Prospective Grizzlies buyer loses millions
August, 10, 2012
By Darren Rovell | ESPN.com
Joe Murphy/NBAE/Getty ImagesWill Grizzlies fans see a new owner after prospective buyer Robert Pera's major financial loss?Prospective Memphis Grizzlies owner Robert Pera had a rough day on Friday.
On paper, he lost about $365 million.
Pera owns about 58 million shares of his company, Ubiquiti Networks, which plummeted 42 percent on the day after the wireless product maker said sales were down because of counterfeit equipment in the marketplace.
The 34-year-old former Apple engineer agreed to purchase the team from owner Michael Heisley in early June for a reported $350 million. Last month, NBA commissioner David Stern said that the process was "proceeding on pace and we hope in the next couple months to be able to approve that."
Despite the bad news, a source close to the deal says, as of right now, the deal is on track to close. On a conference call on Friday, Pera said he couldn't talk about the Grizzlies deal.
Pera's fortunes have fallen quickly. In March, Forbes said his net worth was $1.5 billion, making him the 854th wealthiest person in the world and the 303rd wealthiest in the United States. His rise continued until May 1, when Ubiquiti shares hit $35 apiece. The next day, shares plummeted on the first news of counterfeiting issues. Friday shares fell below $9, representing a 75 percent drop in a little more than two months.
How and if the deal closes is going to depend on Pera's total stake in the team and how much up-front money he'll have to shell out before terms of the deal get voided in November. Most deals these days require owners to put up about 50 percent cash.
One source tells ESPN.com that Pera has at least three written commitments from "deep-pocketed investors" who have agreed to be part of the ownership team. The Memphis Commercial Appeal has reported that Pera, who lives in California, is looking for local investors and has spoken to FedEx CEO Fred Smith.
Most of Pera's net worth is tied into the company's stock, which investors couldn't get rid of fast enough on Friday. On average, 565,000 shares of the stock are traded each day. Friday? More than seven million shares changed hands. Despite the challenges related to the counterfeiting issue, Ubiquiti Networks actually has been profitable every quarter since Pera founded it in 2005.
If the deal does fall apart, it wouldn't be the first for Heisley. In 2007, Heisley agreed to sell 70 percent of the team for $360 million to a group headed by former Duke basketball players Christian Laettner and Brian Davis. The deal fell apart after the consortium missed a series of deadlines.