Mar 11, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Lazaro Gamio/Axios

Presidential candidate Elizabeth Warren on Friday unveiled a tech trust-busting plan that would theoretically undo some of the past decade's most influential mergers, including Facebook's 2012 acquisition of Instagram, Google's 2007 deal for DoubleClick, and Amazon's 2017 purchase of Whole Foods Markets.

  • Other companies affected could theoretically include Apple and Walmart, although Warren didn't explicitly call them out.
  • Warren has repeatedly said on the campaign trail that she is a capitalist, not a socialist, but that she believes America's current application of capitalism is so lawless as to be counterproductive.

Silicon Valley, so far, is largely rolling its eyes.

  • Warren remains a long-shot to get the Democratic Party nomination, let alone win the presidency.
  • Even if elected, she couldn't implement her plan by fiat. She'd need Congressional help for much of it, including approval for her hand-picked regulators, and inevitably would face court challenges on forced divestitures.
    • President Trump expressed opposition to AT&T's Time Warner acquisition during the campaign and his DOJ sued to block the deal. He lost.
  • Big tech believes that consumers are more concerned with privacy than with power.
  • I spoke to several tech deal-makers over the weekend, and none of them said that Warren's plan is causing even a tentative hiccup in their active pipeline.

But, but, but:

  • Donald Trump was a long-shot to get the Republican Party nomination, let alone win the presidency.
  • There well could be Congressional support for such a plan if Democrats take control of both chambers, particularly given that it's really a tech-targeted version of the "Better Deal" plan released in mid-2017.
    • Courts are currently hamstrung a bit by current antitrust law, which hasn't been updated much since J.P. Morgan was known more as a person than as a bank. Change the laws, change the rulings.
  • Big tech has been shown to have a tin ear when it comes to the consequences of its actions.
  • Tech deal-makers don't care if they close a merger tomorrow that gets unwound in three years. The advisory fees don't get refunded.

Chip chop: Nvidia this morning agreed to buy rival Silicon Valley chipmaker Mellanox Technologies for around $6.9 billion in cash, or $125 per share (14.25% premium over Friday's closing price).

  • It is Nvidia's largest-ever acquisition, and reportedly comes after besting Intel at auction.

BFD update: Barrick Gold (TSX: ABX) withdrew its $18 billion hostile takeover bid for rival Newmont Mining (NYSE: NEM), instead agreeing to create a joint venture for their Nevada mines.

Another Social Capital refugee has found a new home: Mike Ghaffary, who had joined SC as a partner in mid-2017 before leaving one year later, has joined Canvas Ventures as its fourth general partner.

  • Ghaffary's resume also includes time as CEO of Yelp Eat24, co-founder of Stitcher and as a VP with Summit Partners.
Source: Giphy

Private equity executives Josh Harris and David Blitzer are seeking a buyer for Crystal Palace, the English Premier League club they bought three years ago, per Bloomberg.

  • Why it's the BFD: Because, and stop me if you've heard this before, "football" is the world's most popular sport, and EPL is its most-watched league. Plus, this sale process was unexpected, as Harris and Blitzer have proven themselves to be longer-term owners of other pro sports franchises like the NBA's Philadelphia 76ers (since 2011) and the NHL's New Jersey Devils (since 2013).
  • Is Crystal Palace any good? No. It currently sits in 14th place (out of 20 clubs), and its highest-ever finish was 3rd (nearly three decades ago).
  • Bottom line: "Harris and Blitzer had been among the owners who unsuccessfully sought to keep an even share of the league’s international TV money. Bigger clubs like Manchester United, Chelsea, Liverpool and Arsenal won the right to get a bigger share, saying their international popularity drives viewership." — Scott Soshnick, Bloomberg
Venture Capital Deals

Talent Garden, a co-working space operator in Southern and Eastern Europe, raised €44 million. Return backer Tamburi Investment Partners led, and was joined by Social Capital and Inadco Ventures.

🚑 Ossio, a Woburn, Mass.-based developer of bone regeneration technology, raised $22 million led by OCV Partners.

PolyAI, a London-based conversational AI platform, raised $12 million in Series A funding. Point72 Ventures led, and was joined by Sands Capital Ventures, Amadeus Capital Partners, Passion Capital, and Entrepreneur First.

Josh Wood, a London-based celebrity hair colorist, raised $6.5 million for an at-home hair coloring line. Index Ventures led, and was joined by JamJar Ventures and Venrex.

