Mar 23, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🚨 Situational awareness: Jay Powell just threw the kitchen sink at the coronavirus crisis, unveiling a slate of new policies that will, for the first time, see the Fed dip its toes into the corporate bond market. Go deeper.

🎧 Pro Rata Podcast on Saturday posted a 15-minute episode focused on the coronavirus. We began with how to social distance while still grocery shopping and helping neighbors, and then we talked with Axios' health care and markets editors. Listen here.

Top of the Morning

Illustration: Aïda Amer/Axios. Photo: Drew Angerer/Getty Staff

Sen. Ron Johnson (R-Wis.) was one of several senators who came under fire last week after disclosing that they had sold large amounts of stock just before large swaths of the American economy shut down.

  • Many of Johnson's colleagues should indeed be scrutinized by the SEC and/or the Department of Justice, but Johnson himself hasn't done anything worthy of investigation.

Background: Johnson's job before becoming a U.S. senator was CEO of Pacur, an Oshkosh, Wis.-based plastic sheeting manufacturer that had been founded by his brother-in-law under a different name (and with a different primary product).

  • The pair sold Pacur in 1986 but Johnson remained an employee. In 1997, he bought the company back.
  • Johnson was elected to the Senate in 2010.
  • A source says that Pacur began seeking to sell in early 2019, hiring an investment bank to launch an auction process that would result in bids from multiple private equity firms and strategics.
  • Over the holidays it picked an offer from Gryphon Investors. Papers were formally signed in early January with March 1 set as the closing date.
  • Gryphon's purchase of a majority stake always included Johnson's entire remaining position, which the source says was 5%. It bought the rest of its shares from other Johnson family members, who rolled over some of their stock into a minority stake.

The bottom line: This was a vanilla private equity deal that was negotiated before almost anyone had heard of COVID-19. Johnson, who has said several wrong-headed things about the pandemic, didn't trade on insider information.

The BFD

Photo Illustration: Eniola Odetunde/Axios. Photo: Yoshikazu Tsuno/Getty Images

SoftBank Group announced plans to sell up to $41 billion of assets, in order to buy back shares and reduce debt.

  • Why it's the BFD: The Japanese giant is getting hammered on three different fronts. First, Elliott Management has been pushing for buybacks since acquiring a large equity stake in early February. Second, Apollo Global Management is shorting SoftBank's debt, per the FT. Third, a special board committee at WeWork, in which SoftBank is the largest shareholder, is trying to force the firm to close on its $3 billion tender offer.
  • From last week: WeWork's letter to employees.
  • The bottom line: "The asset sales come as SoftBank’s conglomerate discount, or the difference between its market capitalization and the value of its assets, last week yawned to a record 73%." — Sam Nussey, Reuters
Pro Rata for Kids
Giphy

You sent in more kid jokes after we published the original batch last Tuesday, so here's another 15 to share with your new office mates.

Today's project: Ask your kid to make a game. It could be a board game or something like this makeshift foosball field created by Annabel, the 11-year-old daughter of a Pro Rata reader in France.

For the grown-ups: Tonight at 8pm ET/ 5pm PT, a group of Pro Rata readers with Peloton bikes plan to participate in the same ride — something we can do together while socially distancing. Yeah, I'll be on it too.

  • It's the 45-minute "All for One" ride from 7/4/19. Link here. Thanks to reader Mike Duda of Bullish for the pick.
  • So, if you've got a bike, I hope to "see" you tonight!
Venture Capital Deals

Lilium, a German air taxi developer, raised $240 million in Series C funding. Tencent led, and was joined by Atomico, Freigeist, and LGT. http://axios.link/Jz1V

Cazoo, a British online used car marketplace, raised £100 million in new funding. DMG Ventures led, and was joined by General Catalyst, CNP, Mubadala Capital, Octopus Ventures, Eight Roads Ventures, and Stride.VC. http://axios.link/IxUJ

Enable, a British provider of rebate management software, raised $13 million in Series A funding. Menlo Ventures led, and was joined by Sierra Ventures. http://axios.link/D8kX

SecuLetter, a Seoul-based information security startup, raised $6 million in new Series B funding led by Riyadh Valley Co. http://axios.link/EAMQ

This, a British maker of plant-based chicken and bacon, raised £4.7 million in seed funding from Backed, Five Seasons Ventures, Idinvest Partners, Seedcamp and Manta Ray Ventures. http://axios.link/DT1n

Private Equity Deals

The Blackstone Group agreed will pay £120 million to buy 22 U.K. logistics warehouses from real estate fund manager Clearbell Capital. http://axios.link/hdOS

The Jordan Co. acquired Transportation Impact, an Emerald Isle, N.C.-based provider of software for high-volume shippers. www.transimpact.com

Public Offerings

No companies are expected to price U.S. IPOs this week.

Liquidity Events

FuboTV, a New York-based seller of a “skinny bundle” streaming service, is going public via a reverse merger with FaceBank (OTCQB: FNBK). FuboTV had raised around $300 million from firms like Luminari Capital, DCM Ventures, Northzone Ventures, AMC Networks, 21st Century Fox, and Discovery. http://axios.link/LakZ

Lindsay Goldberg completed its €532 million sale of VDM Metals, a German maker of nickel alloys, to Spain’s Acerinox. www.acerinox.com

Thoma Bravo has postponed its sale process for Imprivata, a Lexington, Mass.-based patient data management company that was expected to fetch more than $2 billion, per PE Hub. http://axios.link/ZAx7

More M&A

BT Group (LSE: BT) sold its operations and infrastructure within 16 Latin American countries to an affiliate of private equity firm CIH Technology Holdings. The involved assets generated £110 million in the most recent fiscal year. http://axios.link/M8Bk

• Starboard Value struck an agreement with Box (NYSE: BOX), in which it acquired a 7.5% stake last fall, whereby it will get three directors on Box’s board. http://axios.link/k56N

XPO Logistics (NYSE: XPO), a Connecticut-based warehouse and last-mile delivery company, canceled plans to sell of spin-off multiple business units, due to market conditions.” http://axios.link/r1jI

Fundraising

🚑 Accelmed Partners, a New York-based lower middle-market private equity firm focused on healthcare, is raising up to $400 million for its second fund, per an SEC filing. www.accelmed.com

Lightspeed Venture Partners is said to have effectively finished raising $2.5 billion for a pair of new funds, including its fourteenth flagship fund and fourth opportunities fund. The firm declined comment, suggesting there hasn't yet been a final close.

It's Personnel

James Lee and Jae Woo Park joined Proskauer as partners in the law firm’s M&A practice. Both were previously with K&L Gates. www.proskauer.com

Final Numbers
Source: Renaissance Capital
Dan Primack

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