Jun 8, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

💻 You're invited: Axios tomorrow will host a live virtual event at 12:30pm ET on managing through crisis, including interviews with NYSE president Stacey Cunningham and SweetGreen CEO Jonathan Neman. Register here.

🚨 Don't miss Final Numbers at the end of today's issue.

Top of the Morning

Illustration: Aïda Amer/Axios

Protectionism is poised to play an elevated role in global dealmaking, particularly as countries grapple with the economic fallout of COVID-19.

Driving the news: Governments are creating new regulations and incentives to maintain local ownership of homegrown companies.

  • France’s Finance Ministry on Friday formed a fund to invest in domestic tech companies if they receive unsolicited takeover offers from foreign suitors. It begins with €150 million, managed via state-backed lender Bpifrance, but could expand to €500 million next year.
  • Australia has proposed a series of changes related to foreign takeover offers in all sorts of industries, regardless of deal size, including one that would let the country's treasurer force divestitures on the basis of national security.
  • Poland, Hungary and the Czech Republic are in various stages of implementing new restrictions of foreign direct investments, with the goal of restricting takeovers by non-EU companies.
  • Germany also strengthened its screening of foreign direct investments, initially aimed at health care but it's expected to expand to other "sensitive" industries like artificial intelligence.
  • Sweden today got into the act, with top government officials introducing a series of proposals to better screen foreign direct investments.
  • India last month said that companies from its seven neighboring nations, including China, must receive government approval for takeovers of Indian businesses. It also applies to other changes to beneficial ownership.
  • The U.S. doesn't appear likely to enact similar restrictions, regardless of White House saber-rattling toward China, although there was that proposal from some congressional Democrats in April to put an overall moratorium on large M&A until the pandemic subsides.

By the numbers: Global cross-border merger activity is down 40% year-to-date, compared to an overall 43% drop in total M&A, per Refintiv. Cross-border deals for European targets, however, are down 5% versus an overall 12% increase in European dealmaking.

The bottom line: The world may be flat, but political policy is marked by peaks and valleys.

The BFD

Illustration: Sarah Grillo/Axios

AstraZeneca (LSE: AZN) approached Gilead Sciences (Nasdaq: GILD) last month about a possible merger, although the two companies aren't currently in formal talks, as first reported by Bloomberg.

  • Why it's the BFD: This still feels highly unlikely but, if consummated, would be the largest health care merger in history. AstraZeneca has a current market cap of around $140 billion, while Gilead's is $96 billion. It also could portend a rash of pharma deal-talk ahead of treatments or vaccines for COVID-19.
  • The bottom line: "Most large biopharma deals arise from a position of distress, not strength, and Gilead today is far from distressed. ... It may suggest that AZN is looking to leverage its valuation and current strategic position by making a large acquisition to diversify away from dependence on its blockbuster oncology franchise. Other targets, such as perhaps Biogen, Amgen, or Alexion, may be equally suitable for these purposes, and could prove more amenable to overtures." — SVB Leerink analyst note
Venture Capital Deals

Wahed Invest, a New York-based online Islamic investment platform, raised $25 million from Saudi Aramco, BECO Capital, and Cue Ball Group. http://axios.link/Bu4S

Bonusly, a Boulder, Colo.-based employee management and rewards platform, raised $9 million in Series A funding. Access Venture Partners led, and was joined by Next Frontier Capital and Operator Partners. http://axios.link/Fcwc

Quaise, a Cambridge, Mass.-based developer of millimeter-wave drilling technology for accessing geothermal energy, raised $6 million in seed funding. The Engine led, and was joined by Collaborative Fund. www.quaise.energy

TaxProsper, a property tax analytics platform, raised $2 million. Khosla Ventures led, and was joined by Global Founders Capital and Clocktower Ventures. http://axios.link/I6sZ

Fivetran, an Oakland-based data integration startup, is in talks with General Catalyst and existing backer Andreessen Horowitz to raise new funding at a valuation north of $1 billion, per Bloomberg. http://axios.link/YQUl

Private Equity Deals

Abu Dhabi Investment Authority agreed to invest $750 million for a 1.16% stake in Indian telco Reliance Jio Platforms. http://axios.link/xDQI

  • In related news, Silver Lake is investing another $600 million into Reliance Jio Platforms, a month after committing $750 million. Go deeper into Jio Platforms.

