Greetings from the home office, where it's good to be back after a week of vacation. Big thanks to Kia for filling in.
Top of the Morning
Carl Icahn gambled again. And won again.
- Eldoraro Resorts this morning agreed to buy Caesar's Entertainment for $17.3 billion (including assumed debt), or $12.75 per share in cash and stock. That's a 29% premium over where shares closed Friday, and nearly an 88% increase from where they entered 2019.
- It creates the largest owner and operator of U.S. casinos, with the combined company to retain the Caesar's brand.
Icahn first disclosed a 9.8% stake in Caesar's in mid-February, and began pushing the company to sell. Caesar's quickly folded, giving Icahn three board seats and a say in picking its next CEO.
- By the end of March, Icahn was the company's largest outside shareholder with a 15.84% stake (per S&P IQ).
- He reportedly worked to block an $11 per share takeover offer from Eldorado which, if true, netted Icahn an additional $174 million.
- Caesar's shares opened trading in 2019 below $7 per share, and closed Friday at $9.99 per share.
Today's deal the second time in less than a year that Icahn has cashed in chips at the Eldorado window, having previously sold it Tropicana Entertainment for $1.85 billion.
Icahn also took the rare step of publicly praising the Caesar's board for "acting responsibly and decisively in negotiating and approving this transformational transaction."
- But, true to form, he also used the moment to slam Occidental Petroleum for its proposed Anadarko acquisition, over which Icahn is suing Occidental.
- "There are far too many boards that unlike Caesars, believe corporations are more like feudal systems, than democracies; that stockholders are the peasants who represent a necessary evil that must be tolerated, possibly patronized, but certainly ignored.
PE angle: Apollo and TPG, which bought Caesar's in a pre-crisis deal that ended in bankruptcy, sold their remaining stakes by in early March — which is a bit like losing all day on a slot machine, getting up for just a moment, and then learning your successor got three cherries in a row.
Next up: All eyes are now on MGM Resorts, which in January gave a board seat to former Icahn lieutenant Keith Meister (Corvex Management) and launched a strategic review. MGM shares are up more than 1% in early trading.
- Go deeper: Axios' Courtenay Brown explains why Wall Street is now playing nice with activists.
🌲 ICYMI: On Saturday we published a deep dive on the cannabis industry, including on how 2019 already has seen a record amount of venture capital funding for cannabis-related startups.
- Catch-22: Lots of these investments are binary bets on federal legalization. But, if that happens, a lot of cannabis-specific services companies (logistics, retail, etc.) could be rendered obsolete.
- Axios/SurveyMonkey poll: Most Americans support federally-legalizing marijuana (63%), but only 26% say they're interested in purchasing it.
L Catterton agreed to buy Del Frisco’s Restaurant Group (Nasdaq: DFRG) for approximately $650 million in cash, or $8 per share.
- Why it's the BFD: Because this reflects how private equity passes around high-end steakhouses like they're a side of lobster mac & cheese. Del Frisco's was once owned by Lone Star, L Catterton once backed the parent company of Fleming's, BRSR owned Ruth's Chris, both Bunker Hill Capital and TH Lee held Smith & Wollensky, etc.
- Price talk: This is a 22% premium to where Del Frisco's was trading before announcing last December that it would explore strategic alternatives. The deal value is just a slight increase over the $629 million that Lone Stars Funds paid to buy Del Frisco's 13 years ago.
- Bottom line: "Del Frisco’s has been on the market for much of the year, pushed by activist investors that have soured on the company’s performance, particularly since Del Frisco’s used debt to pay $325 million for Barteca Restaurant Group, the owner of Barcelona and Bartaco... The company operates 78 restaurants in its various brands and first-quarter same-store sales rose 1.3% at all of its brands." — Jonathan Maze, Restaurant Business
Venture Capital Deals
• Blend, a San Francisco-based digital lending platform, raised $130 million in Series E funding. Temasek and General Atlantic co-led, and were joined by return backers 8VC, Founders Fund, Greylock Partners, and Lightspeed Venture Partners. www.blend.com
🚑 Acutus Medical, a Carlsbad, Calif.-based provider of electrophysiology solutions, raised $100 million in Series D funding. 8VC, Opaleye Management and Pura Vida Investments were joined by return backers OrbiMed, Deerfield Management, Advent Venture Partners, Xeraya Capital and GE Ventures. The company also secured a $70 million credit facility from Deerfield and OrbiMed. http://axios.link/0cP4
• Procurify, a Vancouver-based spend management platform, raised around $20 million in Series B funding. Information Venture Partners led, and was joined by Runa Capital, HarbourVest Partners, Manulife and BC Tech Fund. http://axios.link/JNS0
🚑 Corinth MedTech, a Cupertino, Calif.-based medical device startup focused on urology, raised $12 million in Series D funding co-led by ShangBay Capital and Aethan Capital. http://axios.link/cW0h
🚑 Alma, a New York-based mental health platform, raised $8 million in Series A funding. Tusk Venture Partners led, and was joined by Sound Ventures, First Round Capital, Primary Ventures, Box Group and Able Partners.
