Mar 13, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

President Trump last night took Broadcom out back and slaughtered its $117 billion pursuit of Qualcomm, in the name of national security.

  • For Broadcom, this is an unanticipated disaster. It got outplayed in D.C. by Qualcomm, and used by the White House as a proxy in the IP protection fight to come against China.
  • For Qualcomm, this sweet relief is only temporary. Its stock had never gotten close to Broadcom's offer price and plenty of shareholders wanted to replace the entire board. And it still hasn't been able to complete its own deal with NXP Semiconductors, nor settle its legal battles with Apple.
  • For Intel, this is opportunity. It could just breath a giant sigh of relief, or could make a play for either Broadcom or Qualcomm. The former makes more strategic sense than the latter — and likely would create fewer anti-trust headaches — but it might not be able to resist the siren song of the latter's willing shareholders.
  • For Silver Lake, it's the first major defeat after a series of high-wire wins. It's also likely to discourage other private equity firms from engaging in hostile takeover attempts. Sure this one had unique complications, but Broadcom's biggest hurdle was always its unwilling target.
  • For other CEOs, this is a lesson that cozying up to President Trump — including press conferences in which you tout new job creation, spending and even redomiciling in the U.S.— doesn't necessarily give you carte blanche.
  • For CFIUS, this apparently shows that it can work quickly when everyone is on its back. Just nine days ago it asked Qualcomm to delay its shareholder vote by 30 days.
  • For capital markets, this is unprecedented. A deal that didn't even exist has been blocked by a U.S. president, who also apparently has the power to determine who can and can't stand for election to a private sector company's board of directors. And all of this was enabled by a regulatory body focused on foreign acquisitions of U.S. companies, even though the acquirer was scheduled to stop being "foreign" in just a few weeks.
  • For future M&A, this is a warning. The White House is more than willing to stop mergers it feels aren't in the country's best interest. Not just for national security, but also for anti-trust. Just ask AT&T or DraftKings.

Deal or no deal? TechCrunch reported on Friday that Giphy held talks to raise a huge new financing round — though it’s not clear if it ever crossed the finish line." I'm hearing that the round never did happen, although it wasn't for lack of investor interest. Sounds like it's just a matter of time.

Gametime: More than 400 Pro Rata readers have already signed up for our March Madness Extravaganza, which kicks off on Thursday afternoon. To join:

  1. Log in to your account, or sign up for one on the homepage. Either option is in the top-right corner, and you can register via your Facebook account. It's pretty simple.
  2. Go to the Tournament Challenge group page and search for the Pro Rata 2018 group (search box is about halfway down the page). Password: TheBFD
  3. Create your bracket before the games begin.
Source: Giphy

Apple has acquired Next Issue Media, the maker of a "Netflix for digital magazines" service called Texture. The company was originally created by publishers Condé Nast, Hearst Magazines, Meredith, News Corp., Rogers Communications and Time Inc., and later sold a minority equity stake to KKR for $50 million.

  • Why it's the BFD: Because it reflects Apple's desire to boost the software piece of its hardware-heavy revenue pie, and also how Silicon Valley is continuing to centralize American media distribution.
  • Bottom line: "Apple's purchase of Texture raises tantalizing possibilities for publishers eager to jumpstart their digital business. But it's not the first time publishers have hoped Apple would save them and, so far, redemption has yet to come from Cupertino or elsewhere." — Sara Fischer, Axios
Venture Capital Deals

Ofo, a Chinese bike-sharing company, has raised $866 million in new equity and debt funding led by existing backer Alibaba Group. Other participants include Ant Financial, Haofeng Group, Tianhe Capital and Junli Capital.

Moogsoft, a San Francisco-based provider of AI for IT operations, has raised $40 million in Series D funding. Goldman Sachs Growth Equity led, and was joined by return backers HCL, Northgate Capital, Redpoint Ventures, Singtel Innov8, STTelemedia and Wing VC.

Turnkey, an Austin, Texas-based, has raised $31 million in Series D funding. Adams Street Partners led, and was joined by fellow insider Altos Ventures and two unidentified new investors.

BioCatch, a developer of “behavioral biometric authentication and threat detection” for banks to prevent fraud, has raised $30 million in new funding. Maverick Ventures led, and was joined by American Express Ventures, NexStar Partners, Kreos Capital, CreditEase, OurCrowd and JANVEST Capital.

Gousto, a British meal kit company, has raised £28.5 million from Hargreave Hale, Angel CoFund, MMC Ventures and BGF Ventures.

Carbon Lighthouse, a San Francisco-based provider of energy efficiency solutions to the commercial real estate, hospitality and private education markets, has raised $27 million in growth equity funding. GRC SinoGreen led, and was joined by JCI Ventures, Ulupono Initiative, WV Tech Ventures, Radicle Impact Partners and Ekistic Ventures.

Yogome, a Mexican maker of educational digital games for children, has raised $26.9 million in Series B funding. Exceed Capital Partners led, and was joined by Seeya Ventures, Insight Venture Partners and Variv Capital.

Airspace Systems, a San Francisco-based maker of drone defense systems, has raised $20 million in Series A funding. Singtel Innov8 led, and was joined by s28 Capital and return backers Shasta Ventures and Granite Hill Capital Partners.

Rent the Runway, a New York-based women’s clothing rental company, has raised $20 million in new funding from China’s Blue Pool Capital at a valuation just shy of $800 million, per Recode.

🐠 Fishbrain, a Sweden-based social network for sport fishing, has raised $13.5 million in Series B funding. B Capital Group led, and was joined by SoftBank Ventures Korea and return backers Northzone and Industrifonden.

RapidAPI, an API marketplace, has raised $9 million in Series A funding led by return backer Andreessen Horowitz.

