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Aug 20, 2019

Axios Pro Rata

Top of the Morning

Illustration: Lazaro Gamio/Axios

Yesterday was all about the warm fuzzies in Corporate America, after The Business Roundtable changed its mission statement to acknowledge that companies have obligations to all stakeholders, not just those with stock certificates. At some point, the FEC might check to see if this counts as an in-kind contribution to Elizabeth Warren.

  • 181 CEOs said their companies have a "fundamental commitment" to employees, suppliers, customers, local communities, and the environment.
    • Eight members didn't sign. Two, State Farm and Kaiser Permanente, said it was because they don't have shareholders. None of the others gave comment.
  • Axios' Jim VandeHei wrote that it codifies America's CEOs as politicians.
  • Fortune's Alan Murray said on the Pro Rata Podcast that it is partially driven by CEO fears that free-market capitalism is under assault, and that companies must reframe their own narratives before it's too late.

But the adulation wasn't universal.

I spoke yesterday on background with several business bigs who believe us media folks got snowed.

The biggest critiques related to what happens when interests of various stakeholders come into conflict. If fiduciary duty to owners is no longer primary, what drives final decisions?

  • "You'd think some of these for-profit companies would have also announced that they're converting into public benefit corps, but they didn't," one naysayer offered.
  • Another added: "The mistake I think they made was suggesting that decisions will be made for the purpose of benefiting all stakeholders, rather than saying that they do positive things for employees and local communities because it enhances shareholder value in the long term. You can save a buck today by shortchanging customers, for example, but you're also shortchanging your long-term investors."

There also were worries that stakeholders could use the Business Roundtable statement in litigation.

  • "Class action lawyers are going to love this the next time one of these companies do layoffs or move a factory. Unless the company is bankrupt, how can they justify those actions if employees and local communities are on par with shareholders?"
  • "I don't see this actually happening, but what if one of these companies sells to a lower bidder because they think it's a better fit for employees? If it's a penny less per share, fine. But if it's $5? Delaware law is pretty clear on that."

If you've ever been involved in drafting a mission statement, you know how complicated it can be. And that goes double if you're changing an old one. There are good-faith arguments over specific words and how sentences are structured, with everyone trying to strike the proper balance of aspiration, realism, and flexibility.

In this case, the CEOs may not have realized that their moral GPS was driving them into a ditch. But if they prove unable to successfully negotiate with all stakeholders — if they must lean on their fiduciary crutch — then perhaps they shouldn't be CEOs in the first place.


Source: Giphy

Bayer (DB: BAYN) agreed to sell its veterinary drugs business to Elanco (NYSE: ELAN) for $7.6 billion in cash and stock.

  • Why it's the BFD: Because it creates the world's second-largest animal health company by revenue, behind Zoetis, with a 13% market share. It also will help Bayer cut into the debt pile it built via last year's Monsanto acquisition.
  • Bottom line: "Pfizer’s decision to spin out its animal-health business, Zoetis, in 2013 has prodded other drugmakers to shed their veterinary units. The businesses are often stable, profitable operations whose fortunes are more tied to macroeconomic trends like rising global wealth and protein consumption, instead of risky bets on drug research." ⁠— Riley Griffin, Bloomberg
Venture Capital Deals

H2O.ai, a Mountain View-based open-source machine learning automation platform, raised $72.5 million in Series D funding. Goldman Sachs and Ping An Global Voyager Fund co-led, and were joined by Nvidia, Wells Fargo, and Nexus Venture Partners. http://axios.link/FKmc

Starship Technologies, a San Francisco-based developer of last-mile delivery robots, raised $40 million in new Series A funding. Morpheus Ventures led, and was joined by TDK Ventures, Qu Ventures, Shasta Ventures, Matrix Partners, and MetaPlanet Holdings. http://axios.link/lFj1

Reputation.com, a Redwood City, Calif.-based online reputation management platform for companies, raised $30 million. Ascension Ventures led, and was joined by Akkadian Ventures, Industry Ventures, River City Ventures and return backers Kleiner Perkins, August Capital, Bessemer Venture Partners, Heritage Group, and Icon Ventures. http://axios.link/JEnw

Ally, a Seattle-based corporate goal-setting platform, raised $8 million in Series A funding. Accel led, and was joined by Founders Co-op, Vulcan Capital, and Lee Fixel. http://axios.link/T5JA

BDS Analytics, a Boulder, Colo.-based cannabis market intelligence startup, raised $7 million from Key Investment Partners, Altitude Investment Management, and 7thirty. www.bdsanalytics.com

Syzygy Plasmonics, a Houston-based photocatalyst startup, raised $5.8 million in Series A funding co-led by The Engine and The GOOSE Society of Texas. http://axios.link/HQgv\

Internal, a San Francisco-based no-code SaaS tool for deploying internal corporate consoles, raised $5 million in seed funding. Craft Ventures led, and was joined by Founders Fund. http://axios.link/3z7w

SpotQA, a London-based automated software testing platform, raised $3.25 million in seed funding led by Crane Venture Partners. http://axios.link/DMg3

