Mar 28, 2017

Axios Pro Rata

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Top of the Morning

• M&A Slowdown: U.S. M&A activity totaled $55.5 billion over the past 30 days, compared to $102 billion during the prior 30-day period, per S&P Global Intelligence. For the year, deal value is down -7.25% from YTD 2016 (deal number is off 3.6%) and we're on track for the lowest Q1 M&A dollar value since 2014.

• Coming attractions: CarGurus, a Cambridge, Mass.-based online car research and shopping platform, has quietly picked Goldman Sachs and Allen & Co. to help lead an upcoming IPO, per a source familiar with the situation. No comment from CarGurus, natch.

• Buck stop: During yesterday's WH press briefing, Sean Spicer was asked who would be in charge of writing the expected tax reform package. His reply: "Obviously we're driving the train on this.

• Autonomous delay: Yesterday was supposed to be the deadline for Uber to respond to Alphabet's lawsuit over alleged theft of IP related to self-driving trucks (you may also know this as the Waymo vs. Otto case). But the two sides agreed to an extension to April 28, although Uber still only has until April 7 to respond to Alphabet's request for an injunction.

• R&D&Rx: The White House reportedly has sent discretionary spending instructions to Congress, which includes a proposed $1.23 billion cut to the NIH, in order to help fund increased military and border security spending. This is different than the previously-proposed NIH cuts as part of the FY18 budget process (i.e., Congress is being forced to confront this issue earlier than expected).

I recently spoke about the proposed NIH cuts with John Crowley, a veteran biotech exec known for founding a company to help find a cure to a rare disease afflicting his young daughter. If this sounds familiar, it's probably because you either saw the film Extraordinary Measures (starring Harrison Ford) or because Crowley and his daughter Megan (now 20 years old) were among Trump's special guests during his recent Congressional Address (which coincided with Rare Disease Day).

In short, Crowley thinks NIH needs more, not less, funding:

"For me as an entrepreneur, it's all about inventions and healing, and I think NIH plays a crucial role. It's part of this virtuous circle that it necessary to advance medicines to patients, which also includes the grants that NIH provides to our academic institutions. Our university research system is the core for basic science and basic translational research and is the basis for a lot of the good ideas that come into a company like ours."

• Trumpland: Yesterday came news that fortunate son-in-law Jared Kushner will lead a new White House group called the Office of Innovation, which is tasked with using technology and other methods to reform and better streamline procurement, federal bureaucracies, etc. No word yet on how this would differ from the U.S. Digital Service (now led by ex-Googler Matt Cutts), which seems to have the same basic charge.

USDS didn't return a request for comment, but here's one read from someone familiar with the situation:

"USDS is full of developers engineers and project managers that go to agencies and fix them. This new deal sounds like a centrally-located command post to help direct firepower like USDS and 18F and other similar initiatives. Most importantly, it brings the spirit of USDS closer to the Oval Office, which means more can get done faster... theoretically."


TPG Capital has agreed to sell its 25.1% stake in listed Israeli coffee producer Strauss Coffee back to the company for around $279 million, via a two-part transaction that will completely wrap up by the end of August.

Why it's the BFD: Because this marks the end of a protracted saga between TPG and Strauss, which first got together via a $293 million TPG investment back in 2008. At issue was Todd Morgan, a TPG employee and the firm's rep on Strauss Coffee's board, before he was later named CEO. In early 2014, however, Morgan was fired over TPG's objections, which became public via a court fight. Morgan is now a senior managing director with Centerbridge.

Bottom line: "With 14,830 employees, food and beverages manufacturer and marketer Strauss is Israel's second largest company. Strauss's share of the local food and beverages market is 11.5%." ― Yossi Nissan

Venture Capital Deals

• Didi Chuxing, the Chinese ride-hailing giant, is considering a $6 billion investment offer from SoftBank, according to Bloomberg.

• Benson Hill Biosystems, a St. Louis-based crop performance improvement startup, has raised $25 million in Series B funding. Lewis & Clark Ventures and Prelude Ventures, co-led the round, and were joined by Fall Line Capital, S2G Ventures and return backers Alexandria Venture Investments, Cultivation Capital, iSelect Fund, Mercury Fund, Middleland Capital, Missouri Technology Corporation, Prolog Ventures and TechAccel.

• Turvo, a Sunnyvale, Calif.-based logistics management startup, has raised $25 million in Series A funding. Activant Capital led the round, and was joined by Turvo, a Silicon Valley startup that's been quietly building logistics management software, has raised $25 million in Series A funding, and was joined by Felicis Ventures, Upside Partnership, Slow Ventures, Tony Fadell, Aaron Levie, Kevin Nazemi and Ravi Venkatesan.

• Cloudvirga, an Irvine, Calif.-based developer of an automated mortgage platform, has raised $15 million in Series B funding led by Incenter (a portfolio company of The Blackstone Group).

• Kingdee Healthare, a Chinese mobile healthcare platform, has raised around $14 million in Series A funding co-led by and Yongjin Group.

• Kaloom, a Montreal-based developer of software networking solutions for data centers, has raised US$10.7 million in Series A funding. Fonds de solidarité FTQ led the round, and was joined by Somel Investments, MBuzz Investments and Griffin Fund.

• RightHand Robotics, a Boston-based developer of robotic picking solutions for ecommerce fulfillment, has raised $8 million in Series A funding. Playground Ventures led the round, and was joined by Matrix Partners, Seven Seas Partners and Dream Incubator.

• Peakon, a Denmark-based provider of employee engagement and HR analytics software, has raised €6.1 million in funding led by EQT Ventures.

• Arable Labs, a Princeton, N.J.-based provider of "data-driven land management" solutions, has raised $4.25 million in Series A funding. Middleland Capital and S2G Ventures co-led the round, and were joined by Chase Field, Spark Labs and Cantos VC.

