Top of the Morning
Saturday's attacks on Saudi Arabia's oil infrastructure took around 5% of the world's daily output offline.
Why the world cares: War could be imminent, with President Trump suggesting that he's just an MBS head nod away from dropping bombs on Iran.
Why oil markets care: This is the largest supply disruption in history, in terms of barrels, topping any political or military conflict (Iranian Revolution, Gulf War, etc.).
- Crude prices are receding after their initial surge, which represented the largest intra-day jump in 28 years, but remain higher than pre-attack levels.
- It is important to emphasize the per barrels qualifier. As Bloomberg's Javier Blais tweets: "The overall oil market was a lot smaller in 1990 and 1979, so a smaller outage in volume terms (barrels per day) could have a much larger impact when considered as % of global supplies."
Why capital markets care: Saudi Aramco finally seemed to be moving toward what would be the world's largest-ever IPO, setting the stage in recent weeks by picking bankers and changing leadership. The attacks are a reminder of how vulnerable Aramco may be, and its ability to quickly recover could be worth tens of billions of dollars in valuation (in either direction).
- In an April bond prospectus, Aramco referred to one of the attacked facilities as critical to its financial performance.
- The WSJ reports that Aramco plans to get around one-third of the lost capacity back online today, although the company itself has not made any public promises.
- Bloomberg reports that Aramco officials are considering delaying the IPO. But don't necessarily read too much into it, given that any company would at least consider delaying an IPO in the wake of being bombed. Not saying they won't delay — they done so before, repeatedly — just that it would be reckless to not at least consider it under the circumstances.
The bottom line: What seemed stable on Friday is now volatile, with decisions to be made soon that could have large ripple effects for years to come.
Lundbeck, a Danish pharma company focused on brain disease, agreed to buy Alder BioPharmaceuticals (Nasdaq: ALDR), a Bothell, Wash.-based developer of migraine drugs, for upwards of $1.95 billion in cash.
- Why it's the BFD: This is the patent cliff in practice. Lundbeck soon will lose patent protection on Parkinson's drug Northera, and hopes that Alder's lead drug candidate (eptinezumab) will get regulatory approval to fill the revenue gap.
- Details: Alder will pay $18 per share upfront, representing a 79% premium on Friday's closing price, and another $2 per share if European regulatory approval is obtained.
- Bottom line: "If the FDA approves eptinezumab in February, the drug will become the fourth anti-CGRP drug available in the U.S... Those drugs racked up sales of $233 million in the first half of 2019 and are tipped for further growth. Lundbeck, which plans to file for approval in the EU next year, will need to find a way to persuade payers and physicians to choose eptinezumab over the competition." — Nick Paul Taylor, FierceBiotech
Venture Capital Deals
• Gitlab, a San Francisco-based dev-ops platform, authorized a Series E round that could raise upwards of $268 million at a $2.55 billion valuation, per a Delaware filing found by the Prime Unicorn Index. http://axios.link/LFxf
🐝 Beekeeper, a Zurich-based chat platform for non-desk hotel workers, raised $45 million in Series C funding. Thayer Ventures and Swisscanto Invest co-led, and were joined by return backers Atomico, Alpana Ventures, Edenred Capital Partners, Fyrfly, Hammer Team, investiere, HighSage Ventures, Keen Venture Partners, Samsung NEXT, Swiss Post, and Swisscom. http://axios.link/FGsU
• Rafay, a Sunnyvale, Calif.-based SaaS startup for operations and lifecycle management of containerized applications, raised $8 million in Series A funding. Ridge Ventures led, and was joined by NTT DOCOMO, Costanoa Ventures, and Moment Ventures. http://axios.link/X1Fi
• Lenses.io, a London-based provider of data-ops tools, raised $7.5 million in Series A funding. 83North led, and was joined by Marathon VC. http://axios.link/UxcI
• Mitto, a Spain-based debit card and app for teens, raised €2 million in seed funding led by the VC arm of Banco Sabadell. http://axios.link/j4sK
Private Equity Deals
• The Blackstone Group agreed to buy Dream Global (TSX: DRG), a Canadian office and industrial REIT, for C$6.2 billion. http://axios.link/23OA
• Cobham (LSE: COB), a British defense and aerospace group, said it received shareholder approval for its £4 billion takeover by Advent International. http://axios.link/zCKr
• Spectrum Equity invested in Datassential, a Chicago-based provider of data and market research to the foodservice industry. www.datassential.com
• Vivint Smart Home, a Provo, Utah-based home automation company owned by The Blackstone Group, will go public via a reverse merger with SoftBank-backed Mosaic Acquisition Corp. (NYSE: MOSC). http://axios.link/3pMV
• Five companies plan to go public on U.S. exchanges this week: Datadog, Ping Identity, Envista Holdings, Exagen, IGM Biosciences, and Ping Identity. http://axios.link/BNV6
• Endeavor Group, a talent representation and live events company, set IPO terms to 19.35 million shares at $30-$32. It plans to trade on the NYSE (EDR) with Goldman Sachs leading an underwriting group of 23 banks. The company, backed by Silver Lake Partners and CPPIB, reports a $220 million net loss on $2.02 billion in revenue for the six months ending June 30, 2019.
👖 Madewell, a jeans brand being spun out of J Crew, filed for a $100 million IPO. It reports a $68 million net loss on $2.5 billion in revenue for its most recent fiscal year. J Crew is owned by Leonard Green & Partners and TPG Capital. http://axios.link/uUKI
• Virgin Australia (ASX: VAH) agreed to buy back the 35% stake it didn’t own in its Velocity frequent flier program for A$700 million from Affinity Equity Partners. http://axios.link/xdOp
• March Capital Partners is raising upwards of $410 million for its third VC fund, per an SEC filing. www.marchcp.com
• Stefano Giambelli and Tobias Borkowski joined H.I.G. Capital as a principal and director, respectively, in the firm’s European mid-market buyouts team.
• Mateja Maher joined Sidley Austin as a London-based partner in the law firm’s fund investments practice. He previously was general counsel with placement agent Campbell Lutyens. www.sidley.com