Private Equity Deals
⛽ Align Capital Partners acquired a majority stake in E Source, a Boulder, Colo.-based provider of research, data and consulting for utilities. www.esource.com
⛽ Aurora Capital Partners acquired Petroleum Service Corp., a Baton Rouge, La.-based provider of product handling and site logistics services, from Switzerland’s SGS.
• Equistone agreed to buy Vulcain Ingénierie, a French engineering consultancy for the energy and pharma sectors, from NiXEN Partners and Initiative & Finance. http://axios.link/t5iR
• METIS Solutions, an Arlington, Va.-based portfolio company of Blue Delta Capital Partners, acquired Pluribus, a Springfield, Va.-based provider of specialized intelligence services to the U.S. intelligence community. www.metissolutions.com
• Pamlico Capital invested in Digitech Computer, a Chappaqua, N.Y.-based provider of revenue cycle management software for emergency medical services transport companies. http://axios.link/HdEw
• TPG acquired a non-control stake in early-stage VC firm Harlem Capital Partners. http://axios.link/xlWv
• Nine companies plan to price IPOs on U.S. exchanges this week: Change Healthcare, TheRealReal, Linx, BridgeBio Pharma, Adaptive Biotech, Cambium Networks, Morphic Holding, Priam Properties and Karuna Therapeutics. http://axios.link/9PAm
• ConversionPoint, a Newport Beach, Calif.-based SaaS platform for marketing and e-commerce, formally withdrew its $40 million IPO registration. It had postponed the offering last month.
🚑 Fulcrum Therapeutics, a Cambridge, Mass.-based developer of rare disease therapies based on gene regulation, filed for an $86 million IPO. The pre-revenue company plans to trade on the Nasdaq (FULC) with Morgan Stanley as lead underwriter, and raised around $140 million from Third Rock Ventures (43.2% pre-IPO stake), GlaxoSmithKline (9.5%) and Foresite Capital (8%). http://axios.link/hc3Y
• Medallia, a San Francisco-based customer experience feedback platform, filed for a $100 million IPO. It plans to trade on the NYSE (MDLA) with BAML as lead underwriter. It reports a $2.6 million net loss on $94 million in revenue for Q1 2019, and raised over $330 million from firms like Sequoia Capital (41% pre-IPO stake). http://axios.link/PHF6
🚑 Mirum Pharma, a Foster City, Calif.-based developer of treatments for cholestatic liver diseases, filed for an $86 million IPO. The pre-revenue company plans to trade on the Nasdaq (MIRM) with Citigroup as lead underwriter, and raised $120 million from NEA (20.8% pre-IPO stake), Deerfield Management (17.3%), Frazier Life Sciences (17.3%), Novo (10.4%), Shire (10.3%) and RiverVest (9%). http://axios.link/I9V5
🚑 Phressia, a New York-based provider of patient-intake software, filed for a $125 million IPO. It plans to trade on the NYSE (PHR) with JPMorgan as lead underwriter, and reports a $7 million net loss on $28 million in revenue for Q1 2019. The company raised around $119 million in VC funding from LLR Equity (23.85% pre-IPO stake), HLM Venture Partners (17.33%), Polaris Partners (14.52%), Ascension Ventures (10.77%), Echo Health Venture (9.01%), Blue Cross Blue Shield Venture Partners (7.8%) and VantagePoint Venture Partners (7.08%). http://axios.link/8hu7
• Genesis Park hired Goldman Sachs to find a buyer for Texas Monthly, a publication it bought for around $25 million in 2016, per the FT. http://axios.link/LqyU
• Carrefour (Paris: CA), the French retailing giant, agreed to sell an 80% stake in its China business for nearly $700 million in cash to Chinese retailer Suning.com. http://axios.link/nsLB
• EP Global Commerce offered to buy German wholesaler Metro at an enterprise value of around €5.8 billion, but Metro’s board said the bid is too low. http://axios.link/aKJs
• Bedrock Capital raised $350 million for its second fund. www.bedrockcap.com
• Hamilton Lane raised $1.7 billion for its fourth private equity co-investment fund. www.hamiltonalane.com
• NewSpring Capital is raising $350 million for its fifth growth equity fund, per an SEC filing. http://axios.link/kN6t
• Jared Gordon joined AngelList as director of Canada. He previously was head of financial services for TribalScale.
• Julie Lydon joined Fifth Wall, a VC firm focused on real estate tech, as head of communications. www.fifthwall.vc
• Russell Yue joined the VC and growth equity team at H.I.G. Capital, after previously spending two years with Greycroft. www.higcapital.com