Aug 13, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

🎧 Pro Rata Podcast digs into a White House proposal to have the FCC monitor alleged censorship of political speech on social media platforms. Listen here.

Top of the Morning

Illustration: Sarah Grillo/Axios

When Yahoo bought Tumblr in 2013 for $1.1 billion, its press release included a "promise not to screw it up."

We could almost call that a tell, except it was really Yahoo asking if four in a row could count as a straight.

  • Yahoo wrote down nearly half of that purchase price just three years later, and then sold itself entirely to Verizon in mid-2017. In short, Yahoo never managed to leverage Tumblr's data in the way that Facebook did with Instagram ⁠— a pretty good comp given the timing, price, and sector.
  • Verizon yesterday sold Tumblr to Automattic, the parent company of blogging platform WordPress. No financial terms were disclosed, but multiple sources tell Axios that the price was around $3 million. Or, put another way, well less than 1% of what Yahoo originally paid.
    • Automattic also will take on the entire Tumblr workforce, with a source saying that puts its post-close costs at around 20x the purchase price.
    • Tumblr still hosts around 450 million blogs.
  • We hear there were other bidders, although it's unclear if PornHub was among them. The smut streamer had expressed interest back in May, after Verizon banned porn from Tumblr and put the business up for sale.
  • In terms of comps, the best I can come up with is Bebo, a social network AOL bought for $850 million in 2008, which it then sold two years later for just $10 million to a private equity firm (which later sold it to Bebo's founder for around $1 million).

For Verizon, selling Tumblr was a fire-sale for tax purposes. It also was another way to unload media assets that don't seem to interest Hans Vestberg, who became CEO after the Yahoo purchase.

  • Yes, Yahoo screwed it up. But Verizon did no better.

For Automattic, which is viewed by Wall Street as an IPO candidate, it's about adding a consumer-facing business and large existing user base (or at least just Taylor Swift).

  • Axios' Sara Fischer notes that Autommatic rival Squarespace, which also wants to go public in the next year or two, has spent big money on consumer-facing marketing campaigns to beef up its numbers. Adding Tumblr helps Automattic keep pace there.

The bottom line: One of the fastest ways to lose $1 billion in value is to be sold for just over $1 billion.

The BFD

AMS (Swiss: AMS), an Austrian sensor maker, said it would offer to buy German car-lighting company Osram for €4.3 billion in cash, a 10% premium to an existing takeover offer from Bain Capital and The Carlyle Group.

  • Why it's the BFD: Because it presents a strategic dilemma for Bain and Carlyle, even if they're willing to pay more. On the one hand, Osram's top outside shareholder, Allianz Global Investors, already said it would oppose the private equity firms' bid. On the other hand, this is actually the second time AMS has proposed a superior offer, having pulled the prior approach, suggesting Bain and Carlyle could just wait out the competition.
  • Bottom line: "Osram’s strongest business has traditionally been car headlamps, but in recent years it has expanded into different parts of the optical spectrum, such as infra-red. AMS is optimistic that it can package those products with its sensors to work in autonomous cars (which might need laser-based environmental sensors) and for in-cabin sensing (to tell, for example, if the driver has fallen asleep)." — Alex Webb, Bloomberg
Venture Capital Deals

Zhihu, a Chinese Q&A platform, raised $434 million in Series F funding. Beijing Kuaishou led, and was joined by Baidu and return backers Tencent and CapitalToday. http://axios.link/7Hqr

Uniphore, a conversational AI startup for call centers, raised $51 million in Series C funding led by March Capital Partners. http://axios.link/WoeR

Attentive, a New York-based personalized mobile messaging platform for brands, raised $40 million in Series B funding. Sequoia Capital led, and was joined by IVP, High Alpha and return backers Bain Capital Ventures, Eniac Ventures, and NextView Ventures. http://axios.link/9eGq

Light Field Lab, a San Jose, Calif.-based developer of holographic displays, raised $28 million in Series A funding. Bosch VC and Taiwania Capital co-led, and were joined by Samsung, Verizon Ventures, Comcast, Liberty Global Ventures, NTT Docomo Ventures, Hella Ventures, Khosla Ventures, Alumni Ventures Group, R7 Partners, and Acme Capital. http://axios.link/H2r1

QFPay, a Chinese digital payments startup, raised $20 million co-led by insiders Sequoia Capital China and Matrix Partners. Other backers include Rakuten Capital, VentureSouq, and a unit of Telkom Indonesia. http://axios.link/SyTv

Singularity 6, a Los Angeles-based online game developer, raised $16.5 million in Series A funding. Andreessen Horowitz led, and was joined by LVP and FunPlus Ventures. http://axios.link/488F

Dostavista, a Russia-based same-day “crowdsourced” delivery service, raised $15 million in Series B funding. Vostok New Ventures led, and was joined by return backers Flashpoint and Addventure. http://axios.link/7gbv

🚑 GNA Biosolutions, a Munich-based developer of point-of-care molecular diagnostics, raised $13.5 million in Series C funding. GreyBird Ventures led, and was joined by Occident and Wachtumsfonds Bayern. http://axios.link/KxNR

