Feb 13, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Snowbound greetings from the home office, on a very weak Merger Monday. Remember to send tips and feedback by hitting reply to this email, or by using our anonymous tipline at http://Axios.com/tips. Here we go...

Top of the Morning

Shopping spree? Intel's Brian Krzanich last week became the latest CEO to appear alongside President Trump, pledging to create thousands of new, high-paying American manufacturing jobs. Never mind that Intel last year laid off thousands of workers. Or that it had requested thousands of H1-B visas. Or that the factory in question was actually built long before the election (albeit not put online). That was all rear-view. Looking forward, Intel would invest under the aegis of tax and regulatory reforms aimed at improving its domestic bliss.

And it all makes sense, except for one pesky problem: Almost none of these reforms have been formally proposed yet, let alone become law.

To be clear, I do believe we'll see some sort of corporate tax reform in 2017. And of course there will be regulatory changes (likely including to Intel's beloved H1-B program). But it seems strange to make major corporate play calls, let alone multi-billion dollar investments, before seeing the rules of the game.

But there does seem to be one area where corporate America is standing pat, waiting for the GOP's grand vision to solidify: Mergers and acquisitions.

According to Thomson Reuters, strategic M&A for U.S. targets was down 2% in through Feb. 9 from the year-earlier period. The overall YTD figure was up 11%, but that was based on a whopping 340% increase in private equity-backed deals.

This is a pretty large disconnect. If CEOs are basing hiring and facilities decisions on expectations of lowered costs, then shouldn't they be buying? If you can commit billions to a new factory in Arizona based on last November election, certainly there's been enough time to sign merger agreements. Or perhaps folks like Krzanich, hawking their silicon wares from the Oval Office, are the over-publicized exceptions to the rule...

• IPO calendar: No companies are expected to go public on U.S. exchanges this week, but there is a chance that we could get Snap's pricing expectations (the 15-day minimum waiting period expires late Thursday). Or, put another way, we could see expected valuation and how much of the company Evan Spiegel and friends are willing to unload.

• Pricey rental: Last week we noted multiple reports that Airbnb is preparing to buy Luxury Retreats, a VC-backed Canadian vacation rentals company, for a figure said to be "in the $200 millions." It's worth noting that there is now some conflict on that price, as another source close to Airbnb tells us that the actual figure is north of $300 million, once cash on hand and other factors are taken into account.

The BFD: J. Jill preps IPO

J. Jill, a Quincy, Mass.-based women's apparel retailer acquired less than two years ago by TowerBrook Capital Partners, has filed for a $100 million IPO (that number is likely as placeholder). It plans to trade on the NYSE under ticker symbol JILL, with BofA Merrill Lynch serving as lead underwriter.

Why it's the BFD: These are tough times for mall-based retailers, but J. Jill seems to be bucking the broader trends. The company reports a 10% compound annual growth rate for its most recent fiscal year, as sales climbed from $562 million to $617 million (albeit without taking the 2016 holiday season into account). Moreover, this appears to be a real turnaround success for TowerBrook. It's also bucking J. Jill's own history over the past decade, which has included a failed IPO attempt and multiple sales at depressed valuations. For example, Golden Gate Capital paid just $75 million for the business in 2009, three years after Talbots had paid $500 million.

Bottom line: "While many companies in the IPO pipeline have opted for outright sales instead, an IPO is a better option for J. Jill as there are few corporate buyers with the appetite and wherewithal to pull off a takeover, several people said. Even private-equity firms who scour the landscape for such deals have been wary of buying niche clothing sellers." ― WSJ

Venture Capital Deals

• Oncoinvent, a Norway-based developer of cancer therapeutics, has raised around $25 million in new equity funding from Geveran Trading, Canica, CGS Holding, Helene Sundt and Must Invest. http://bit.ly/2kjhBWT

• Demisto, a Cupertino, Calif.-based provider of automation and collaboration platforms for security operations centers, has raised $20 million in Series B funding. Clearsky led the round, and was joined by Accel and the Slack Fund. http://bit.ly/2kZxPkZ

• CrediFi, a provider of data and analytics for commercial real estate finance, has raised $13 million in Series B funding. Liberty Israel Venture Fund led the round, and was joined by 31 Ventures and return backers Battery Ventures, Carmel Ventures, OurCrowd and Stax. www.credifi.com

• Nura, an Australian maker of customizable headphones, has raised $4.6 million in new VC funding from backers like Sydneysiders and Blackbird Management. http://tcrn.ch/2lGqEgI

• Bloom & Wild, a British online flower company, has raised £3.75 million in new VC funding. Burda Principal Investments led the round, and was joined by return backer MMC Ventures. http://read.bi/2kj1AQA

• Trizic, a San Francisco-based provider of digital wealth advisory solutions for financial institutions and RIAs, has raised $3.3 million in new VC funding. Freestyle Capital led the round, and was joined by Broadhaven Capital Partners and Commerce Ventures. www.trizic.com

