Dec 16, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Aïda Amer/Axios

For the past year I've had a running digital conversation with a well-known Silicon Valley investor, over my criticisms of tech startups taking money from Saudi Arabia's sovereign wealth fund. Almost any time I write the word "Khashoggi," my phone buzzes with a link to the latest human rights violation in China.

  • The investor's argument is that I dove head-first down a slippery slope.

Even if the Chinese government doesn't directly invest in a U.S. company, as the Saudis often do, it's very difficult to separate China's private and public enterprise. Particularly in tech So, de facto, the Chinese government is arguably investing. And, conversely, U.S. investors and firms are supporting China's government by backing Chinese companies.

Yes, foreign direct investment between the countries has deteriorated in the past year, thanks to the endless trade war, but there's still plenty of cross-border deals and non-investment partnerships.

  • I write this against the backdrop of British soccer team Arsenal, owned by St. Louis turncoat Stan Kroenke, today publicly distancing itself from the comments of one of its own players, who criticized China's government for its mass detention of Uighur Muslims (thus causing China's state broadcaster to pull an Arsenal match).

There is no simple exit off the slippery slope here for me, or for those who invest in China but abhor its human rights record. Except, perhaps, to first consider how you'd react if an employee or other stakeholder were to make a criticism similar to that of the Arsenal player, or when asked by a journalist.

  • If the answer is to beg forgiveness, like usually-Silent Stan, or to dodge, then don't lie down in the first place.
  • If it's to support the comments and let the chips fall where they may, then enjoy the ride.
Also...

🚀 Failure to launch: Vector, a small satellite launch company that had raised over $90 million in VC funding, on Friday filed for Chapter 11 bankruptcy protection. It also disclosed plans to sell some of its assets to Lockheed Martin.

  • Reports are that the company was forced in August to lay off around 150 employees, after investor Sequoia Capital reportedly "withdrew its support for the company because of concerns about how the company was managed."
  • Per a source: Sequoia decided to stop investing due to a high burn rate and the company not meeting projections. That decision was followed by two lenders opting against giving Vector new debt lines — something Sequoia didn't instruct, but which Vector nonetheless blames on the VC firm.
  • Lockheed Martin would only pay around $2.5 million for the select assets, and also provided Vector with $500,000 of debtor-in-possession financing.
  • Axios Space's Miriam Kramer: "Analysts have predicted that a bubble is forming in the small launcher industry, with dozens of companies looking to capitalize on the projected boom in launch market for small satellites in the coming years. Vector's bankruptcy could be one of the first indications that they're right."

In memoriam: Felix Rohatyn, known for helping to design countless big company mergers and the 1970's rescue plan for New York City, died Saturday at the age of 91.

  • “I get called when something is broken. I’m supposed to operate, fix it up and leave as little blood on the floor as possible,” he told the AP in 1978.
  • Read The New York Times obituary
The BFD

Illustration: Aïda Amer/Axios

International Flavors & Fragrances (NYSE: IFF) agreed to merge with DuPont's (NYSE: DD) nutrition and biosciences unit, with a combined company value of $45.4 billion.

  • Why it's the BFD: This creates a global ingredients behemoth, affecting the taste and smell of tens of thousands of consumer products — from yogurts to plant-based meats to laundry detergents.
  • Deal details: IFF beat out Ireland's Kerry Group for the deal, structured as a Reverse Morris Trust, with its shareholders to hold 44.6% of the merged entity. DuPont shareholders will hold 55.4%, while DuPont also will receive a $7.3 billion cash payment.
  • Bottom line: "Consumers have been increasingly gravitating toward healthier and more natural flavors, a trend that the companies said played an important factor in their decision to merge." — Michelle Toh, CNN Business
Venture Capital Deals

• Ruangguru, an Indonesian e-learning platform, raised around $100 million in Series C funding led by General Atlantic, per DealStreetAsia. http://axios.link/yA6Y

CallMiner, a Waltham, Mass.-based provider of speech and customer interaction analytics, raised $75 million from Goldman Sachs. www.callminer.com

Licious, a Bangalore-based online seller of fresh meat and seafood, raised $30 million in Series E funding. Vertex Growth Fund led, and was joined by return backers 3one4 Capital, Bertelsmann India Investments, Vertex Ventures Southeast Asia and India, and Sistema Asia Fund. http://axios.link/htoq

🚑 Garwood Medical Devices, a Buffalo, N.Y.-based developer of a minimally-invasive device for knee implant biofilm infection control, raised $3.7 million in Series B funding from backers like the WNY Impact Investment Fund. http://axios.link/Lgqe

Private Equity Deals

Apax Partners agreed to buy Coalfire, a Westminster, Colo.-based provider of cybersecurity advisory and assessment services, from The Carlyle Group and The Chertoff Group. http://axios.link/RvQ9

