Fox’s $787.5 million settlement is big win for buyout firm Staple Street

By Svea Herbst-Bayliss

(Reuters) – Staple Street Capital Group LLC, the small buyout firm that owns Dominion Voting Systems, has scored a $787.5 million windfall after Fox Corp settled a defamation lawsuit brought by the voting machine operator.

The New York-based private equity firm stands to earn a return that dwarfs the $38.3 million it paid in 2018 to acquire a 76.2% stake in Dominion.

The $787.5 million Dominion will receive from Fox in the settlement, which also comes with an acknowledgement of a court ruling from its cable channel Fox News that it aired false claims about Dominion machines facilitating fraud in the 2020 U.S. election, is about half the $1.6 billion in damages it was seeking in its defamation lawsuit.

It is not clear how much Staple Street stands to receive after legal taxes and fees, but the $787.5 million settlement is equivalent to 20 times the amount it paid to acquire its controlling stake in Dominion in 2018.

Even before Tuesday’s settlement, Staple Street’s investment in Dominion had paid off handsomely. Fox said in a court filing that Dominion was valued at around $226 million in the run-up to the 2020 election, citing exhibits it did not make public. That was up from the $80 million valuation when the acquisition of Dominion was clinched in 2018.

Investors in the $265 million private equity fund that Staple Street was using for investments when it acquired Dominion include the University of Arizona’s endowment, Travelers (NYSE:) Insurance and fund-of-funds manager Hauser Private Equity, according to data provider Pitchbook.

Founded in 2009 by Stephen Owens, a former Carlyle Group (NASDAQ:) Inc dealmaker and Hootan Yaghoobzadeh, a Cerberus Capital Management veteran, Staples Street invests in companies in a range of sectors, including financial services, healthcare and chemicals.

Yaghoobzadeh told reporters on Tuesday that Staple Street backed Dominion in its mission to shoot down lies against it.

“We are proud to have played whatever part we could in helping Dominion achieve these important goals,” he said.

Staple Street investor Mark Hauser, managing partner of Hauser Private Equity, also welcomed the settlement news.

“We are very pleased with the outcome and think that Staple Street has handled the situation very well on behalf of their investors. We’ve had a relationship with Staple Street since 2014 and think highly of their management team,” he said.

Staple Street’s previous investments include theme park operator Six Flags (NYSE:) Entertainment Corp and information technology services provider Cyberlink ASP Technology Inc, according to its website.

In one of the court filings, Fox cited a December 2020 text from a former Staple Street employee to a current executive that proved prescient.

“Would be pretty unreal if you guys like 20x’ed your Dominion investment with these lawsuits,” the text read.