Sep 24, 2018

Axios Pro Rata

DC readers: Please join us tomorrow morning for a live Axios event on the future of vaping, including a Mike Allen interview with FDA Commissioner Scott Gottlieb. More info and RSVP here.

Top of the Morning

Source: Giphy

SiriusXM this morning said it would buy Internet radio company Pandora for $3.5 billion in stock. A few notes, per Axios' Sara Fischer:

  • The deal rationale is for Sirius to move out of cars and into streaming, which is where the bigger money is.
  • Don't expect much regulatory opposition, but Sirius has had a tough summer in DC — fighting what appears to have been a losing battle against the Music Modernization Act.
  • The effort not only cost big lobbying dollars, but it also caused thousands of artists — including big names like Katy Perry and Paul McCartney — to threaten boycotts of Sirius parent company Liberty Media.
  • Pandora was among those on the other side of the MMA battle.
  • Beyond MMA, Sirius will need to work with Pandora to fight the sun-setting of decades-old Justice Department consent decrees that could threaten Pandora’s entire business if they are removed.

Roberts > Murdoch: Comcast prevailed in the weekend auction for European broadcaster Sky, besting 21st Century Fox. More here.

Busted: Private equity firm VSS was fined $200,000 by the SEC for allegedly misleading LPs on the fair market value of existing fund stakes, as part of a secondary restructuring transaction. The most surprising part is that this seems to be the first such SEC action, despite a boom in these sorts of inherently-conflicted deals.

Deal or no deal? French supermarket giant Casino today said it rejected a takeover offer from larger rival Carrefour. The only trouble is that Carrefour denies ever making an offer, claiming befuddlement at Casino's board turning down “a merger proposal that does not exist.”

Today in Social Capital: Kira McCroden has stepped down as head of marketing and communications, per her LinkedIn profile.

• Big bark: Animal health company Elanco saw its shares soar 50% on Friday, after raising $1.5 billion in an IPO that spun it out of Eli Lilly.

  • It was the largest first-day percentage pop for a billion dollar+ IPO since Twitter in 2013.
  • Elanco CEO Jeff Simmons tells me that while the company was very acquisitive over the past decade, it does not expect any major purchases in the foreseeable future. "The M&A was intentional to build a top-tier animal health business, but we don't expect to do more because we've launched 9 products in the past three years and have another 12 in development."

Source: Giphy

Barrick Gold (TSX: ABX) has agreed to buy Randgold Resources (LSE: RRS) in an all-stock merger that values the combined company at around $18 billion.

  • Why it's the BFD: Because it creates the world's largest gold mining company.
  • Bottom line: "Barrick’s gold production has dwindled, falling more than 25% since 2013 to 5.3 million ounces last year. The acquisition of Randgold, whose production is focused on Africa and which produced 1.3 million ounces in 2017, will help make up the loss." — Scott Patterson, WSJ
Venture Capital Deals

Convoy, a Seattle-based network that connects trucking companies with freight shippers, raised $185 million in Series C funding. CapitalG led, and was joined by T. Rowe Price, Long Pine Capital and return backers Greylock and Y Combinator.

🚑 MeMed, an Israeli developer of a point-of-care immune system diagnostics, raised $70 million in Series C funding from Ping An Global Voyager Fund, Foxconn, Caesarea Medical Holdings, Clal Insurance, Phoenix Insurance, OurCrowd, Social Capital, WTI and Horizons Ventures.

Qonto, a French business banking startup, raised $23 million co-led by return backers Valar Ventures and Alven.

Clippings, a London-based online marketplace for interior design products, raised $15.4 million in Series B funding. Advance Venture Partners led, and was joined by return backer C4Ventures.

Shohoz, an on-demand transportation startup in Bangladesh, raised $15 million. Golden Gate Ventures led, and was joined by Linear VC, 500 Startups and Koh Boon Hwee.

Socotra, a San Francisco-based “productized insurance core platform,” raised $5.5 million in Series A funding led by 8VC.

Private Equity Deals

Array Canada, an in-store merchandising services company owned by The Carlyle Group, agreed to buy Willson & Brown, a Warsaw-based provider of point-of-sale programs.

Flexpoint Ford invested in MobilityWorks, a Richfield, Ohio-based provider of wheelchair accessible vehicles.

NCK Capital acquired Tricoci, an Oak Brook, Ill.-based provider of cosmetology, esthetics and barbering education.

Public Offerings

13 companies are expected to price IPOs on U.S. exchanges this week, including SurveyMonkey and Gritstone Oncology.

Dell is speaking with banks about a traditional IPO, following some shareholder opposition to a proposed reverse merger with VMWare's tracking stock, per the WSJ.

