Oct 16, 2018

Axios Pro Rata

Dan Primack
Top of the Morning

Source: Giphy

Carl Icahn vs. Michael Dell, take two.

The activist investor yesterday disclosed an 8.3% stake in a tracking stock for Dell Technologies' position in VMWare, and said he will actively oppose Dell's plan to return to the public markets via a $22 billion reverse merger with that tracking stock. Per Icahn's letter:

"I firmly believe Dell and Silver Lake are trying to capture $11 billion of value that rightly belongs to us, the DVMT stockholders. As such, I intend to do everything in my power to STOP this proposed DVMT merger...
For the better part of the past year, Dell and Silver Lake worked to destroy the value of the Tracker by (1) raising the possibility of a Dell IPO, (2) floating the idea of a merger with VMware and (3) threatening a forced conversion of the Tracker into Dell common stock, among other tactics. These scare tactics are reminiscent of the tactics Machiavelli advised the Borgia rulers to use centuries ago."

If this sounds familiar, it's because Icahn tried preventing Dell from going private back in 2013, arguing that Michael Dell and private equity sponsor Silver Lake were undervaluing the company.

  • Icahn eventually relented after getting a small price bump and losing a Delaware legal battle, but seems to believe he has a better chance of prevailing this time because he's acting earlier and has the apparent support of several other large shareholders in the tracking stock.
  • He's not only pledging a "no" vote on the reverse merger, but also floated his own bid for more of the tracking stock at a better price than what Dell is offering. This is a bit reminiscent of the public stub idea he tried out five years ago.

Bottom line: Both sides are likely headed back to a Delaware courtroom.

🎧 Pro Rata Podcast: Our new episode focuses on the Saudi Arabia situation, and I'm joined by NY Times columnist Nicholas Kristof. Just 10 minutes to get you smarter, faster.

Comeback Capital has quietly launched as a pre-seed firm focused on Midwestern startups, and has held a first close on a $2.25 million fund that plans to write checks of around $100,000, with co-investments from a group of 35 coastal limited partners (including folks like Patrick McKenna, Roy Bahat, and Cyan and Scott Banister).

It's the outgrowth of the "Rust Belt Safari" bus tour this past summer organized by Rep. Tim Ryan (D-Ohio) and Rep. Ro Khanna (D-CA) for coastal investors, which got a lot of media play.

  • Comeback Capital focuses on startups in four locations: Columbus (led by Scott Shane, angel investor & professor at Case Western), Pittsburgh (Robb Myer, Carnegie Mellon), Chicago/South Bend (Tony Olivito, Hummingbird Nano), and Flint, Mich. (Phil Hagerman, Diplomat Pharmacy).
  • "I helped organize the bus tour because I wanted venture capitalists to see the opportunity here," Rep. Ryan explains. "We're not a nonprofit. These are real businesses that are building off of our manufacturing legacy... like how Akron has seen startups find new uses for polymers out of its history in the rubber industry."
  • Reps. Ryan and Khanna also organized a second bus tour for coastal VCs, this time focused on the old textile markets of Georgia and South Carolina, kicking off next week.

🌎Speaking of Ohio: Next week I'll be in Columbus for the Devol's Dance event, where my role will include a keynote interview of Gov. John Kasich. Then it's onto Las Vegas for Money 20/20, where on Wednesday I'll interview Grab Financial chief Reuben Lai and OVO CEO Jason Thompson. Hope to see some of you out there...

The BFD

Twilio (NYSE: TWLO) agreed to buy Denver-based email marketing company SendGrid (NYSE: SEND) for around $2 billion in stock, which works out to an implied price of $36.92 per share (19% premium to Monday's closing price for SendGrid).

  • Why it's the BFD: Because email continues to not be dead, despite all punditry to the contrary.
  • Bottom line: "Twilio’s current focus is on omnichannel communication, and email is obviously a major part of that. And while it offers plenty of services around voice, video and chat, email hasn’t been on its radar in the same way. This acquisition now allows it to quickly build up expertise in this area and expand its services there." — Frederic Lardinois, TechCrunch
Venture Capital Deals

Instacart, a San Francisco-based grocery delivery company, raised $600 million in new funding at a $7.6 billion post-money valuation led by D1 Capital Partners.

