Axios Pro Rata

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January 25, 2024

Top of the Morning

Illustration of the Japanese flag made out of steel

Illustration: Sarah Grillo/Axios

When U.S. Steel last month agreed to be acquired by Japan's Nippon Steel, many pundits and politicians were aghast that such an iconic American company would even consider foreign ownership.

  • It turns out that the deciding factor was regulatory arbitrage, not price.

Behind the scenes: U.S. Steel yesterday filed its preliminary proxy statement, which includes a detailed deal history.

  • There were several bidders, but the two most serious were Nippon and what's referred to as "Company D."
  • "Company D" was Ohio-based steelmaker Cleveland-Cliffs, per a source familiar with the situation. The same Cleveland-Cliffs that earlier in 2023 had unsuccessfully attempted to buy U.S. Steel for around $7 billion.

By the numbers: There were several rounds of bids and negotiations, but the upshot is that Cleveland-Cliffs eventually offered $54 per share in cash and stock.

  • That worked out to around $220 million less than the $55 per share all-cash offer from Nippon, but Cleveland-Cliffs also asserted that its merger would result in around $6.50 per share, or $1.45 billion, in "potential synergy value."
  • Plus, Cleveland-Cliffs had steelworkers union support (even though one might think some of its synergies were synonymous with job cuts).

Tipping point: U.S. Steel engaged outside advisers to assess regulatory risks.

  • Were it to go with Nippon, U.S. Steel expected a CFIUS review of national security implications.
  • Were it to go with Cleveland-Cliffs, U.S. Steel expected a DOJ review of antitrust issues.
  • Per the proxy: "A transaction with Company D would eliminate the sole new competitor in non-grain-oriented steel production in North America as well as eliminate a competitive threat to Company D's incumbent position in the U.S., and put up to 95% of iron ore production in the U.S. under the control of a single company."
  • It added that such a merger also would reduce competition when it comes to supplying steel products to auto manufacturers.
  • The CFIUS threat, meanwhile, was viewed as relatively mild. Plus, Nippon didn't require shareholder approval whereas Cleveland-Cliffs would have.

The bottom line: U.S. Steel picked the path of least (expected) resistance.


Illustration of hundred dollar bills and coins arranged in the shape of a cancer ribbon.

Illustration: Aïda Amer/Axios

CG Oncology, a biotech focused on bladder cancer, raised $380 million in its IPO, pricing 20 million shares at $19.

Why it's the BFD: This is a lustrous green light for the broader IPO market.

  • CG originally planned to raise just around $200 million, before boosting the share count by 44%. Then the company sold even more shares at a price above its anticipated range.
  • Its initial market value will be around $1.2 billion.

ROI: CG had raised around $317 million in VC funding since its 2010 formation. Major backers included ORI Capital (11.3% pre-IPO stake), Decheng Capital (10.4%), Longitude Venture Partners (9.5%), Foresite Capital (6.3%), TCGX (6.3%), and Ally Bridge Group (5.7%).

The bottom line: CG's lead candidate is focused on patients with non-muscle invasive bladder cancer (NMIBC) who aren't responsive to the current standard-of-care therapy. There are around 63,000 diagnosed cases of NMIBC in the U.S. per year.

Venture Capital Deals

Sion Power, a Tucson, Ariz.-based EV battery developer, raised $75m in Series A funding. LG Energy Solution led, and was joined by Euclidean Capital and Hillspire.

Infinite Roots (fka Mushlabs), a German developer of mycelium-based food products, raised $58m in Series B funding. Dr. Hans Riegel Holding and confectionary company Haribo co-led, and were joined by EIC Fund, REWE Group and Betagro Ventures.

• Anomalo, a Palo Alto, Calif.-based data quality platform, raised $33m in Series B funding. SignalFire led, and was joined by Databricks Ventures and insiders Norwest Venture Partners, Two Sigma Ventures, and Foundation Capital.

