Dec 3, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

D.C. readers: Join us this Wednesday for a breakfast discussion of how AI will impact our economy and day-to-day lives. Axios' Kim Hart will interview both chairs of the Congressional AI caucus, Rep. John Delaney (D-MD) and Rep. Pete Olson (R-TX), plus former Defense Dept official Michèle Flournoy and former Pennsylvania Gov. Ed Rendell. RSVP here.

Top of the Morning
Source: Giphy

Qualcomm is tired of being used as a political football.

  • The company in July ended its $44 billion pursuit of Dutch chipmaker NXP, after failing to gain Chinese regulatory approval. This came just months after President Trump blocked Qualcomm from itself being acquired by Broadcom.
  • Following Saturday night's G20 trade negotiations, the White House said that China was “open to approving the previously unapproved [deal] should it again be presented."
  • But Qualcomm responded by saying that it "considers the matter closed."

Treasury Sec. Steve Mnuchin expressed U.S.-China trade agreement optimism this morning during a CNBC interview, but acknowledged there is still lots of work to do. And, by "lots of work," he means that none of the fundamental trade disagreements were decided over dinner. For now it's more sanguine than substance.

  • Stock markets are surging this morning on Trump's agreement to postpone tariff increases on Chinese goods by 90 days. And that may create a virtuous cycle for free-traders, as Trump cares very much about short-term market moves.
  • This comes shortly after another stock market rally on the Fed's dovish turn, even though that announcement was primarily predicated on an exacerbation of trade tensions. In other words, a U.S.-China trade deal could also result in renewed interest rate escalations. So consider that a possible counterbalance to Trump's stock market instincts.

The bottom line: Check back with me in 90 days.

Also...

SoftBank Group has agreed to lead a large investment in Florida-based parking startup ParkJockey, Axios' Kia Kokalitcheva reports.

  • AbuDhabi's Mubadala Investment Co. also is expected to participate, alongside a lender.
  • Proceeds will be used, in part, to finance planned (and unannounced) acquisitions of parking lot operators Impark and Lanier.
  • ParkJockey's ambition is to displace garage operators by selling a technology-based alternative to the garage owners. It then wants to sell space access to customers like ride-hail and car rental companies.
  • This fits well within SoftBank's focus on spaces like autonomous driving, ride-hailing, on-demand delivery and real estate. And, just to clarify, this deal is from SoftBank Group, not from SoftBank Vision Fund.

Secondary stuff: Venture firm NEA said that it has completed the sale of its interests in 31 startups to NewView Capital, a new direct secondaries firm led by longtime NEA partner Ravi Viswanathan.

  • NewView raised a total of $1.35 billion, including a previously-reported cornerstone commitment from Goldman Sachs. It is unclear how much of that fundraise is being used to buy the NEA assets, which originally had an estimated price-tag of around $1 billion (with $400m or so coming from Goldman).
  • In other VC secondaries news, multiple sources say that General Catalyst has completed the sale of a significant stake in its management company to Goldman Sachs.

Recommended reading: Axios' Courtenay Brown on the whimpering end of industrial conglomerates, as highlighted by last week's United Technologies breakup.

ICYMI: On Friday we reported Juul is facing employee resistance to a proposed investment by Altria Group, the maker of Marlboro cigarettes, according to internal Slack messages obtained by Axios. Go deeper here.

Situational awareness: U.S. stock markets will be closed on Wednesday, in honor of former President George H.W. Bush.

The BFD
Source: Giphy

Nexstar Media Group (Nasdaq: NXST) agreed to acquire Tribune Media (NYSE: TRCO) for around $4.1 billion, or bid of $46.50 per share in cash.

  • Why it's the BFD: Because it would make Nexstar the country's largest owner of local television stations.
  • Bottom line: Tribune Media already got burned once by a regulatory review, when its $3.9 billion sale to Sinclair Broadcast Group was scuttled after Sinclair allegedly lied to government regulators. This new agreement reflects a lot of faith that Nexstar can get the ball over the goal-line — including via some relatively small divestitures — as I'm told Tribune could have instead opted for a bid from Apollo Global Management that was less than a dollar lower, with much less regulatory risk and a significantly shorter time to close.
Venture Capital Deals

🚑 Auris Health, a Redwood City, Calif.-based robotic surgery platform, raised $220 million. Partner Fund Management led, and was joined by Wellington Management, D1 Capital Partners, Senator Investment Group and return backers Mithril Capital, Lux Capital and Viking Global Investors. http://axios.link/MJDQ