Springlane, a German e-commerce company focused on barbecue products, raised €10 million from Apeiron Investment Group and S-UBG. http://axios.link/KIru

Polarity, a Farmington, Conn.-based memory augmentation platform, raised $8.1 million in Series AA funding. TechOperators led, and was joined by Shasta Ventures, Strategic Cyber Ventures, Gula Tech Adventures, and Kaiser Permanente Ventures. http://axios.link/QSUh

🚑 Baze, a Boston-based at-home nutritional testing kit, raised $6 million in Series A funding led by Nature’s Way. www.baze.com

Blade, a cryptocurrency derivatives exchange, raised $4.3 million in seed funding from Coinbase, SV Angel, A.Capital, Slow Ventures, Justin Kan and Adam D’Angelo. http://axios.link/raWQ

Joust Labs, an Austin, Texas-based financial services platform for founders and freelancers, raised $2.6 million in seed funding led by PTB Ventures. http://axios.link/4gBO

Perceptyx, a Temecula, Calif.-based employee survey platform, raised an undisclosed amount of funding from TCV. http://axios.link/XEZS

Private Equity Deals

ABRY Partners, General Atlantic, and GTCR are among the bidders for Mercer Advisors, a Denver-based wealth management firm being sold for more than $600 million by Genstar Capital, per PE Hub. http://axios.link/kvoi

AMS (Swiss: AMS), an Austrian sensor maker, said it would offer to buy German lighting company Osram for €4.3 billion in cash, a 10% premium to an existing takeover offer from Bain Capital and The Carlyle Group. http://axios.link/8rzD

Arcline invested in Actera Ingredients, a Newtown, Penn.-based provider of functional and sensory cosmetics ingredients. www.acteraingredients.com

BC Partners agreed to buy a 50% stake in Advanced, a UK-based enterprise software group, from Vista Equity Partners for around £2 billion (including debt). http://axios.link/lXxU

Brookfield Asset Management has approached Pattern Energy (Nasdaq: PEGI), a San Francisco-based owner and operator of wind and solar farms in North America and Japan, about a takeover and merger with TerraForm Power (Nasdaq: TERP), per Bloomberg. Pattern Energy has a market cap of $2.4 billion, while Brookfield holds a 65% stake in TerraForm Power. http://axios.link/gaA4

GPRS, a Toledo, Ohio-based portfolio company of CIVC Partners, acquired Master Locators, a provider of private utility locating services in the Northeastern U.S. www.gprsinc.com

Grain Management acquired a majority stake in Ritter Communications, an independent communications provider in Tennessee and Arkansas. http://axios.link/sYYR

Lucidworks, a San Francisco-based provider of search-as-a-service, raised $100 million from Francisco Partners and TPG Sixth Street Partners. http://axios.link/lwLy

M Group Services, a UK-based portfolio company of PAI Partners, acquired KH Engineering Services, a UK-based mechanical and electrical engineering company. www.mgroupservices.com

Syndigo, a Chicago-based portfolio company of The Jordan Co., acquired SellPoints, an Emeryville, Calif.-based e-commerce optimization platform, from ConversionPoint. http://axios.link/3s5M

Public Offerings

Allied Esports Entertainment, a provider of e-sports venues and live gaming and poker events, has gone public via a reverse merger with Black Ridge Acquisition Corp. http://axios.link/fuHe

Postmates, the San Francisco-based delivery platform that’s raised over $650 million in VC funding, plans to publicly file its IPO prospectus in September, per TechCrunch. http://axios.link/x0Tm

More M&A

Caterwings, a London-based corporate catering marketplace founded by Rocket Internet, acquired German rival Lemoncat in an all-stock deal. Lemoncat had raised nearly $10 million from Target Global, Point 9 Capital, and Northzone Ventures. http://axios.link/T00G

CIT Group (NYSE: CIT) agreed to buy Mutual of Omaha Bank for $1 billion in cash and stock. www.cit.com

Guyana Goldfields (TSX: GUY), a Toronto-based mining company, hired RBC and Maxit Capital to explore a possible sale, per Bloomberg. http://axios.link/Eo5K

Scout24, a German classifieds company, said it will consider a sale or spin-off of its auto classifieds business, following pressure from activist investor Elliott Management. http://axios.link/brfI

It's Personnel

Neil Shah joined Evercore as a senior managing director of financial sponsor advisory, and head of a new permanent capital business that will include SPACs. He previously ran Citi’s private capital markets business. www.evercore.com

John Sheputis, rmer president of Infomart Data Centers, joined GI Partners as a managing director and head of tech real estate acquisition and development. www.gipartners.com

Mackenzie Wheatley joined JPMorgan Chase as an executive director of tech investment banking, per his LinkedIn page. He previously was with Square 1 Bank.

H.I.G. Capital promoted Matt Hankins to managing director of the firm’s Advantage Fund. www.higcapital.com

Final Numbers
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Data: Institute of International Finance; Chart: Axios Visuals
Dan Primack

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