Syncron, a Stockholm-based provider of enterprise resource planning SaaS, raised $67 million in growth funding led by Summit Partners at a reported post-money valuation of $175 million. http://axios.link/ZYL0

Cloud9, a Santa Monica, Calif.-based e-sports company, raised $50 million in Series B funding. Valor Equity Partners led, and was joined by TrueBridge Capital Partners, Reimagined Ventures and Robert Hohman. http://axios.link/DXkj

TravelPerk, a Barcelona-based business travel booking and management platform, raised $44 million in Series C funding. Kinnevik and DST Global were joined by return backers Target Capital, Felix Capital, Spark Capital, LocalGlobe and Sunstone. http://axios.link/UYGs

Garrison, a London-based provider of secure web-browsing technology, raised $30 million led by Dawn Capital. www.garrison.com

Smartfrog, an Irish IoT company, invested $25 million for a control stake in New York-based smart security startup Canary. Existing Canary shareholders include Khosla Ventures, Flextronics, Cota Capital and Two Sigma Ventures. http://axios.link/zSah

Paperspace, a New York-based cloud computing and machine learning development platform, raised $13 million in Series A funding from Battery Ventures, SineWave Ventures, Intel Capital and Sorenson Ventures and Initialized Capital. www.paperspace.com

Hubb, a Vancouver, Wash.-based provider of event management software, raised $6.3 million in Series B funding. Five Elms Capital led, and was joined by Oregon Venture Fund and Elevate Capital. www.hubb.me

JobUFO, a Berlin-based video app for job applications, raised €2 million in seed funding co-led by IBB and Hevella Capital. http://axios.link/ckeX

Private Equity Deals

Centre Partners invested in Guy & O’Neill, a Fredonia, Wisc.-based maker of household cleaning and personal care products. www.guyandoneill.com

Clessidra hired Rothschild to help it find a minority equity partner to help fund further growth at Italian fashion group Roberto Cavalli, per Reuters. http://axios.link/4PWx

Fastener Distribution Holdings, an Arlington, Texas-based portfolio company of Audax Private Equity, acquired PDQ Airspares, a British distributor of aerospace consumables and provider of supply chain management services. www.aiapinc.com

• The Riverside Company acquired Woon-Tech, a Boston-based maker of specialty glass for shower enclosures. www.woon-tech.com

Public Offerings

Addiko, a Vienna-based bank owned by Advent International, is working with Citi and Goldman Sachs on a potential IPO that could value the company at around €850 million, per Reuters. http://axios.link/YJx4

Uber may seek a valuation of $120 billion when it attempts going public in 2019, per the WSJ. http://axios.link/65cV

Liquidity Events

🚑 Ambea of Sweden agreed to buy the nursing home and assisted living operations of rival Aleris, controlled by Investor AB, for around $335 million. http://axios.link/9HzJ

The Blackstone Group is in talks to sell Australian chemical company Ixom to Keppel Infrastructure Trust for more than A$1 billion, per Bloomberg. http://axios.link/DyKY

The Blackstone Group and Fajr Capital and others investors in Dubai-based schools operator GEMS Education are considering the sale of a 25% stake in the company for around $1 billion, after putting an IPO on hold, per Bloomberg. http://axios.link/YnZQ

More M&A

Amazon is considering an acquisition of around an 8% stake in India’s Future Retail Ltd. via a cash-and-stock deal that could be worth around $338 million, per a local media report. http://axios.link/ra3u

Canopy Growth (TSX: WEED) agreed to buy Ebbu, an Evergreen, Colo.-based hemp research company, for around C$430 million in cash (C$25m) and stock. Another C$100 million could be added, based on achieving certain milestones. http://axios.link/iWp7

Drax Group (LSE: DRX) agreed to pay £702 million to buy a group of power plans from Spain’s Iberdrola (BME: IBE). http://axios.link/hmvk

HNA Group is considering a sale of Pactera, a Chinese IT outsourcing company it acquired in 2016 from The Blackstone Group for $675 million, per Reuters. Possible suitors include Ant Financial. http://axios.link/B7Rt

Ooyala, a San Jose, Calif.-based video streaming infrastructure company, said that its management has bought out the company from Australia’s Telstra, which had acquired Ooyala for A$500 million via transactions in 2012 and 2014. http://axios.link/jRrM

Swisscom (SWX: SCMN) is considering options for its Fastweb Italian unit, including a possible sale or partnership with a group like Wind Tre (owned by CK Hutchison Holdings), per Bloomberg. http://axios.link/hzfh

Fundraising

Bain Capital plans to hold a first and final close by year-end on its fourth Asia buyout fund, which is targeting $3.5 billion, per PE International. http://axios.link/6Q3O

It's Personnel

Abhishek Shukla left GE Ventures to join the corporate VC arm of HP Enterprise as a managing director.

Karen Snow has is leaving Credit Suisse to join Nasdaq as a senior VP and head of listings and IR intelligence sales for the Eastern region. www.nasdaq.com

Final Photo

Photo by Ann E. Yow-Dyson/Getty Images

Dan Primack