Top of the Morning
President Trump this morning tweet-proposed a fundamental change to U.S. corporate governance and transparency:
"In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. 'Stop quarterly reporting & go to a six month system,' said one. That would allow greater flexibility & save money. I have asked the SEC to study!"
It's too early to know how serious Trump is about this, as this was just one of six morning tweets, but some quick thoughts:
- There is little doubt that too many public company operations are perverted by "short-termism," and it can have a negative impact on hiring.
- But halving the number of reporting periods is certain to reduce the amount of information available to investors, without solving the core problem of CEOs trying to meet artificial data deadlines.
- A much more commonly-suggested fix would be to change CEO incentives, primarily by decoupling compensation from short-term stock price goals.
- And, of course, a regular reminder that CEOs don't need to obsess over quarterly numbers. It's a choice.
- As always, very interested in your thoughts on this. Email me at firstname.lastname@example.org, or just by hitting reply.
• Initial Congressional Offering: Rep. Warren Davidson (R-Ohio) just sent out invites for a Sept. 25 forum on Capitol Hill to discuss what he calls "light-touch" regulation on initial coin offerings (ICOs), Axios has learned.
- The invite list includes VC firms (Andreessen Horowitz, Union Square Ventures), exchanges (Intercontinental Exchange, Kraken, Nasdaq, CME Group, Circle), non-profits (Coin Center), and other digital token and securities companies (Ripple, Harbor, CoinList).
- Go deeper here
• Even more DC (sorry): FCC chair Ajit Pai yesterday told a Senate committee that top White House lawyer Don McGahn reached out to ask about the FCC's review of Sinclair Broadcasting's attempted purchase of Tribune Media.
- Per Axios' David McCabe: The FCC — and merger reviews generally — are supposed to be independent from the White House. Pai explained, "no one has called from the White House to express a view. We received one status inquiry."
🏀💲Listen up: Our latest podcast is about the future of legalized sports betting, and I'm joined by Washington Capitals and Wizards owner Ted Leonsis. Listen at Axios.com, or subscribe via Apple or other podcast platforms.
Inspire Brands, the Roark Capital-backed owner of Arby's and Buffalo Wild Wings, has purchased a 12.3% ownership stake in itself from Wendy's (Nasdaq: WEN) for $450 million.
- Why it's the BFD: Because Roark wants to take Inspire Brands public, as we reported when first disclosing its existence late last year, and this strengthens its position.
- History: Roark bought a majority stake in Arby's from Wendy's in 2011, with Wendy's being further diluted when Roark added Buffalo Wild Wings (after which Inspire was formed). Wendy's says the new deal is at a 38% premium to Inspire's valuation at the end of June.
- Bottom line: Roark has the meats.
Venture Capital Deals
• DoorDash , a San Francisco-based food delivery company, raised $250 million in Series E funding co-led by Coatue Management and DST at a $4 billion post-money valuation. Yes, this is just five months after the company raised $535 million at a $1.4 billion valuation, in a SoftBank-led round. More here.
• Cargomatic, a Venice, Calif.-based freight-load matching platform, raised $35 million in Series B funding led by Warburg Pincus. http://axios.link/esST
• SOFX, a cyptocurrency platform for institutional investors, raised $22.7 million in Series A funding. Tribe Capital and Social Capital co-led, and were joined by Nathan Blecharczyk, Y Combinator, Danhua Venture Capital and Digital Currency Group. http://axios.link/JRCm
• Threads, a London-based luxury fashion e-commerce platform that operates within chat apps, raised $20 million from C Ventures and Highland Europe. http://axios.link/0Puw
• Instaclustr, a Palo Alto-based “open-source-as-a-service” platform, raised $15 million from Level Equity. www.instaclustr.com
• Rhumbix, a San Francisco-based productivity tracking platform for construction projects, raised $8 million in funding led by Autodesk (Nasdaq: ADSK). www.rhumbix.com
• Lucidity, developer of a digital advertising blockchain protocol, raised $5 million from 3Rodeo, CoinUs, Cypher Group, YouBi Capital and Pithia. www.lucidity.tech
• Room, a New York-based modular office furniture startup, raised $2 million in seed funding led by Slow Ventures. http://axios.link/fWOz
• Excelero, a San Jose, Calif.-based software-defined block storage startup, raised an undisclosed amount of strategic funding from Western Digital (Nasdaq: WDC). It has raised $35 million overall. www.excelero.com
• Mafengwo, a Chinese travel site backed by Temasek, is seeking to raise $300 million at a valuation of between $2 billion and $2.5 billion, per Reuters. http://axios.link/N5fE
Private Equity Deals
• Cava Group agreed to buy fast-casual restaurant chain Zoe’s Kitchen (NYSE: ZOES) for around $300 million in cash, or $12.75 per share (33% premium to yesterday’s closing price). Shareholders in Washington, D.C.-based Cava Group include Revolution Growth, Swan & Legend Venture Partners and Invus Group.