Algeco Group, a London-based portfolio company of TDR Capital, acquired a 55% stake in Norwegian modular building supplier Wexus Gruppen from Norvestor Equity. http://axios.link/seA5

The Blackstone Group lowered its acquisition offer for Dutch lender NIBC from €1.36 billion to €1.13 billion, claiming pandemic-related concerns. http://axios.link/20Xt

FirstLight, an Albany, N.Y.-based regional fiber network provider owned by Antin Infrastructure Partners, agreed to buy BestWeb, a facilities-based service provider in Westchester County, N.Y. http://axios.link/vukw

Fralock, a Valencia, Calif.-based portfolio company of Arsenal Capital Partners, acquired Career Technologies USA, a Chatsworth, Calif.-based provider of provider of design and assembly solutions for circuits and related assemblies. www.fralock.com

Guala Closures (BIT: GCL), an Italian bottle caps maker, said that Investindustrial’s $103 million offer for a 25% ownership stake was “inadequate.” http://axios.link/ffde

🚑 Kinderhook Industries acquired covered entity-pharmacies Paramount Specialty Pharmacy (New York) and PharmaBlue (Pennsylvania), both of which will be merged into a roll-up platform called Avita. www.avitapharmacy.com

🚑 Melinta Therapeutics, a New Haven, Conn.-based portfolio company of Deerfield Management, agreed to buy Tetraphase Pharma (Nasdaq: TTPH) for upwards of $55 million ($39m cash upfront). http://axios.link/5z8i

Orion Innovation, an Edison, N.J.-based portfolio company of One Equity Partners, acquired Zodiac Systems, a New York-based provider of video service delivery software. www.orioninc.com

Sycamore Partners is in early talks to make a takeover offer for bankrupt retailer J.C. Penney, if its creditors fail to finalize a deal, per Reuters. http://axios.link/x4QB

Public Offerings

Three companies expect to go public on U.S. exchanges this week: Vroom, uCloudlink, and Lantern Pharma. http://axios.link/FUtA

🚑 Akouos, a Boston-based developer of gene therapies for hearing disorders, filed for a $100 million IPO. The pre-revenue company plans to trade on the Nasdaq (AKUS) with BofA as lead underwriter, and had raised $162 million in VC funding from firms like 5AM Ventures (21.6% pre-IPO stake), NEA (18.6%), Pivotal BioVentures (7.5%), Sofinnova Ventures (7.3%), RA Capital (7.3%), Novartis (5.3%), and Fidelity (5%). http://axios.link/0HcN

🚑 ArcherDX, a Boulder, Colo.-based personalized genomic medicine company focused on cancer, filed for a $100 million IPO. It plans to list on the Nasdaq (RCHR) with JPMorgan as lead underwriter, and reports a $41 million net loss on $51 million in revenue for 2019. The company raised around $150 million in VC funding from firms like Perceptive Advisors, Redmile Group, Boulder Ventures, Soleus Capital, Driehaus Capital Management, ArrowMark Partners, Sands Capital, Longwood Fund, and PBM Capital. http://axios.link/KVGf

🚑 Avidity Biosciences, a La Jolla, Calif.-based biotech startup focused on rare muscle disorders, set IPO terms to 10 million shares at $14-$16. It would have a fully diluted market value of $500 million, were it to price in the middle, and raised $145 million in VC funding from firms like RTW Investments (14.5% pre-IPO stake), Cormorant Asset Management (10.6%), Eli Lilly (10.4%), Alethea Capital (8.2%), and EcoR1 Capital (6.2%). The company plans to trade on the Nasdaq (RNA) with Cowen as left lead underwriter. http://axios.link/VmPa

The AZEK Co., a Chicago-based manufacturer of composite building products, set IPO terms to 31.2 million shares at $19-$21. It would have a fully diluted market value of $2.8 billion, were it to price in the middle, and plans to list on the NYSE (AZEK) with Barclays as lead underwriter. The company reports a $20 million net loss on $794 million in revenue for fiscal 2019, while sharerholders include Ares Management and Ontario Teachers’ Pension Plan. http://axios.link/mtpP

🚑 Generation Bio, a Cambridge, Mass.-based gene therapy company initially focused on hemophilia and phenylketonuria, set IPO terms to 7.4 million shares at $16-$18. It would have a fully diluted market value of $764 million, were it to price in the middle, and plans to list on the Nasdaq (GBIO) with JPMorgan as lead underwriter. The pre-revenue company raised over $230 million in VC funding from firms like Atlas Venture (37% pre-IPO stake), Fidelity (14.9%), T. Rowe Price (8.9%), and Invus (5.9%). http://axios.link/TNpg