Private Equity Deals

• 3i Group is receiving private equity interest for portfolio company ESG, a UK-based provider of environmental testing and compliance services, according to Dow Jones. http://bit.ly/2lAVfAn

• Apax Partners is in talks to acquire Syneron Medical (Nasdaq: ELOS), an Israeli maker of aesthetic medical devices, for between $350 million and $400 million, according to Calcalist. Barclays is managing the process. The company closed trading Friday with a market cap of nearly $323 million. http://reut.rs/2lHDfRJ

• Cinven Partners has offered to acquire listed German drugmaker Stada nearly €3.5 billion. Stada also has received a second bid, with Reuters reporting that it may be from a private equity consortium of Advent International, CVC Capital Partners and Permira. http://reut.rs/2kK6DIg

• Diversis Capital has completed its previously-announced, take-private acquisition of ServicePower, a McLean, Va.-based provider of workforce management software. The deal was valued at just under $19 million. www.servicepower.com

• Mercer Advisors, a Santa Barbara, Calif.-based registered investment advisor backed by Genstar Capital, has acquired Duckworth Wealth Advisors, a Newport Beach, Calif.-based family office that manages $160 million in client assets. No financial terms were disclosed. www.merceradvisors.com

• Nova Sciences, a new acquisitions platform focused on the metering, measurement and control instrumentation sector, has secured a $100 million equity commitment from Pamplona Capital Management and Advent Venture Partners. The company will be led by Jim Barbookles, former CEO of Thermo Orion.

• ProSites, an online marketing platform owned by The Riverside Co., has acquired PracticeMojo, an Arizona-based provider of cloud SaaS software for dental practices. http://bit.ly/2lGoWM2

• Ship Supply International, a Miami, Fla.-based portfolio company of H.I.G. Capital, has acquired Marine Trading Services, a Hackensack, N.J.-based provider of last-mile delivery of perishable goods and deck and engine maintenance products to vessels. No financial terms were disclosed. www.shipsup.com

• Smile Brands, an Irvine, Calif.-based dental practice platform backed by Gryphon Investors, has acquired two California dental practice groups: A+ Dental Care and OneSmile Silicon Valley. No financial terms were disclosed. www.smilebrands.com

• TA Associates has acquired a minority stake in Retriever, a Valhalla, N.Y.-based provider of payment technology and merchant services to healthcare providers. No financial terms were disclosed. www.retrievermed.com

Public Offerings

• Floor & Décor, a Smyrna, Ga.-based retailer of hard surface flooring and related accessories , has filed for a $150 million IPO. It plans to trade on the NYSE under ticker symbol FND, with BofA Merrill Lynch serving as lead underwriter. The company reports $26 million of earnings on $772 million in revenue for the 39 week period through Oct. 29, 2016, and is owned by Ares Management and Freeman Spogli & Co.

Liquidity Events

• Grab, an Uber rival focused on Southeast Asia, has agreed to acquire Kudo, an Indonesian online payments processing company, for over $100 million, according to The Economic Times. Kudo backers include 500 Startups, East Ventures, Eland Mahkota Technologies and GREE Ventures. http://bit.ly/2lHytU1

More M&A

• Dalian Wanda Group disputed an FT report about its possible takeover interest in European financial institutions like Deutsche Bank's Postbank, by saying that the two groups "have not been in touch." http://reut.rs/2kK8Ovq

• Heineken has agreed to acquire the Brazilian breweries of Japan's Kirin Holdings for €664 million. http://on.wsj.com/2lAQypY

• PPC Ltd., South Africa's largest cement maker, is in talks to merger with rival Afrisam Group. http://bit.ly/2lG7iYX

• Sanofi (Paris: SAN) has agreed to sell five over-the-counter healthcare producrs, including the painkiller Prontalgine, to Ipsen (Paris: IPN) for €83 million. http://bloom.bg/2kIQfaX

• Sinochem, a state-owned oil and gas company in China, is in preliminary talks to acquire an equity stake in troubled Swiss commodities trader Noble Group, according to Reuters. http://reut.rs/2kKkxu3

Fundraising

• Grand Ventures, a Michigan-based VC effort led by insurance industry exec McKeel Hagarty, is raising up to $50 million for its debut fund, per an SEC filing. http://bit.ly/2kobZp9

• Valor Capital Group, a New York-based investment firm focused on cross-border opportunities with Brazil, is raising up to $100 million for a new VC fund, per an SEC filing. http://bit.ly/2lbasHm

It's Personnel

• Pascale Diaine, founder of Orange's startup accelerator, has joined Storm Ventures as a principal. http://bit.ly/2lzCU35

• Nicola McClafferty, former CEO of Covertique.com, has joined European VC firm Draper Esprit as a Dublin-based investment professional. www.draperesprit.com

Final numbers
Dan Primack