Voci Technologies, a Pittsburgh-based provider of enterprise speech-to-text transcription and analytics, has raised $8 million in Series B funding from Grotech Ventures and Harbert Growth Partners.

NSLComm, an Israeli developer of nanosatellite technology for high-volume communications, has raised $6.25 million in Series B funding from JVP, Liberty, OurCrowd, Hawk GF, and Cockpit Innovation.

Blast, a Newport Beach, Calif.-based gamification startup, has raised $5 million in seed funding from the Forbes and Roth families, Core Innovation Capital, Great Oaks Venture Capital, Snowmass Private Equity and Wilson Sonsini Goodrich & Rosati.

Epsagon, an Israeli developer of solutions for monitoring serverless architecture systems, has raised $4.1 million in seed funding from Lightspeed Venture Partners, StageOne Ventures and Ariel Maislos.

Unearth, a Seattle-based provider of aerial images for creating interactive site maps of large construction projects, has raised $3 million from Madrona Venture Group and Vulcan Capital.

Private Equity Deals

Altice NV has agreed to sell its inter-operator telecom carrier activities in France, Portugal and the Dominican Republic, to Tofane Global, a French portfolio company of Ciclad and Trocadero Capital Partners.

AMP Capital has agreed to acquire Everstream Solutions, a Cleveland-based network services provider, from M/C Partners, J.P. Morgan Asset Management and Morgan Stanley Alternative Investment Partners.

Battery Ventures and Silver Lake have agreed to acquire EDR, a SaaS platform for property due diligence and risk management, from Daily Mail and General Trust (NYSE: DMGT) for $205 million.

GI Partners has acquired Togetherwork, a Columbus, Ga.-based provider of group management software and payment solutions, from Aquiline Capital Partners.

🚑 ICV Partners has acquired Outpatient Imaging Affiliates, a Franklin, Tenn.-based provider of outpatient radiology services from company founder Frank Kyle and MedCare Investment Funds.

Kellermeyer Bergensons Services, a Maumee, Ohio-based property services provider owned by GI Partners, has acquired Emmaculate Reflections, a Ft. Lauderdale, Fla.-based provider of contract cleaning and facility support services to restaurant chains.

🚑 NexPhase Capital has acquired Gulf Pain Institute, a Pensacola, Fla.-based chronic pain management practice.

🚑 Nordic Capital has agreed to acquire German ophthalmology group OberScharrer from Palamon Capital Partners.

🚑 Patricia Industries, a unit of Sweden’s Investor AB, has agreed to acquire a majority stake in Sarnova Holdings, an Ohio-based distributor of medical products in the EMS and acute care markets, from Water Street Healthcare Partners (which will retain a minority position) for approximately $500 million.

Shamrock Capital has invested in Wpromote, an El Segundo, Calif.-based digital marketing agency.

Spice Private Equity, a Swiss affiliate of GP Investments, has agreed to acquire Bravo Brio Restaurant Group (Nasdaq: BBRG), a Columbus, Ohio-based owner and operator of the BRAVO! Cucina Italiana and BRIO Tuscan Grille restaurant concepts, for around $100 million, or $4.05 per share (16.7% premium over prior closing price).

Public Offerings

IHS Towers, a Nigeria-based telecom towers company, is prepping a New York IPO, per Bloomberg. Shareholders include Wendel SA, Goldman Sachs and MTN Group.

Liquidity Events

Charlesbank Capital Partners has agreed to sell Cedar Creek Holdings, an Oklahoma City-based wholesale distributor of specialty lumber products and building materials, to BlueLinx (NYSE: BXC) for $413 million.

MindBody (Nasdaq: MB) has agreed to acquire Booker Software, a New York-based business management platform for salons and spas, for $150 million in cash. Booker has raised over $80 million like Medina Capital, First Data, Jump Capital, Signal Peak Ventures, Revolution, Bain Capital Ventures, Vital Venture Capital, TDF Ventures and Grotech Ventures.

Salesforce (NYSE: CRM) has agreed to buy CloudCraze, a Chicago-based provider of enterprise e-commerce solutions that had raised around $30 million in VC funding from groups like Salesforce Ventures and Insight Venture Partners.

More M&A

Blackstone Real Estate Income Trust has acquired the Canyon Industrial Portfolio, a 22-million square foot pool of industrial assets in the U.S., for $1.8 billion.

HNA Group is seeking to sell some or all of its 25% stake in Hilton Grand Vacations (NYSE: HGV), per the WSJ. The position currently is worth around $1.2 billion.

Natixis (Paris: CNAT) has acquired stakes in three boutique advisory firms: 51% in Fenchurch (UK, focused on financial services companies), a majority stake in Vermilion Partners (France, focused on cross-border M&A with China), and a minority stake in Clipperton (France, focused on high-growth tech).

Piquadro (Milan: PQ), an Italian maker of high-end briefcases, is in talks to acquire French leather goods company Lancel from Switzerland’s Richemont (Swiss: CFR).

Solidium, an investment arm of Finland’s government, has acquired a 3.3% stake in Nokia.


Golden Gate Ventures of Singapore is raising up to $100 million for its third fund, per Bloomberg.

K1 Investment Management is raising $1.5 billion for its fourth fund focused on buyouts of enterprise software companies, per a Pennsylvania pension document.

Platinum Equity is raising its first small-cap private equity fund, with a $1 billion target and $1.5 billion hard cap, per a Pennsylvania pension document.

Webster Capital, a Waltham, Mass.-based buyout firm focused on the healthcare services and branded consumer sectors, is targeting $650 million for its fourth fund ($800m hard cap), per a Pennsylvania pension document.

Final Numbers
Source: Crunchbase News
Dan Primack