• Hundredrooms, a Spain-based vacation rental search engine, has raised €4 million in new VC funding led by Seaya Ventures.

• Wrench, a Seattle-based on-demand auto mechanic service, has raised $4 million in funding led by Madrona Venture Group.

Private Equity Deals

• Bain Capital is walking away from its proposed $420 million purchase of listed Belgian packaging company Resilux, due to an unfavorable antitrust ruling in Germany.

• Bharti Airtel of India has sold a 10.3% stake in its telecom tower unit (Bharti Infratel) to KKR and Canada Pension Plan Investment Board for around $953 million.

• Castle Harlan said that it has invested more than $40 million so far this year into existing portfolio company Gold Star Foods, an Ontario, Calif.-based food distributor to K-12 schools that it first acquired in 2014.

• Clearlake Capital has completed its previously-announced acquisition of NetDocuments, a Lehi, Utah-based provider of cloud software for law firms and corporate legal and compliance departments. No financial terms were disclosed. Sellers include Frontier Capital.

• Genstar Capital has acquired Bracket, a Wayne, Penn.-based clinical trial technology and specialty services provider, from Parthenon Capital Partners. No financial terms were disclosed.

• Solina, a France-based food ingredients company owned by Ardian, has agreed to acquire Supremia Grup, a Romanian food ingredient and spice maker. No financial terms were disclosed.

Public Offerings

• Yext, a New York-based "knowledge engine" that helps local businesses sync their data across services like Apple Maps and Instagram, has set its IPO terms to 10.5 million shares being offered at between$8 and $10 per share. It would have a fully-diluted market cap of around $905 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol YEXT, with Morgan Stanley listed as left lead underwriter. Yext has raised over $100 million in VC funding from firms like Sutter Hill Ventures (23.6% pre-IPO stake), IVP (16%), Marker Financial (13.6%) and Insight Venture Partners (10.3%).

Liquidity Events

• Darden Restaurants (NYSE: DRI) has agreed to acquire Cheddar's Scratch Kitchen, an Arlington, Texas-based chain of 165 restaurants, from L Catterton and Oak Investment Partners for $780 million in cash.

• Ethicon, a unit of Johnson & Johnson (NYSE: JNJ) has acquired Torax Medical, a Shoreview, Minn.-based medical device maker focused on gastro-esophageal reflux disease. No financial terms were disclosed. Torax Medical had raised over $110 million in VC funding, from firms like J&J, Sanderling Ventures, Mayo Medical Ventures, Thomas McNerney & Partners, Accuitive Medical Ventures, Kaiser Permanente Ventures, Revelation Partners and Piper Jaffray.

• Grupo México, Mexico's largest railroad operator, is nearing an agreement to acquire Florida East Coast Railway from Fortress Investment Group for more than $2 billion (including debt), according to Reuters.

• Spotify has acquired MightyTV, a New York-based mobile app for TV and film recommendations. No financial terms were disclosed for the deal, which will result in MightTV founder and CEO Brian Adams becoming Spotify's VP of technology. MightyTV had been seeded by Canaan Partners and Spark Capital.

More M&A

• Aviva PLC (LSE: AV) is considering a sale of Friends Provident International, a provider of life assurance and investment products, for between $500 million and $700 million, according to Reuters.

• Barclays is in exclusive talks to sell its stake in Barclays Bank of Zimbabwe to First Merchant Bank (Malawi).

• Banco Popular of Spain is in talks to sell its property portfolio and an equity stake in the overall group to Libra Group, per a local media report.

• Dominion Diamond Corp. (NYSE: DDC) said that it will launch a formal sale process, just days after receiving an unsolicited $1.1 billion takeover offer from The Washington Companies.

• Elliott Management has agreed to provide €300 million in financing to back a Chinese investor consortium's planned €740 million purchase of Italian football club AC Milan.

• HNA Group of China is in talks to acquire a controlling stake in the publisher of Forbes magazine, according to Reuters.

• HNA Group of China is seeking to acquire a stake in listed Swiss airport detail Dufry, which has a current market cap of around $7.6 billion, per WSG. Existing Dufry shareholders include GIC and Temasek.

• Home BancShares (Nasdaq: HOMB) has agreed to acquire Florida-based regional lender Stonegate Bank (Nasdaq: SGBK) for around $778 million in cash and stock.

• Sberbank of Russia is selling its Ukranian subsidiary to an investor consortium that includes Latvia's Norvik Bank.

• Schlumberger (NYSE: SLB) reportedly has acquired a 20% stake in Norwegian rig operator Borr Drilling for upwards of $220 million.

• Tencent has acquired a 5% stake in Tesla Motors (Nasdaq: TSLA).

It's Personnel

• Andrew Freeman has joined the middle-market affiliate of H.I.G. Capital as a San Francisco-based managing director, with a focus on investments in the food and agribusiness sectors. He previously was a partner with Paine & Partners.

• Google Ventures has added four new advisors: Ray Mabus (former Secretary of the U.S. Navy), Craig Kornblau (ex-prez of Universal Studios Home Entertainment), Guillaume Le Cunff (prez of Nespresso USA) and Sanyin Siang (exec director of Coach K Center on Leadership & Ethics).

• Antoine Papiernik has been named chairman of France-based VC firm Sofinnova Partners, succeeding Denis Lucquin (who remains a managing partner).

• Irfhan Rawji has joined Canadian VC firm Relay Ventures as a venture partner. He is a former principal with Birch Hill Equity Partners and director with Onex, who most recently was VP of strategy and corp dev with Parkland Fuel.

• Zeynep Young, founder and former CEO of ed-tech company Double Line Partners has joined Next Coast Ventures as a venture partner.

Final Numbers