Aug 30, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Tax talk: President Trump today will visit Springfield, Missouri to give a tax plan speech that the White House is hyping while simultaneously acknowledging that it will be devoid of any actual substance.

Want to know about corporate rates or capital gains or carried interest or interest deductibility? Let alone individual deductions or whether or not there will be full expensing? Then this speech will not be for you, likely because none of those details have actually been worked out yet. Instead, you'll hear that Trump's tax plan is designed to help grow the American economy, aid middle-class workers and improve small business competitiveness. If that sounds like a rehash of what Trump was saying on the campaign stump at this time last year, that's because it is. Happy business planning for 2018...

• As Uber turns: Uber made its CEO pick official last night, and ex-CEO Travis Kalanick also issued a short statement of support ("couldn't be happier"). But while Dara Khosrowshahi will be at an all-hands in San Francisco today taking employee questions, the Benchmark Capital vs. Kalanick lawsuit heads into Delaware Chancery Court, with a judge expected to decide whether or not the conflict gets kicked into arbitration (as Kalanick desires).

  • Full steam ahead: Benchmark has no intention of letting this matter drop now that a CEO has been selected, according to a source familiar with its thinking. And yesterday's news that Uber is under preliminary Department of Justice investigation for possibly violating foreign bribery laws only strengthens its belief that Kalanick must be shown the door — and that the best way to get buy-in from Kalanick loyalists still with Uber is by publicly exposing his alleged misdeeds.
  • However: Khosrowshahi could possibly nip this all in the bud by proposing some sort of grand bargain, along with an argument that any ongoing legal battle (whether in arbitration or in court) is damaging his ability to move the company forward.
  • History lesson: Mike Isaac has a good tick-tock of the CEO selection process in today's NY Times. One outstanding question, however, is if Khosrowshahi ever actually had access to the entire Holder Report. One source says he just received summary information in a data room, and Uber itself declined to comment. Hard to believe he wouldn't have demanded to see it before accepting the position — if only to know exactly what he was walking into, and to perhaps better understand the board animus. But "hard to believe" is probably going to be the title of someone's Uber book.

Bain Capital has recruited Apple Inc. (Nasdaq: AAPL) for a last-ditch offer to buy Toshiba Corp.'s semiconductors business, according to Reuters. The bid comes in at around $18.2 billion, with Bain and South Korean chipmaker SK Hynix responsible for over half, with Apple providing up to $3.6 billion and Japanese banks funding the remainder. This would slightly trump an existing offer led by Toshiba joint venture partner Western Digital (Nasdaq: WDC), which also includes KKR.

  • Why it's the BFD: Because this auction has had more twists than a Choose Your Own Adventure book read in its entirety. Bain originally entered the process as the partner of Innovation Network Corporation of Japan., which blindsided its original financial sponsor partner, KKR. Apple was first mentioned by Foxconn as a financing partner for its own bid, even though an Apple source says no such deal was ever agreed-upon (Foxconn also claimed to partner with Dell, which is a portfolio company of Silver Lake — which was bidding with Broadcom). KKR then teamed up with Western Digital, which has basically threatened to use legal means to block rival offers. Toshiba then picked INJC/Bain as its preferred bidder, but those talks faded due to INJC's concerns over Western Digital's demands. Reuters now reports that INJC and Development Bank of Japan would both back Bain's bid, but only invest after any legal issues with Western Digital are settled. Got all that?
  • Bottom line: "Failure to clinch a deal in the next few weeks could mean that it may not clear all necessary regulatory approvals by the end of the financial year in March. That would likely lead to Toshiba reporting negative net worth for two years in a row, increasing its chances of being delisted."Kentaro Hamada & Taro Fuse
Venture Capital Deals

🚑 Arrail Dental, a Chinese operator of nearly 100 private dental clinics, has raised $90 million in Series D funding from Goldman Sachs and Hillhouse Capital Group.

• LookingGlass Cyber Solutions, a Reston, Va.-based cybersecurity company, has raised $26.3 million in mezzanine debt and VC funding co-led by Eastward Capital and Triangle Peak Partners. Return backers include Alsop Louie Partners, Neuberger Berman, and New Spring Capital.

🚑 Shiudi, a crowdfunding platform for covering healthcare bills that runs within Tencent's WeChat app, has raised around $24 million in Series A funding. Tencent and BlueRun Ventures co-led the round, and were joined by Sinovation Ventures, Banyan Capital, IDG Capital, Meituan-Dianping and Tongcheng Foundation.

• Convey, an Austin, Texas-based delivery platform, has raised $8.25 million in Series B funding from Techstars Venture Capital and RPM Ventures.

• LevaData, a Sunnyvale, Calif.-based "cognitive sourcing platform" for reducing supply chain costs, has raised $5 million in Series A funding from Tola Capital.

• Homelike, a German travel platform for long-stay business trips, has raised €4 million in Series A funding. Cherry Ventures led the round, and was joined by seed backer Coparion.

• Herb, a cannabis content startup, has raised $4.1 million in seed funding. Lerer Hippeau Ventures led the round, and was joined by Slow Ventures, Bullpen Capital, Liquid 2 Ventures and individual angels.

🚑 PriorAuthNow, a Columbus, Ohio-based healthcare connection platform that uses prior authorization automation, has raised $3.6 million in new VC funding. NCT Ventures led the round, and was joined by Detroit Venture Partners.

