Apr 7, 2020

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Sarah Grillo/Axios

SoftBank was sued this morning by a special committee of WeWork's board of directors for alleged breaches of contract and fiduciary duty related to SoftBank's decision to cancel a $3 billion tender offer for WeWork shares.

  • Why it matters: SoftBank is viewed by many in the private markets as an unfaithful partner. If this reaches trial, that reputation could either become widely cemented or reversed.
  • Read the lawsuit, which was filed in Delaware Chancery Court.

SoftBank last week gave two reasons for bailing on the tender:

1. The emergence of civil and criminal investigations that could create material liabilities.

  • In its lawsuit, the special committee claims that SoftBank was aware of the investigations. Not when it signed the original deal in October, but when it signed an amended agreement in late December.

2. WeWork not meeting all of the closing conditions, including a consolidation of its joint venture in China.

  • In its lawsuit, the special committee claims the China roll-up failed because SoftBank used its "influence" to persuade certain minority investors in the JV to not enable the deal.

The special committee is comprised of venture capitalist Bruce Dunlevie, a partner with early WeWork investor Benchmark, and former Coach CEO Lewis Frankfort.

  • In short, they accuse SoftBank of having "buyer's remorse" — particularly as the Japanese investment giant came under pressure from activist investor Elliott Management.
  • They also dispute SoftBank's claims that it doesn't have effective control of WeWork.
  • Representatives for SoftBank and WeWork declined to comment.

The bottom line: It is highly unusual for a VC-backed company to sue one of its investors, let alone its largest investor. But that's what's happening, and hundreds of millions of dollars are at stake for current and former WeWork employees who had been promised a payday.

The BFD

Illustration: Rebecca Zisser/Axios

Allegro Merger (Nasdaq: ALGR), a blank-check acquisition company led by Eric Rosenfeld, terminated its $380 million takeover of restaurant chain TGI Fridays, which is owned by TriArtisan Capital Partners.

  • Why it's the BFD: TGI Fridays is one of the world's largest eat-in restaurant franchisers, with more than half of its 842 stores located outside the U.S. Plus, its spinach and artichoke dip is downright delicious.
  • Details: Allegro last month pushed back the close date from March 30 to April 30, but says in a filing that the deal failure was a mutual decision based on "extraordinary market conditions and the failure to meet necessary closing conditions." Allegro will liquidate and return its IPO proceeds to shareholders.
  • The bottom line: "[The deal's] collapse will likely generate significant questions about the chain, which struggled with steeply falling same-store sales going into the merger and had $371 million in debt." — Peter Romeo & Jonathan Maze, Restaurant Business
Pro Rata for Kids

Today's project is to ask your kid(s) to create a "movie theater." That means they need to make tickets. And a snack counter. And a marquee. And whatever else. (Yes, it also means you're gonna need to watch a kid movie or TV show tonight, but do you have any better social plans?)

  • Per usual, please send me pics of what they make.

Yesterday I asked your kid(s) to make a fort. And they did!

Zack and Emma (happy 6th birthday Emma!)
Venture Capital Deals

Kurly, a South Korean grocery delivery service, raised $150 million in Series E funding at a $780 million valuation from Sequoia Capital, Hillhouse Capital, and DST Global. http://axios.link/pFN6

Podium, a Lehi, Utah-based customer messaging platform for local businesses, raised $125 million in Series C funding. YC Continuity led, and was joined by Sapphire Ventures, Alkeon Capital, Recruit Co., Ltd., IVP, Accel, Summit Partners, and GV. www.podium.com

Accellion, a Palo Alto-based enterprise content firewall company, raised $120 million led by Bregal Sagemount. www.accellion.com

CircleCI, a San Francisco-based continuous integration and delivery platform for software development, raised $100 million in Series E funding co-led by IVP and Sapphire Ventures. www.circleci.com

WorkJam, a Montreal-based engagement platform for non-desk workers, raised US$50 million in Series C funding. Inovia Capital led, and was joined by Fonds de Solidarité FTQ, Claridge, and return backers Lerer Hippeau, Blumberg Capital, and Harmony Partners. http://axios.link/yHu6

🚑 SonderMind, a Denver-based behavioral health startup, raised $27 million in Series B funding. General Catalyst led, and was joined by F-Prime Capital and return backers Kickstart Seed Fund, Diōko Ventures, and Jonathan Bush. http://axios.link/yyEi