🚑 Royalty Pharma, a New York-based company that buys biopharma royalty interests. set IPO terms to 70 million shares at $25-$28. It would have a fully diluted market value of $15.8 billion, were it to price in the middle, and plans to list on the Nasdaq (RPRX) with JPMorgan as left lead underwriter. Backers include Adage Capital Management. http://axios.link/ULQj

🚑 Vaxcyte, a Foster City, Calif.-based developer of pneumococcal vaccines, set IPO terms to 14 million shares at $14-$16. The pre-revenue company would have a fully diluted market value of $763 million, were it to price in the middle, plans to list on the Nasdaq (PCVX) with BofA as lead underwriter. It raised $283 million in VC funding from firms like TPG Growth (12.9% pre-IPO stake), Abingworth (12.7%), Longitude Venture Partners (11%), RA Capital (9.1%), Janus Henderson (9.1%), Roche (7.9%), Pivotal bioVentures (6.5%), Frazier Life Sciences (6.3%), and Medixi (5.8%). http://axios.link/1dJ1

Liquidity Events

🚑 Welsh, Carson, Anderson & Stowe is nearing a sale of portfolio company InnovAge, a Denver-based in-home senior care provider that could fetch $900 million, per PE Hub. http://axios.link/lfg5

More M&A

Chegg (NYSE: CHGG) bought Mathway, a Center Valley, Penn.-based online math education company, for approximately $100 million in cash. http://axios.link/mur3

Ebix (Nasdaq: EBIX) of Atlanta terminated its $338 million takeover of Indian travel booking platform Yatra (Nasdaq: YTRA), which sued for breach of contract. http://axios.link/XXbB

Ergo, a unit of Munich Re, agreed to buy a 24.9% stake in Chinese insurer Taishan Property & Casualty Insurance Co. http://axios.link/OIWO

Fiat Chrysler and PSA may need to make divestitures in order to gain EU regulatory approval for their $50 billion merger, per Reuters. http://axios.link/OC1d

Zijin Mining Group of China agreed to pay $548 million for a 50.1% stake in Julong Copper, owner and operator of copper mines in Tibet. http://axios.link/qx8n

Fundraising

Bungalow Capital is raising $30 million for its debut seed fund, per an SEC filing. The firm is led by David Ambrose (ex-Steadfast Capital) and Matthew Ziskie (ex-Airbnb).

Meritech Capital Partners raised $800 million for its seventh later-stage VC fund. www.meritechcapital.com

True Ventures is raising $415 million for its seventh early stage fund and $340 million for its fourth “select” fund, per SEC filings. www.trueventures.com

It's Personnel

Access Holdings promoted both Andy Colmone and Michael Rogers to managing directors. www.accessholdings.com

Kay Ashton is retiring as a partner with British private equity firm Silverfleet Capital, after nearly three decades with the firm. http://axios.link/F5w3

Scott Chen joined L Catterton as co-managing partner for Asia operations. He previously was a partner with TPG Capital Asia, where he co-led Greater China investing. http://axios.link/kc9I

TSG Consumer Partners promoted both Erik Johnson and Ed Wong to managing directors. www.tsgconsumer.com

Final Numbers
$1.08 million

That's the amount Axios Pro Rata readers helped raise on Saturday, via our latest Peloton fundraising ride to benefit the NAACP Legal Defense Fund.

  • We had around 11,500 riders, which at first I thought was a software glitch.
  • For context, our prior fundraising ride had around 1,300 riders.
  • That dollar amount doesn't include any donations made via the link provided here last week, or via my Twitter feed. It was clicked on hundreds of times.

Thank you so much to everyone who took time out of their day to ride. And to our generous donors, including those who honored their per-rider pledges despite being led (by me) to expect a much lower number of participants.

  • Major donors: Stewart Butterfield, Jen Rubio, Jonathan Heiliger, Freestyle Capital, John Foley, Jesse Rogers, Jon Callaghan, Ian Loring, Andrew Reed, TUGG, “The Magic Beans," Jonah Sulak. Bill McComb, Mike Duda, Founders Fund, GGV Capital, Alan Cohen, Siebert Williams, and Anthemis.
Dan Primack

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