Dec 5, 2018

Axios Pro Rata

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

Richard Leon is the U.S. District Court judge last in this space for approving AT&T's purchase of Time Warner, over the objections of U.S. antitrust regulators. Now he's threatening to scuttle another mega-deal that not only received regulatory approval, but which actually closed last week: CVS Health's $69 billion purchase of health insurer Aetna.

  • Leon last week suggested that the government was treating him as a "rubber stamp," and yesterday again refused to sign off on the deal.
  • Per yesterday's order: "At this stage, I am less convinced of the sufficiency of the government’s negotiated remedy than the government is."
  • He wants both the government and companies to file briefs by next Friday (Dec. 14), arguing why he shouldn't suspend the merger until he approves the agreement reached between those parties (which included a since-completed requirement that Aetna sell its Medicare Part D plan to WellCare).

Yes, Leon could effectively order the egg to be unscrambled, assuming he disagrees with the incoming legal briefs. But it would be extremely complicated, as the companies already have begun integrating — something he recently warned should be slowed down — and his actual ruling might not ultimately come until the middle of next year.

  • A more likely scenario is that Leon would demand a partial unscrambling, such as new divestitures. This also is what would be expected if DOJ wins its longshot appeal in the AT&T-Time Warner case.

🏒 David Bonderman yesterday became the latest PE big to majority-own a professional sports team, when his Seattle Hockey Partners was picked for the NHL's next expansion.

  • This would be the second NHL franchise with majority-PE ownership, following the New Jersey Devils (Blackstone's David Blitzer/Apollo's Josh Harris), while most of the focus has been on NBA clubs (including my beloved Boston Celtics).

Heidi Zak, co-founder and CEO of bra startup ThirdLove, suggested yesterday that her company may finally be ready to raise the sort of capital needed to "take down" Victoria's Secret.

Some backstory and notes from my on-stage conversation with Zak:

  • This isn't just a business rivalry. Zak, at the time a Google marketing exec, came up with the idea after buying a bra at Victoria's Secret and being so embarrassed by the company's oversexed image that she hid the bag before returning to work.
  • Victoria's Secret's CMO recently threw some shade at Third Love in a magazine interview, adding that his company wouldn't use plus-sized or transgender models in its fashion show because it's supposed to be "a fantasy."
  • ThirdLove, which uses a much more inclusive marketing and product size strategy, responded with a full-page NYT ad that went viral, saying that Victoria's Secret "markets to men and sell's a male fantasy to women."
  • Days later the CEO of Victoria's Secret was out (move was already in the works due to declining sales), while the CMO inexplicably remained. Its fashion show aired Sunday night with much worse ratings than in the past.
  • ThirdLove has gotten over 11 million women to use its online "fit-finder" despite only raising around $30 million in total funding, with Zak saying the strategy has been to remain lean and close to break-even. But now, she admits, it might be time to push on the gas while the incumbent is so badly wounded. No specifics, but it sounds like a big raise could be around the corner.

🎧 Podcast: Our new episode focuses on the idea of Universal Basic Income, and I'm joined by entrepreneur and 2020 presidential candidate Andrew Yang. Listen here.

Source: Giphy

Pindrop Security, an Atlanta-based voice fraud prevention company, raised $90 million in Series D funding.

  • Why it's the BFD: Because this round will help Pindrop expand into the Internet-of-Things space, including a smart lock integration with new investor Allegion, at a time when more and more of our home and work devices are being operated by what we say, not by what we press.
  • Investors: Vitruvian Partners led, and was joined by Allegion, Cross Creek, Dimension Data, EDBI, Goldman Sachs and return backers CapitalG, GV, Andreessen Horowitz, Citi Ventures and IVP.
  • Bottom line: "Pindrop has built a platform that makes a voice “fingerprint” that identifies not just the specific tone you emit, but how you speak, where you are typically calling from and the sounds of that space, and even your regular device." — Ingrid Lunden, TechCrunch
Venture Capital Deals

Vagaro, a Dublin, Calif.-based provider of business management software to the salon, spa and fitness markets, raised $63 million in growth equity led by FTV Capital.

🚑 Alto, a San Francisco-based digital pharmacy platform, raised $50 million in Series C funding. Zola Global and Greenoaks Capital co-led, and were joined by Jackson Square Ventures and Olive Tree Capital.