🚑 GPB Scientific, a Richmond, Va.-based therapeutic cell production and bioprocessing startup, raised $25.5 million. Vensana Capital led, and was joined by Amgen Ventures. http://axios.link/Kxez

xbAV, a German provider of corporate pension and life insurance digitization SaaS, raised €25 million in Series C funding. HPE Growth led, and was joined by return backers Cinco Capital and Armada Investment. http://axios.link/LCYt

Myriota, an Australian developer of low-power satellites for IoT connectivity, raised $19.3 million in Series B funding. Hostplus and Main Sequence Ventures co-led, and were joined by In-Q-Tel, Inc., Right Click Capital, Singtel Innov8, Boeing HorizonX, South Australian Venture Capital Fund, and Malcolm Turnbull. http://axios.link/EOcK

AlertMedia, an Austin, Texas-based provider of emergency communication software, raised $15 million in Series C funding from insiders JMI Equity, Next Coast Ventures, and Silverton Partners. www.alertmedia.com

Okera, a San Francisco-based secure data access startup, raised $15 million. ClearSky Security led, and was joined by return backers Bessemer Venture Partners and Felicis Ventures. www.okera.com

DeHaat, an Indian agricultural services platform for farmers, raised $12 million in Series A funding. Sequoia Capital India led, and was joined by return backers Omnivore and AgFunder. http://axios.link/hkLM

🚑 Amphista Therapeutics, a Scottish oncology biotech startup, raised $7.5 million in Series A funding. Advent Life Sciences led, and was joined by Scottish Investment Bank, the European Investment Fund, and BioMotiv. http://axios.link/o1Hq

Cyolo, an Israeli unified connectivity platform, raised $4.2 million in seed funding. Flint Capital led, and was joined by Global Founders Capital and Differential Ventures. http://axios.link/kOUv

Private Equity Deals

Airbnb raised $1 billion in equity and debt funding from Silver Lake and Sixth Street Partners. http://axios.link/v7ld

Golden Skies Ventures offered to buy state carrier Malaysia Airlines for $2.5 billion, per Reuters. http://axios.link/406v

ICV Partners invested in Mintz Group, a New York-based provider of investigative and enterprise risk management services. www.mintzgroup.com

Marlin Equity Partners acquired AVI-SPL, a Tampa, Fla.-based provider of workplace collaboration solutions, from H.I.G. Capital. www.avispl.com

The Riverside Co. invested in Independent Living Specialists, an Australian provider of mobility devices like wheelchairs and personal care equipment like shower stools. www.riversidecompany.com

More M&A

Hexcel (NYSE: HXL), a Stamford, Conn.-based composites tech company, and Woodward (Nasdaq: WWD), a Ft. Collins, Colo.-based aircraft parts maker, terminated their $6.4 billion all-stock merger, citing the coronavirus pandemic. Both companies are major suppliers to Boeing. http://axios.link/avCV

Toshiba Corp. (Tokyo: 6502) is under pressure from Hong Kong activist investor Argyle Street Management to sell its entire 40% stake in Japanese flash memory chipmaker Kioxia Holdings when it goes public, per Reuters. Kioxia reportedly could IPO at a $32 billion valuation. http://axios.link/narf

Total (Paris: FP), the French energy giant, sold assets in Brunei, Sierra Leone and Liberia for a total value north of $400 million. http://axios.link/pIqp

Fundraising

Activant Capital, a New York-based growth equity firm focused on commerce infrastructure, raised $257 million for its third fund. www.activantcapital.com

🚑 Deerfield Management raised $840 million for its second healthcare growth equity fund. http://axios.link/y2hE

It's Personnel

Jason New joined Onex Credit as co-CEO. He previously was a senior managing director with The Blackstone Group and co-head of distressed and special situations investing for Blackstone’s GSO Capital Partners. www.onex.com

TPG Growth named Michael Stone as co-managing partner. Sone has been a TPG Growth partner since 2009, and will serve alongside Matthew Hobart. www.tpg.com

Sean Murphy joined Houlihan Lokey as head of its transaction advisory services practice. www.hl.com

Gabriel Olearnik joined Delta Capital Partners Management, a Chicago-based PE firm focused on litigation and legal finance, as a London-based managing director and head of Europe. He previously was with Kochański & Partners. www.deltacph.com

Sounil Yu, former chief security scientist for Bank of America, joined YL Ventures as a full-time CISO-in-residence. www.ylventures.com

Final Numbers
Source: PitchBook. Data for U.S. only.
Dan Primack

🙏 Thanks for reading Axios Pro Rata. Please ask your friends, colleagues, and fort-builders to sign up.

🚴‍♂️ Yeah, we plan to ride again. Details soon...