• Wise Apple, a Chicago-based subscription school lunch service, has raised $3.6 million in seed funding. Pritzker Group Venture Capital and Levy Family Partners co-led the round, and were joined by Chicago Ventures, Greycroft Partners, BoxGroup and Irish Angels.

• Hotelchamp, an Amsterdam-based marketing and sales platform for driving direct hotel bookings, has raised €2.25 million in seed funding from backers like Dutch blogger and entrepreneur Nalden.

🚑 ExplORer Surgical, a Chicago-based platform for intraoperative surgical and interventional procedure workflow management and analytics, has raised $3 million in Series A funding. Aphelion Capital led the round, and was joined by Elliott Management, the University of Chicago, M25 Group and the Harvard Business School Angels of Chicago.

Private Equity Deals

• 1K1V has acquired SanLei, a Lesotho-based trout producer, for an undisclosed amount.

🚑 CCMP Capital Advisors has agreed to acquire a control stake in Eating Recovery Center, a Denver-based provider of treatment for individuals with eating disorders, from Lee Equity Partners. No financial terms were disclosed.

• Eagle Foods, a Richfield, Ohio-based portfolio company of Kelso & Co., has acquired ready-to-eat popcorn maker Popcorn, Indiana. No financial terms were disclosed.

• Lightyear Capital has acquired eCommission Financial Services, an Austin, Texas-based provider of commission payments to residential real estate sales professionals, from Milestone Partners. No financial terms were disclosed.

• May River Capital has acquired BJM Pumps, an Old Saybrook, Conn.-based provider of submersible pumps for industrial and municipal/wastewater environments. No financial terms were disclosed.

• NEXT Investors, a unit of Credit Suisse Asset Management, has acquired a majority stake in Sapience Analytics, an India-based provider of employee productivity software. No financial terms were disclosed.

• PumpMan, a provider of onsite pump system maintenance, repairs and other field services, has acquired W.C. Weil Co. (Allison Park, Pa.) and Bartley Pump Inc. (Santa Rosa, Calif.) in separate transactions. No financial terms were disclosed. PumpMan is owned by Soundcore Capital Partners.

• True Wind Capital has completed its previously-announced $140 million take-private acquisition of ARI Network Services, a Milwaukee-based provider of SaaS sales tools for equipment manufacturers, distributors and dealers.

⛽ Zenith Energy, an international liquids and bulk terminaling company owned by Warburg Pincus, has agreed to acquire New York-based Arc Logistics GP (NYSE: ARCX) for around $322 million, or $16.50 per common unit (15.2% premium over yesterday's closing price). Sellers would include Lightfoot Capital Partners.


• Best, a Chinese logistics company backed by Alibaba Group, has increased its IPO target from $750 million to $1 billion. for a $750 million IPO. It plans to list on the NYSE under ticker symbol BSTI with Citigroup listed as left-lead underwriter. Alibaba holds a 23.4% pre-IPO stake, while IDG-Accel China has a 6.2% position.

• ContourGlobal, a New York-based power generation company backed by Reservoir Capital Group, is prepping a London IPO that could raise upwards of $1 billion, according to Bloomberg.

🚑 Sol-Gel Technologies, an Israel-based developer of topical drug products for the treatment of skin diseases, has filed for an $86.25 million IPO. The pre-revenue company plans to trade on the Nasdaq under ticker symbol SLGL, with Jefferies and BMO Capital Markets serving as co-lead underwriters.

Liquidity Events

• Blackstreet Capital Management has sold DAI Investment, a Randolph, Mass.-based apparel company whose brands include TravelSmith and Chadwicks of Boston, to an undisclosed third party.

More M&A

• Axiata Group, a Malaysian telecom company, has agreed to acquire Deodar, the telecom tower unit of Pakistan Mobile Communications, for $940 million.

• Co-operative Group (LSE: 42TE) is in exclusive talks to acquire British wholesaler Nisa, which previously had been in discussions with Sainsbury's, according to Reuters.

🚑 Jazz Pharmaceuticals (Nasdaq: JAZZ) has agreed to an agreement with ImmunoGen (Nasdaq: IMGN), whereby Jazz receives exclusive, global rights to opt into development and commercialization of two early-stage, hematology-related antibody-drug conjugate (ADC) programs (plus a third program, TBA). The deal includes a $75 million upfront payment and up to $100 million in R&D funding over seven years.

• Meltwater, a San Francisco-based media monitoring company, has acquired Algo, a real-time data analytics platform. No financial terms were disclosed. Earlier this year, Meltwater secured $60 million in debt financing from Vector Capital and Silicon Valley Bank.

• Siemens has agreed to acquire Tass International, a Dutch maker of self-driving software that has around $32 million in annual revenue and 200 employees. No financial terms were disclosed.

• Spectris (LSE: SXS) has sold Microscan Systems, its Renton, Wash.-based barcoding business to Omrom Corp. (Tokyo: 6645) for $157 million in cash.


• Macquarie has secured over $3.3 billion in commitments for its fourth infrastructure fund, per an SEC filing.

• Qingsong Fund, a Chinese VC firm led by Tencent co-founder Alvin Liu, has raised $129 million for its third fund.

Final Numbers
  • More: United Technologies (NYSE: UTX) reportedly is closing in on an agreement to buy rival aerospace supplies company Rockwell Collins (NYSE: COL). With an expected value of around $22.8 billion (not including assumed debt), it would easily become the largest aerospace/defense deal of all-time.
Dan Primack