Ardian agreed to buy a majority stake in Audiotonix, a UK-based maker of professional music-mixing consoles, at an enterprise value of nearly €1 billion, from Astorg Partners. http://axios.link/GgvX

🚑 GenesisCare, an Australian portfolio company of KKR and China Resources, acquired 21st Century Oncology,, a Ft Myers, Fla.-based network of cancer care centers, for a reported A$1.5 billion. http://axios.link/7tSN

Great Hill Partners agreed to buy VersaPay (TSX: VPY), a Canadian provider of invoice-to-cash software, for C$126 million, or C2.70 per share (47.5% premium to last Thursday’s closing price). http://axios.link/3Tmr

Macquarie Group reportedly agreed to buy South Korean industrial gas supplier Daesung for at least $2.12 billion from MBK Partners. http://axios.link/kwhP

Portobello Capital agreed to buy the Spain operations of BT (LSE: BT), and also sign an ongoing wholesale agreement. http://axios.link/J5HH

The Riverside Company acquired HealthTech BioActives, an ingredient manufacturer, from Spanish pharma company Grupo Ferrer. http://axios.link/coCF

🐱 Targeted PetCare, a Canadian portfolio company of Wind Point Partners, acquired sWheat Scoop, a Detroit Lakes, Minn.-based maker of cat litter, from Farmers Union Industries. www.swheatscoop.com

Thompson Street Capital Partners bought Data Dimensions, a Janesville, Wis.-based provider of business process automation software, from HealthEdge Investment Partners. www.datadimensions.com

Public Offerings

• Two micro-cap companies, Indonesia Energy and Monopar Therapeutics, are expected to price U.S. IPOs this week. http://axios.link/NV3v

Liquidity Events

Accenture (NYSE: ACN) agreed to buy Clarity Insights, a Chicago-based data science consultancy, from Riordan Lewis & Haden. http://axios.link/zUiz

Animoca Brands (ASX: AB1) of Hong Kong agreed to buy nWay, a San Francisco-based game developer whose titles include Power Rangers: Legacy Wars, for $7.7 million. nWay had raised around $22 million from firms like March Capital Partners, Ridge Ventures, Baseline Ventures, TransLink Capital, and WI Harper Group. http://axios.link/xBdG

Fortress Investment Group is seeking to sell Princeton, N.J.-based transportation equipment company Trac Intermodal for around $1 billion (including debt), per Bloomberg. http://axios.link/D3LG

More M&A

Cineworld (LSE: CINE) agreed to buy Cineplex (TSC: CGX) for US$1.6 billion in cash, making Britain’s Cineworld the largest movie theater operator in North America. http://axios.link/w63A

Uber (NYSE: UBER) is in talks to sell its India food delivery business to local unicorn Zomato, at a valuation of around $400 million, per TechCrunch. http://axios.link/Hk5N

State Grid Corp. of China bought a 49% stake in Oman’s state-owned electric utility Nama. http://axios.link/ZvmQ

🚑 VetPartners agreed to buy rival Australian vet clinic chain National Veterinary Care (ASX: NVL) for A$248.4 million, or A$3.70 per share (56.8% premium). http://axios.link/ht2R

WPX Energy (NYSE: WPX) agreed to buy Delaware Basin operator Felix Energy, for $2.5 billion in cash and stock. http://axios.link/dch7

Fundraising

Kohlberg & Co. is targeting $3 billion for its ninth flagship buyout fund, per public pension documents. http://axios.link/Xddt

Metric Capital Partners, a London-based special situations firm, raised €1.2 billion for its fourth fund. http://axios.link/pbNp

🚑 Transformation Capital, a healthcare-focused growth equity firm, is raising upwards of $425 million for its second fund, per an SEC filing.

It's Personnel

John Martin joined Victory Park Capital as a Chicago-based senior advisor. He was managing partner and co-CEO of Antares Capital until this past May. www.victoryparkcapital.com

Jonathan Raskin joined Prudential Financial’s investment office to focus on private equity, per PE Hub. He previously was with AT&T’s corporate pension fund.

Kristina Shen joined Andreessen Horowitz as a general partner focused on enterprise software investments. She previously was with Bessemer Venture Partners. www.a16z.com

🚑 Kathleen Snyder joined Wilson Sonsini Goodrich & Rosati as a Boston-based of counsel, focused on digital health transactions. She previously was deputy general counsel for IT at the Massachusetts Executive Office of Health and Human Services. www.wsgr.com

General Atlantic promoted David Buckley to operating partner and both Roger Gao and Raph Osnoss to principals. www.generalatlantic.com

Final Numbers
Source: Refinitiv Deals Intelligence. Data through December 12, 2019.
Dan Primack

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