• CheckSammy, a Dallas-based bulk waste collection startup, raised around $22.5m in equity funding led by I Squared Capital, per Axios Pro.

Elo Life Systems, a Durham, N.C.-based gene editing startup focused on next-gen food ingredients, raised $20.5m in Series A2 funding. DCVC Bio and Novo Holdings co-led, and were joined by Hanwha Next Generation Opportunity Fund, AccelR8, and Alexandria Venture Investments.

• Spellbook, an AI copilot for lawyers, raised US$20m in Series A funding. Inovia Capital led, and was joined by Thomson Reuters Ventures, The Legaltech Fund, Bling Capital, Moxxie Ventures, Concrete Ventures, Path Ventures, N49P, and Good News Ventures.

🚑 IMU Biosciences, a British precision medicine startup, raised £11.5m in Series A funding. Molten Ventures led, and was joined by LifeX Ventures.

🚑 CardioSignal, a Finnish developer of smartphone-based cardio tests, raised $10m in Series A funding. DigiTx Partners led, and was joined by Sandwater and

Brite Solar, a Greek solar glass developer, raised a €8.6m in Series A funding led by New Energy Partners.

🌎 Heex, a French provider of carbon-reduction software, raised €6m in seed funding co-led by Shift Invest and Karista.

🚑 Isaac Health, a New York-based brain health startup, raised $5.7m in seed funding. Meridian Street Capital and B Capital co-led, and were joined by Primetime Partners, Co-Found Partners, VU Venture Partners, and AirAngels.

• Sequence, a financial router for consumers, raised $5.5m led by Aleph.

🚑 Being Health, a New York-based mental health startup, raised $5.4m from 18 Park and HDS Capital.

Boomerang, a Maimi-based lost and found platform for stadiums, raised $4.9m. LightShed Ventures led, and was joined by GGV, GoldHouse, Harlo Capital, Dream Ventures, Lake Nona Fund, and SeventySix Capital.

🚑 HEAL Security, a Menlo Park, Calif.-based health care cybersecurity intelligence platform, raised $4.6m led by Health2047, per Axios Pro.

Crescendo, a developer of "AI-native" contact centers, raised $4.5m in seed funding led by General Catalyst.

DXwand, a customer service automation startup based in Cairo and Dubai, raised $4m in Series A funding. Shorooq Partners and Algebra Ventures co-led, and were joined by insider Dubai Future District Fund.

🚑 UnSkript, an SF-based IT problem-solving platform for health care, raised $3.8m from Westwave Capital, First Rays Venture Partners, Scribble Ventures, and Zero Prime Ventures.

Alinia Invest, a wealth management app aimed at Gen Z women, raised $3.4m in seed funding. F7 Ventures and GFR co-led, and were joined by Worklife Ventures, FoundersX Fund, and Gaingels.

Krepling, an e-commerce channel management platform, raised $3.3m in seed finding. Bull City Venture Partners led, and was joined by Launch, Brickyard, Front Porch Ventures, 11 Tribes Ventures, Colabora Ventures, and Broadshade Investments.

• STAN, an Indian e-sports platform, raised $2.7m in pre-Series A funding from Aptos Labs, Pix Capital, Maelstrom Fund, GFR Fund and insider General Catalyst.

Private Equity Deals

• Andre Agassi, David Kass, and Raine Ventures paid $8m for a control stake in pickleball rating system DUPR.

• Apollo Global Management will pay up to €300m for around a 22% stake in Spanish testing and certifications provider Applus (Madrid: APPS), beating out rival bidders I Squared Capital and TDR Capital.

• GS Foods Group, a Vernon, Calif.-based portfolio company of Highview Capital and A&M Capital Partners, acquired Diamond Foods, a New Orleans-based K-12 food distributor.

KPS Capital Partners last month offered to buy British specialty chemicals company Elementis (LSE: ELM), but was rebuffed on price, per Reuters.

