Nov 25, 2019

Axios Pro Rata

Dan Primack
Top of the Morning
Source: Giphy

It's been a while since we've had a full-fledged Merger Monday, but today we've seen over $60 billion in announced deals.

  • This isn't about a macro economic shift. It's about bankers and boards wanting to enjoy their Thanksgiving breaks, without constant cell phone pings.

Charles Schwab confirmed that it will buy TD Ameritrade for $26 billion in stock.

  • This creates a discount brokerage with over $5 trillion in AUM, assuming it can pass regulatory muster.

LVMH confirmed it will buy Tiffany & Co. for $16.2 billion (not including assumed debt), or $135 per share.

  • The deal ends Tiffany's 182-year run as an independent company, and comes as the U.S.-China trade war has taken a painful toll.

Viagogo agreed to buy StubHub from eBay for $4.05 billion in cash.

  • Viagogo founder and CEO Eric Baker also co-founded StubHub, and now gets to manage both ticket resale marketplaces under the same umbrella. It also represents a whiff for PE-backed Vivid Seats, which for months had seemed to be the favorite.
  • Baker tells Axios that VC-backed Viagogo is profitable, and that the deal was financed through a combination of cash on hand, debt underwritten by JPMorgan, and new equity funding from existing backers Bessemer Venture Partners and Madrone Venture Group.

Novartis will buy The Medicines Co. for $9.7 billion in cash.

  • This is a pricey bet on a cholesterol-fighting drug that's being prepped for an FDA approval filing that should come within the month. A similar submission for Europe is expected in Q1.

Mitsubishi Corp. agreed to buy Dutch utility Eneco for €4.1 billion, beating out KKR and Royal Dutch Shell.

  • It's a major loss for Shell, which has said it wants to buy its way into becoming a power generation leader.

Up next: Pass the stuffing.

The BFD

Illustration: Lazaro Gamio/Axios

KKR agreed to buy Novaria Group, a Texas-based manufacturer of components for the aerospace and defense industries, from Rosewood Private Investments and Tailwind Advisors.

  • Why it's the BFD: Because this is the latest example of KKR buying an industrials company and then giving employees equity, something that has not caught on with many other private equity shops.
  • How it works: Top executives and managers will be allowed to effectively buy into the LBO, while hundreds of lower-paid (mostly-hourly) workers will get zero-cost stock options. Both groups get to participate in any dividends — CHI Overhead Doors, for example, has done three since KKR bought it 2015 — but employees must still be present at the time of exit.
  • Bottom line: "We've learned on these deals that we need to overcommunicate, because most hourly workers have never held equity before... open up the books, explain what the plan is, and how what they're doing every day fits into it. We also learned that personal financial literacy training can be a really helpful tool." — Pete Stravros, KKR

Venture Capital Deals

VTEX, a Brazilian provider of backend e-commerce services, raised $140 million. SoftBank led, and was joined by Gávea Investimentos, Constellation Asset Management, and return backers Riverwood and Naspers. http://axios.link/UNzv

Scribd, a San Francisco-based subscription reading service, raised $58 million led by Spectrum Equity. http://axios.link/Wbwn

Frame.io, a New York-based video review and collaboration platform, raised $50 million in Series C funding. Insight Partners led, and was joined by return backers Accel, FirstMark, SignalFire, and Shasta Ventures. www.frame.io

Detectify, a Sweden-based provider of a crowdsource website vulnerability scanner, raised €21 million. Balderton Capital led, and was joined by return backers Paua Ventures, Inventure, and Insight Partners. http://axios.link/Ad2m

Tookitaki, a Singapore-based provider of compliance software for financial institutions, raised $11.7 million in new Series A funding. Viola Fintech led, and was joined by SIG Asia Investment and Nomura Holdings. http://axios.link/sjN2

Entera, a residential real estate investment platform, raised $7.5 million. Bullpen Capital and Craft Ventures co-led, and were joined by ValueStream Ventures and ex-Keller Williams CEO Chris Heller. http://axios.link/mYjn

Private Equity Deals

Goya, the Spanish food giant, ended talks to sell itself to The Carlyle Group, following disagreement over the founding family’s ongoing role, per The NY Post. http://axios.link/0LOL

🚑 NextGen Growth Partners invested in Record Connect, a Saginaw, Mich.-based provider of services for healthcare patient information release. www.recordconnectinc.com

Platinum Equity is in talks to buy Biscuit International, a Paris-based private-label sweet biscuit baker, from Qualium Investissement. http://axios.link/EAyi

Silver Lake agreed to buy First Advantage, an Atlanta-based background check provider owned by Symphony Technology Group. Reuters reported that the deal could be valued north of $1.5 billion. http://axios.link/CgSH

Public Offerings

Exeter Finance, an Irving, Texas-based subprime auto lender owned by The Blackstone Group, withdrew an IPO registration filed in January, citing "market conditions." It had planned to trade on the NYSE with Citi and Wells Fargo as lead underwriters.

Liquidity Events

Altice Europe (AS: ATCA) agreed to buy French fiber wholesale operator Covage for around €1 billion. Sellers include Cube Infrastructure Managers. http://axios.link/z5aW

Euromoney (LSE: ERM) agreed to buy Wealth-X, a Singapore-based B2B information provider focused on high-net-worth individuals, for $20.4 million in cash. Sellers include Insight Venture Partners. http://axios.link/ch7S

IDinvest Partners agreed to sell Bimedia, a French provider of point-of-sale collection software, to French lottery group FDJ (Paris: FDJ) for less than €50 million. http://axios.link/eENM

Permira is seeking a buyer for British footwear maker Dr. Martens, which could fetch upwards of £1.2 billion, per MarketWatch. http://axios.link/t7js

More M&A

🚑 Asahi Kasei (Tokyo: 3407) offered to buy Veloxis, a Copenhagen-listed drugmaker focused on transplant patients, for around $1.31 billion. http://axios.link/J08d

Kirkland Lake Gold (TSX: KL) agreed to buy rival Canadian gold miner Detour Gold (TSX: DGC) for around C$4.9 billion in stock. http://axios.link/HU0J

Mengniu Dairy of China agreed to buy Lion Dairy & Drinks, an Australian beverage group, from Kirin Holdings (Tokyo: 2503) for around $419 million. http://axios.link/B01k

Unilever is denying weekend reports that its teas business, including brands PG Tips and Lipton, is for sale. http://axios.link/Qi3V

Fundraising

MiddleGame Ventures, a VC firm focused on fintech startups in Europe and North America, raised €150 million for its debut fund. www.middlegamevc.com

Final Numbers
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Data: IHS Markit/CIPS; Note: Nov. 2019 reading is based on 85% of respondent's data; Chart: Axios Visuals
Dan Primack

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