Elastic, a provider of subscription-based data search software, set IPO terms to 7 million shares at $26-$29. It would have an initial market cap of around $1.9 billion, were it to price in the middle, and plans to trade on the NYSE (ESTC) with Goldman Sachs as lead underwriter. The company reports a $19 million net loss on $57 million in revenue for H1 2018, and raised over $100 million in VC funding from firms like Benchmark (17.8% pre-IPO stake), Hexavest (10.5%), NEA (10.2%) and Future Fund (8.2%).

🚑 Guardant Health, a Redwood City, Calif.-based liquid biopsy company, set IPO terms to 12.5 million shares at $15-$17. It would have a fully diluted market value of $1.4 billion (were it to price in the middle) and plans to trade on the Nasdaq (GH). The company reports a $35 million net loss on $36 million in revenue for H1 2018, and raised around $540 million in VC funding from firms like SoftBank Vision Fund (39.3% pre-IPO stake), Sequoia Capital (11%), Khosla Ventures (10.1%) and Lightspeed Venture Partners (5.4%).

🚑 PhaseBio Pharma, a Malvern, Penn.-based drug developer focused on orphan cardiopulmonary diseases, filed for an $87 million IPO. It plans to trade on the Nasdaq (PHAS) with Citigroup as lead underwriter. The pre-revenue company raised around $140 million in VC funding from firms like NEA, Hatteras Venture Partners, Johnson & Johnson and Fletcher Spaght Ventures.

SolarWinds, an Austin, Texas-based provider of IT management software, filed for a $500 million IPO. It plans to trade on the NYSE (SWI) with Goldman Sachs as lead underwriter. The company reports an $87 million net loss on $399 million of revenue for the first half of 2018, and was taken private in 2016 for $4.5 billion by Silver Lake and Thoma Bravo.

Liquidity Events

Berkshire Partners agreed to sell Canadian food retailer Farm Boy, to Empire Co. (TSX: EMP) for around C$800 million.

Cinven agreed to sell nearly a 25% stake in Envirotainer, a Stockholm-based provider of temperature-controlled air cargo containers that Cinven bought two months ago for more than €1 billion, to Denmark’s Novo Holdings.

Francisco Partners sold Crossmatch, a Palm Beach Gardens, Fla.-based provider of biometric identity management solutions, to Assa Abloy subsidiary HID Global.

Great Hill Partners agreed to sell Ascenty, a Brazilian data center provider, to a unit of Digital Realty (NYSE: DLR) for around $1.8 billion.

More M&A

Drax (LSE: DRX) is in talks to buy a UK portfolio of power assets from Spain’s Iberdrola, per Reuters.

Invesco (NYSE: IVZ) has agreed to buy OppenheimerFunds from MassMutual, per the FT.

Michael Kors (NYSE: KORS) has agreed to take control of Italian fashion house Versace at a valuation of at least $2 billion, per Reuters.

Shanghai Electric Group has abandoned talks to buy Brazilian power transmission assets from Eltrosul.

WPP (NYSE: WPP) is considering a merger of its Young & Rubicam agency with its digital-focused VML, per the WSJ.


Altor Equity Partners of Sweden is targeting €2.5 billion for its fifth flagship buyout fund, per PE News.

Boldstart Ventures has secured $45 million of the $75 million target for its fourth fund, per an SEC filing.

Five Arrows Capital Partners, an affiliate of Rothschild & Co., raised $655 million for its first U.S. buyout fund.

Inverleith, a Scottish private equity firm focused on the consumer sector, raised €60 million for its debut fund.

Tailwind Capital closed its third buyout fund with $1.8 billion.

It's Personnel

🚑 Brian Gallagher joined life sciences VC firm Abingworth as a Boston-based partner. He previously was a partner with SR One, the VC arm of GlaxoSmithKline.

• Matt Flynn and Rick Morioka joined Campbell Lutyens as principals in the firm’s fund placement group. Flynn previously was with Credit Suisse while Morioka was with Abraaj Group.

• Elliot Lynch joined Yukon Partners as a VP. He previously was with Shoreview Industries.

• Thoma Bravo promoted Chip Virnig from principal to partner.

• Michael Shay has become director of investments for The Museum of Modern Art in New York, per his LinkedIn profile. He had been an investment officer there until 2011, when he left to lead investments for Phillips Academy.

• Michael Spirito is joining Sapphire Ventures as a venture partner. He previously led business development and digital media for the Fox Sports regional networks (including YES).

• Wesley Tang-Wymer has left SoftBank to join Rucker Park, a new VC firm founded by Marissa Campise (ex-SoftBank, Greycroft, Venrock), per an SEC filing.

Final Numbers: The price of gold
Source: FactSet