Brainbase, a Los Angeles-based IP licensing management platform, raised $3 million led by Struck Capital. http://axios.link/P9Qw

Podcorn, a podcasting monetization platform, raised $2.2 million in seed funding from Bessemer Venture Partners, Alumni Ventures, 500 Startups, and Global Founders Capital. www.podcorn.fm

R Fitness, an Indonesia-based micro fitness studio operator, raised $1.25 million in seed funding from Intudo Ventures, Agaeti Ventures and Sinar Mas Digital Ventures. www.ridejkt.com

Private Equity Deals

CH&CO, a UK-based catering company owned by Equistone Partners, acquired London-based workplace catering company Mitie Catering. http://axios.link/t4Yp

🚑 Kaltroco acquired EspriGas, an Atlanta-based provider of medical and industrial gases, from Council Capital. www.esprigas.com

Kinderhook Industries acquired Capital Waste Services, a Columbia, S.C.-based provider of solid waste hauling services, from Hawk Capital Partners. www.capwasteservices.com

Lovell Minnick Partners agreed to buy a majority stake in Inside Real Estate, a Salt Lake City-based SaaS platform for residential real estate brokers. www.insiderealestate.com

Mitel Networks, a Canadian telecom equipment company owned by Searchlight Capital Partners, offered to buy Santa Clara, Calif.-based rival Avaya (NYSE: AVYA) for more than $5 billion (including assumed debt), per Bloomberg. http://axios.link/7ROf

Resolve Systems, an Irvine, Calif.-based IT automation and orchestration company owned by Insight Partners, acquired FixStream, a San Jose, Calif.-based AIOps company. www.resolve.io

Public Offerings

🚑 10x Genomics, a Pleasanton, Calif.-based genomics company, filed for a $100 million IPO. It plans to trade on the Nasdaq (TXG) with JPMorgan as lead underwriter, and reports a $14.5 million net loss on $109 million in first half 2019 revenue. The company raised $320 million in VC funding from firms like Foresite Capital (18.1% pre-IPO stake), Venrock (16.3%), Paladin Capital (11.5%), Fidelity (11.3%), Meritech Capital Partners, and SoftBank. http://axios.link/ZwBi

🚑 IGM Biosciences, a Mountain View-based cancer drug developer, filed for a $100 million IPO. It plans to trade on the Nasdaq (IMGS) with Jefferies as lead underwriter. The pre-revenue company raised $120 million in VC funding from million in Series C funding from Redmile Group, Janus Henderson Investors, Baker Brothers, Vivo Capital, and Haldor Topsøe Holding. http://axios.link/aBT

Saudi Aramco picked Lazard and Moelis & Co. to advise on what would be the largest-ever IPO, per Bloomberg. http://axios.link/20Un

More M&A

Accenture (NYSSE: CAN) acquired Parker Fitzgerald, a London-based consultant to financial institutions. http://axios.link/UHsS

☢️ CK Asset (HK: 1113), founded by Li Ka-Shing, agreed to buy British pubs operator Greene King (LSE: GNK) for £4.6 billion. http://axios.link/Tbpj

🍺 Jacobs Engineering Group (NYSE: JEC) agreed to buy the nuclear power business of Wood PLC (LSE: WG) for £250 million. http://axios.link/wT4O

Lions Gate Entertainment (NYSE: LFG) and ViacomCBS (coming soon) are the final two bidders for up to a 50% stake film studio Miramax, which is being sold by Qatar-based BeIN Media Group at an enterprise value of around $650 million, per Bloomberg. http://axios.link/QwiF

Microsoft (Nasdaq: MSFT) acquired jClarity, a British maker of tools for Java software developers. http://axios.link/DduL

Publicis (Paris: PUB) acquired Irvine, Calif.-based marketing agency Rauxa. http://axios.link/ccvs

Sony acquired Insomniac Games, a Burbank, Calif.-based console gaming studio responsible for Marvel Spider Man. http://axios.link/aSiU


Streamlined Ventures, a Palo Alto-based VC firm led by Ulas Naik, is raising $75 million for its third fund, per an SEC filing.

It's Personnel

Robert Campbell joined boutique investment bank Weild & Co. as a managing director, per his LinkedIn page. He previously was with Boustead Securities. www.weildandco.com

Jean Greene left Lazard to join Bank of America as a senior banker focused on industrials. http://axios.link/bvbQ

Leif King joined law firm Baker McKenzie as a Palo Alto-based partner focused on M&A. He previously was with Skadden Arps. www.bakermckenzie.com

Thrivent promoted Jen Wilson to senior managing director of private equity, per her LinkedIn page. www.thrivent.com

Final Numbers: U.S. IPO perfomance
Source: Renaissance Capital

Select price changes from IPO to yesterday's close:

  • Beyond Meat: +478%
  • Zoom Video: +158%
  • Pinterest: +75%
  • Chewy: +43.5%
  • Livongo Health: +30%
  • Levi Strauss: -4%
  • Uber: -23%
  • DouYou: -27%
  • Lyft: -28%

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