Aceable, an Austin, Texas-based mobile education platform that began with driver’s ed, raised $47 million in Series B funding led by Sageview Capital.

Freelitics, a maker of fitness apps, raised $45 million in Series A funding co-led by FitLab, Causeway Media Partners and Jazz Venture Partners. Others backers include Courtside Ventures, Elysian Park Ventures, Ward Venture and Tony Robbins.

Contentful, a provider of content infrastructure solutions for digital teams, raised $33.5 million in Series D funding. Sapphire Ventures led, and was joined by OMERS Ventures, Salesforce Ventures and return backers General Catalyst, Balderton Capital and Hercules.

Lumeon, a Boston-based care pathway management company, raised $28 million. LSP led, and was joined by MTIP and return backers MTIP Gilde, Amadeus Capital Partners and IPF Partners.

ErisX, a Chicago-based cryptocurrency exchange, raised $27.5 million from backers like Fidelity and Nasdaq.

Fivetran, an Oakland, Calif.-based developer of automated data pipelines, raised $15 million in Series A funding led by Matrix Partners.

FortressIQ, a San Francisco-based startup focused on imitation learning for process automation, raised $12 million in Series A funding from Lightspeed Venture Partners.

Jirnexu, a Kuala Lumpur-based provider of financial comparison services in Malaysia and Indoensia, raised $10 million led by Experian.

Eclypsium, a Beaverton, Ore.-based firmware security startup, raised $8.75 million. Madrona Venture Group led, and was joined by seed backers Andreessen Horowitz, Intel Capital, and Ubiquity Ventures.

Facilio, an Atlanta-based provider of facility management software, raised $6.4 million in Series A funding. Tiger Global led, and was joined by return backer Accel.

Private Equity Deals

Hellman & Friedman offered to buy listed New Zealand e-commerce company Trade Me Group for NZ$6.45 per share, or around US$1.77 billion, which is a 6.6% premium to a prior bid from Apax Partners.

Race Winning Brands, a Mentor, Ohio-based portfolio company of Kinderhook Industries, acquired Giannone Performance Products, a maker of aluminum connecting rods.

Tech Air, a Danbury, Conn.-based portfolio company of CI Capital Partners, acquired Scully, a Collingdale, Penn.-based distributor of propane, industrial gasses and welding supplies.

Public Offerings

🚑 Ardent Health Partners, a Nashville, Tenn.-based operator of 31 acute care hospitals, filed for a $100 million IPO. It plans to trade on the NYSE (ARDT) with Barclays as lead underwriter. Shareholders include Ventas (NYSE: VTR).

Liquidity Events

🚑 Unison Capital hired J.P. Morgan to explore a sale of Ayumi Pharmaceutical Corp., a Japanese maker of drugs for rheumatic and orthopedic disorders that could fetch around $1 billion, per Bloomberg.

More M&A

Gymboree Group, a San Francisco-based kids clothing retailer that emerged from bankruptcy last year, launched a strategic review that could result in the sale of certain brands and some store closures.


Aberdeen Asset Management is raising $150 million for its latest VC fund-of-funds, per an SEC filing.

Abry Partners is raising $1.2 billion for its ninth buyout fund, per an SEC filing.

Activant Capital is raising $250 million for its third growth equity fund, per an SEC filing.

Arrive, the venture arm of Roc Nation, is forming a $40 million opportunities fund, per an SEC filing.

Harlem Capital, an early-stage firm focused on minority and women founders, is raising $25 million for its debut fund, per an SEC filing.

Luminate Capital Partners, a San Francisco-based private equity firm focused on mid-market software and software-enabled companies, raised $425 million for its second fund.

It's Personnel

Mike Duboe joined VC firm Greylock as a principal on the consumer investing team. He previously led growth at StitchFix.

General Atlantic promoted Chris Caulkin, Roni Elchahal, Andrew Ferrer and Peter Munzig to managing director. It also promoted Preston McKenzie to operating partner and Rodrigo Catunda and Luiz Ribeiro to principal.

Salesforce Ventures formed a $100 million fund dedicated to Japanese tech startups.

SoftBank Vision Fund is seeking to hire a China-based investment team, per Reuters.

Dan Primack

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