OYO, an Indian budget hotel operator, raised $100 million from Singapore-based ride-hail and financial firm Grab. Both startups are backed by SoftBank. http://axios.link/YiyP

UrbanClap, an Indian online marketplace for home services, raised $50 million in Series D funding. Steadview Capital led, and was joined by return backer Vy Capital. http://axios.link/Xow9

Floom, a London-based online marketplace for independent florists, raised $2.5 million in seed funding led by Firstminute Capital. http://axios.link/wETq

Private Equity Deals

BayBoston Managers acquired consumer finance company Caribbean Financial Group,, from Irving Place Capital. www.cfgcompany.com

The Blackstone Group, The Carlyle Group and Warburg Pincus are in the final round of bidding for StandardAero, a Scottsdale, Ariz.-based aircraft maintenance company being sold by Veritas Capital for upwards of $5 billion, per Bloomberg. http://axios.link/bIQg

🚑 The Blackstone Group completed its previously-announced purchase of life sciences-based growth equity firm Clarus. http://axios.link/X59c

CenterGate Capital acquired Owen Equipment Co., a Portland, Ore-based dealer of new and used municipal environmental equipment used for sewer maintenance. www.owenequipment.com

Gold Medal Group, a Sewell, N.J.-based portfolio company of Kinderhook Industries, and BioHiTech jointly acquired Apple Valley Waste Services, a Kearneysville, W.V.-based solid waste management company, from Summer Street Capital Partners. www.goldmedal.net

Liberty Hall Capital Partners acquired Aircraft Performance Group, a Castle Rock, Colo.-based provider of flight operations software. www.flyapg.com

Main Capital invested in Cleversoft, a Munich-based developer of regulatory management software for financial institutions. http://axios.link/rJRw

Pexco, an Alpharetta, Ga.-based portfolio company of AEA Investors, acquired Insultab, a Woburn, Mass.-based maker of heat shrinkable and non-shrink tubing products.

S4 Capital, a new firm led by former WPP (LSE: WPP) CEO Martin Sorrell, is in talks to buy MightyHive, a San Francisco-based programmatic ad startup that has been seeded by Felicis Ventures, Andreessen Horowitz and Menlo Ventures, per Reuters. http://axios.link/Fo0t

Stone Point Capital completed its previously-announced $340 million business of real estate lender Rialto from Lennar (NYSE: LEN).

Public Offerings

Four companies plan to price IPOs on U.S. exchanges this week, including what could be the largest VC-backed biotech offering of all time (Moderna Therapeutics). Several other companies, including Beyond Meat and Gateway Casinos, can launch roadshows this week. http://axios.link/Sj4t

Legacy Housing, a Bedford, Texas-based mobile home maker, set IPO terms to 3.5 million shares at $10.75-$12.75 per share. It would have a fully-diluted market value of $276 million, were it to price in the middle. The company plans to trade on the Nasdaq (LEGH) with B Riley FBR as lead underwriter, and reports $19 million of net income on $127 million in revenue for the first nine months of 2018.

🎧 Tencent Music set IPO terms to 82 million shares being offered at $14. It plans to trade on the NYSE under ticker TME, with Morgan Stanley as lead underwriter. http://axios.link/l88A

Liquidity Events

API Technologies, a Marlborough, Mass.-based portfolio company of J.F. Lehman & Co., agreed to sell its electronics manufacturing services unit (API Defense USA) to Kitron Inc. www.kitron.com

More M&A

🚑 GlaxoSmithKline (LSE: GSK) agreed to buy Waltham, Mass.-based oncology drugmaker Tesaro (Nasdaq: TSRO) for approximately $5.1 billion, or $75 per share (62% premium). http://axios.link/nelg

Long-Term Asset Partners, a “little-known asset manager,” offered to buy Australian bulk grain handler GrainCorp (ASX: GNC) for A$2.38 billion. http://axios.link/OHTe

🚑 Unilever agreed to buy India-focused health nutrition business Horlicks from GlaxoSmithKline (LSE: GSK) for $3.8 billion. http://axios.link/8Uad

Fundraising

Slow Ventures is raising up to $175 million for its next seed-stage fund, per an SEC filing. It’s also seeking $60 million for its first opportunities fund.

Sumeru Equity Partners is raising up to $600 million for its third fund, per an SEC filing. www.sumeruequity.com

It's Personnel

🚑 Roel Bulthuis joined Dutch VC firm Inkef Capital as a managing director and head of healthcare. He previously founded and led Merck KGaA’s corporate venture fund. http://axios.link/YHBY

Final Numbers
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Data: Bianco Research; Chart: Lazaro Gamio/Axios
Dan Primack

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