• Suave Brands, a portfolio company of Yellow Wood Partners agreed to buy lip balm brand Chap Stick from Haleon (LSE: HLN) for $510m (including $430m in cash).

Public Offerings

🚑 Kallyope, a New York-based weight loss drug developer, hired JPMorgan to explore an IPO, per Bloomberg. The company has raised around $480m in VC funding from firms like Casdin Capital, Greenspring Associates, Alexandria Venture Investments, Illumina Ventures, Polaris Partners, and The Column Group.

Perfios, an Indian B2B credit decisioning SaaS provider, is working on a local IPO that could raise around $500m, per Bloomberg. It's raised over $350m from firms like Warburg Pincus and Bessemer Venture Partners.

Liquidity Events

Autodesk (Nasdaq: ADSK) agreed to acquire Payapps, an Australian provider of construction payment and compliance management software. Payapps had raised over US$30m from firms like FM Investors, Primorus Investments, and Salta Capital.

Warburg Pincus sold Procare, a Denver-based provider of child care center management software, to Roper Technologies (Nasdaq: ROP) for $1.86b.

• WaterRower, a Warren, R.I.-based maker of indoor rowing machines, acquired CityRow, a New York-based rival that had raised around $16m from firms like Everywhere Ventures. Earlier reports had linked L Catterton-backed Hydrow to CityRow.

More M&A

• Cetera Financial Group invested in Wilde Wealth Management, a Scottsdale, Ariz.-based firm with more than $2.8m in AUM.

• Fantuan, a Canadian portfolio company of VC firms like Vision Plus Capital and Celtic House Asia Partners, acquired the delivery business of Chowbus, a Chicago-based restaurant management software provider that's raised over $100m from firms like Left Lane Capital, FJ Labs, and Greycroft.

• Legacy Holding Group, owned by Mexican businessman Raul Rocha Cantu, will pay around $16m for a 50% stake in the Miss Universe pageant brand from listed Thai media group JKN Global.

• Minute Media, a VC-backed sports media company that owns both The Players' Tribune and FanSided, acquired STN Video, a Canadian sports content distributor. The deal reportedly was valued at around $150m, including financing from BlackRock and HSBC Innovation Banking.

Vertex Commodities, a new firm launched by former ED&F Man traders, agreed to buy the operations of Chicago's Pullman Sugar.


Arlington Capital Partners, a Washington, D.C.-based PE firm focused on regulated industries, raised $3.8b for its sixth fund.

🚑 Cross-Border Impact Ventures, a Toronto-based impact VC firm focused on women's and children's health tech, raised US$90m for its debut fund.

Innovation Endeavors raised $630m for its fifth VC fund.

It's Personnel

RJ David joined midmarket PE firm Broad Sky Partners as a managing director. He previously was with Carlyle.

Douglas DiMedio left Kirkland & Ellis to lead the private equity practice of law firm Benesch.

Brian Klaban joined Levine Leichtman Capital Partners as head of capital markets and a director of originations. He previously was with Platte River Equity.

LBC Credit Partners promoted Homyar Choksi to deputy CIO.

Siris Capital promoted Stephen Catera to partner.

Jason Tanker joined Renovus Capital Partners as a managing director focused on tech services. He previously was with Norwest Equity Partners.

🚑 Third Rock Ventures promoted Jigar Raythatha to partner and Vyas Ramanan to venture partner. It also added three venture partners: Mary Lynne Hedley (ex- Tesaro), Steve Paul (Karuna Therapeutics), and Courtney Wallace (Beam Therapeutics).

Final Numbers

Data: U.S. Department of Labor; Chart: Axios Visuals
Data: U.S. Department of Labor; Chart: Axios Visuals

The U.S. economy grew at a 3.3% annualized rate in Q4 2023, per new GDP data released this morning by the Commerce Department.

  • It's much stronger growth than economists expected and caps a year of economic resilience as the nation avoided a projected recession, Axios' Courtenay Brown writes.

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