Serial Box, a New York-based digital reading and audio platform, raised $4.5 million in seed funding co-led by Boat Rocker Media and Forerunner Ventures.

TartanSense, an Indian agriculture robotics startup, raised around $2 million in seed funding from Omnivore Partners, Blume Ventures and BeeNext.

🚑 Africa Healthcare Network, a Mauritius-based provider of kidney dialysis treatment in East Africa, raised an undisclosed amount of Series A funding from Africa Healthcare Fund and Polaris Partners.

Private Equity Deals

Advent International isn’t moving forward with a $2 billion takeover offer for listed Italian credit data provider Cerved, per Reuters.

Anchor Partners acquired Quality Industries, a La Vergne, Tenn.-based precision metal fabrication company.

• Blackstone Infrastructure Partners invested in Carrix, a Seattle-based marine terminal operator.

• CCMP Capital Advisors agreed to buy BGIS, a Canadian integrated facilities management company, from Brookfield Business Partners for approximately US$1 billion.

• Greenbriar Equity and First Aviation Services acquired Dart Aerospace, a Canadian provider of equipment and aftermarket components for the helicopter and fixed-wing industries.

TPG agreed to acquire a majority stake in Goodnight Midstream, a Dallas-based provider of fluids handling solutions to midstream oil and gas companies, for approximately $930 million. Sellers include Tailwater Capital.

Public Offerings

• No companies are expected to go public on U.S. exchange this week.

• Alight Solutions, a Lincolnshire, Ill.-based benefits administration software company owned by The Blackstone Group, set IPO terms to 32 million shares at $32-$35. It would have an initial market cap of $6.85 billion, were it to price in the middle, and plans to trade on the Nasdaq (ALIT) with BAML as lead underwriter. The company reports a $21 million net loss on $2.38 billion in revenue for 2018.

👖 Levi Strauss & Co., the San Francisco-based jeans-maker, set IPO terms to 36.67 million shares at $14-$16. It would have an initial market cap of $5.78 billion, were it to price in the middle, and plans to trade on the NYSE (LEVI) with Goldman Sachs as lead underwriter.

🚑 Medacta Group, a Swiss orthopedic device-maker owned by the founding Siccardi family, said it plans to go public in Q2.

Liquidity Events

• Apax Partners is seeking buyers for Engineering Ingegneria Informatica, an Italian IT services firm that could fetch more than €1.5 billion, per Reuters.

• Appen (ASX: APN) agreed to buy Figure Eight, a San Francisco-based data annotation startup, for upwards of $300 million ($175m upfront). Figure Eight had raised around $58 million from Industry Ventures, Salesforce Ventures, Canvas Venture Fund, The Dcode Group, Microsoft Ventures and Trinity Ventures.

• Mastercard (NYSE: MA) agreed to buy Transfast, a New York-based cross-border money transfer network, from GCP Capital Partners.

More M&A

Alibaba Group (NYSE: BABA) invested $693 million for a 14% stake in listed Chinese courier service STO Express.

Boeing (NYSE: BA) acquired ForeFlight, a Houston-based provider of digital flight navigation software.

Helen of Troy (Nasdaq: HELE) is seeking to sell its beauty business, which includes Pert shampoo, Brut cologne and Revlon hair dryers, for around $300 million, per the WSJ.

Hitachi (Tokyo: 6501) is seeking to sell its 51% stake in Hitachi Chemical (Tokyo: 4217) for more than $2.7 billion, per a Japanese media report.

Mastercard (NYSE: MA) has dropped its buyout bid for British payments firm Earthport (AIM: EPO), likely clearing the path for a takeover from Visa (NYSE: V).

• OneSavings (LSE: OSB) is in talks to acquire rival British lender Charter Court (LSE: CCFS) in an all-share deal that could value the combined company at around £1.6 billion, per Reuters.


• TPG Capital raised over $3.7 billion for its third real estate private equity fund.

It's Personnel

Sam Altman is stepping down as president of influential startup incubator Y Combinator, in order to spend more time on outside interests like the OpenAI research organization. He'll transition into a chairman role, with many of his day-to-day responsibilities assumed by YC's partners.

Loek van den Boog, former Chairman of Mendix and Myriad, rejoined General Atlantic as a special advisor.

• Kara Davey Master joined ParkerGale Capital as a principal. She previously was with McCarthy Capital.

• Brandon Watson joined private equity firm Kinderhook Industries as a managing director of “growth, innovation and talent.” He previously was with KOM Partners.

Final Numbers
Source: Refinitiv
Dan Primack