 4 the EA take-private closed — $55 billion, the biggest leveraged buyout in history. A consortium led by Saudi Arabia's Public Investment Fund now owns ~93% of it.

The structure is the real story. ~$18B of that $55B is borrowed money, secured against EA's own assets and serviced by its game revenue (yes — Ultimate Team packs). EA's group now pays over $1 billion a year in interest before a single new game gets made.

And the debt gets packaged and sold to pension funds, insurers and private-credit funds, so ordinary savers end up holding pieces of it. Full breakdown in the comments — curious whether people think a deal like this makes the games worse, or if EA was actually a decent LBO candidate.

On Aug 4 the EA take-private closed — $55 billion, the biggest leveraged buyout in history. A consortium led by Saudi Arabia's Public Investment Fund now owns ~93% of it.

The structure is the real story. ~$18B of that $55B is borrowed money, secured against EA's own assets and serviced by its game revenue (yes — Ultimate Team packs). EA's group now pays over $1 billion a year in interest before a single new game gets made.

And the debt gets packaged and sold to pension funds, insurers and private-credit funds, so ordinary savers end up holding pieces of it. Full breakdown in the comments — curious whether people think a deal like this makes the games worse, or if EA was actually a decent LBO candidate.

Everyone's covering "Spencer's is buying Hot Topic, remember the mall?" The buyer isn't the story — the seller is.

- 2013: Sycamore Partners buys Hot Topic for ~$600M, most of it funded by bondholders (~$335M). Inside the company was a fast-growing plus-size brand, Torrid. 2015: Hot Topic sells Torrid — to Sycamore itself (both sides of the table, ~$55M reported), leaving the buyout debt on the mall business. 2021: Torrid IPOs at ~$2.3B. This month: Sycamore finally sells the leftover Hot Topic shell for ~$350M.

- The honest twist: Torrid has since collapsed to ~$250M, so even the "crown jewel" fell — the IPO buyers lost too. So it's not "PE printed billions," it's colder: they put in the least real cash and made sure the debt and downside sat with the bondholders and public, not them. Breakdown from the filings in the comments.

On Aug 6 an SEC filing showed Cerberus — yes, the firm from the Steward Health Care hospital bankruptcy — exercising penny warrants for ~20 million more shares of Eos Energy ($EOSE), pushing its stake from ~32.6% toward ~38%, with a contract that lets it reach 49%.
>
> The mechanics are the interesting part. The 2023 "$315.5M strategic investment" was mostly 
**debt**
 (a $210.5M term loan + $105M revolver, starting at 15% interest, released only as Eos hit milestones Cerberus defines) — plus penny warrants worth up to half the company for basically nothing. Meanwhile a 
**$303.5M U.S. Dept. of Energy loan guarantee**
 backstops the factory. So public money de-risks it, Cerberus's loan sits senior if it fails, and the warrants capture the upside if it flies.
>
> I put the whole thing together from the filings — genuinely curious what people here think: is this a rescue, or a takeover dressed as one? Breakdown's in the comments if useful.