• EQT has acquired a 40% stake in Shine, a Chinese provider of building cleaning, maintenance and facility management services. The company expects around $30 million in 2018 sales. www.zxchinashine.com
⛽ Guzman Energy, a wholesale power provider and energy trading company with offices in Denver and Coral Gables, Fla., raised $130 million from Vision Ridge Partners and ZOMA Capital. www.guzmanenergy.com
• Keter, a Dutch portfolio company of BC Partners, has agreed to buy Adams Manufacturing, a Portersville, Penn.-based maker of resin garden furniture. www.adamsmfg.com
• LightBay Capital acquired a majority stake in Boardroom, operator of 30 men’s salons in Texas, Oklahoma, Georgia and Tennessee. www.boardroomsalon.com
🍷 Resource Label, a Franklin, Tenn.-based portfolio company of First Atlantic Capital and TPG Growth, has acquired Paragon Label, a White Bear Lake, Minn.-based provider of labeling solutions for the premium wine market. www.paragonlabeling.com
• Stagwell Group, a digital marketing firm founded by ex-Clinton advisor Mark Penn, raised $260 million from AlpInvest. http://axios.link/A0up
• Tech Air, a Danbury, Conn.-based portfolio company of CI Capital Partners, has acquired Speed Industrial Supply, a Kemeh, Texas-based distributor of industrial and welding supplies. www.techair.com
• CooTek, a Chinese maker of keyboard software for smartphones, filed for a $100 million IPO. It plans to trade on the NYSE (CTK) with Credit Suisse as lead underwriter. Shareholders include Qiming Venture Partners (18.2% pre-IPO stake) and Sequoia Capital (17.9%).
• Aeronautics, a listed Israeli maker of military drones, rejected a $117 million takeover offer from state-owned Rafael Advanced Defense Systems. http://axios.link/EsrQ
• Campbell's Soup Co. (NYSE: CPB), under pressure from activist Dan Loeb, has hired Goldman Sachs to explore strategic options, per CNBC. http://axios.link/GGN3
• Intel (Nasdaq: INTC) has acquired Vertex.ai, a Seattle-based developer of “deep learning for every platform.” http://axios.link/QAsL
🐔 Tyson (NYSE: TSN) agreed to buy Keystone Foods, a poultry provider to McDonald’s, from Brazil’s Marfrig Global Foods for $2.5 billion, per Reuters. http://axios.link/27Hb
• Falcata Capital, a Houston-based private equity firm focused on enterprise software and tech-enabled services, raised $1 billion for its debut fund. The firm is led by Robert Burnett, former head of corp dev for Reynolds & Reynolds Co. www.FalcataCapital.com
• VIG Partners plans to seek upwards of $800 million for its fourth Korea-focused mid-market private equity fund, per PE International. http://axios.link/hY3A
• Chase Edmonds and Karan Sabharwal joined Waud Capital Partners as VPs of healthcare and biz/tech services, respectively. Edmonds previously was with Comvest Partners, while Sabharwal was with Golden Gate Capital. www.waudcapital.com
• Vishal Shah joined Hudson Sustainable Investments as a partner. He previously was with Deutsche Bank as a managing director focused on cleantech and sustainable investing. www.hudsoncep.com
• Tiberius Vadan (ex-KPMG) joined private equity consultant Accordion as a managing director. www.accordion.com
Tesla CEO Elon Musk gave a lengthy interview to the NY Times, in which he acknowledges that he's spread way too thin. But it was the Times reporting vs. what Musk said that was most notable:
- Musk didn't "recall getting any communications from the board" after his initial take-private tweet (which was sent while driving to the airport), but subsequently admitted via a spokesman that director Antonio Gracias had indeed contacted him about it.
- Musk also said that "to the best of my knowledge,” there is “no active search right now" for a number two exec at Tesla, but the Times reports that such a search is indeed underway.
- Not surprisingly, shares are sinking fast this morning (which isn't reflected in the above chart).
CNBC also reports that Tesla is in talks with three potential financial advisors: Lazard, Evercore and Centerview.
Go deeper on USA vs. Musk: A primer on how we got here.