Apr 25, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Time heals all? There are reports out that Albertsons, the Boise, Idaho-based supermarket chain owned by Cerberus Capital Management, has held "preliminary talks" with bankers about a takeover offer for Whole Foods Market (Nasdaq: WFM). Well, at least that sounds more plausible than other reports of Amazon wanting to buy Whole Foods, which is under pressure from activist Jana Partners.

Whole Foods is currently valued at around $11.6 billion, which means a premium bid would dwarf even the $9 billion that Albertsons paid for Safeway in early 2015. Or, put another way, Albertsons would probably need help from other investors. The big question, therefore, is if Cerberus can convince potential partners that this deal creates the viable exit path that Albertsons has otherwise been unable to take ― including a failed 2015 IPO attempt.

• A modest counter-proposal: The Information's Sam Lessin yesterday suggested that Bay Area politicians stop talking about new taxes on high earners, and instead do this: "All new tech startups should be required to give 5% of the founder's equity in new ventures to a state or regional fund."

The piece (sub req) got a bunch of social media play, and I understand the general theory of Bay Area startups paying back into the region whose education system and other benefits caused them to locate there in the first place. But from where I sit, this is just a more complicated version of the wealth tax Lessin doesn't want. Most startups fail, meaning that most of those 5% equity slugs will be worthless to local governments. For those that succeed, local governments could capture such revenue via... yeah, a wealth tax of some sort.

There is the possibility that local governments could sell baskets of still-private stock on secondary markets, or even borrow against them, but that again seems needlessly complicated for municipal governments. Your thoughts?

Speaking of taxes: The White House tomorrow is supposed to disclose the tax proposal that Treasury Sec. Mnuchin said just a week ago wasn't ready for prime time. Early word is that this will be the so-called candy option (i.e., tons of goodies, possibly including a 15% corporate rate, but no hard choices to offset revenue losses). Sounds like BAT is out and that the proposal may be too high-level to dig into something like carried interest.

Geography lesson: President Trump told the AP that a VC-backed cybersecurity company hired by the Democratic National Committee to examine last summer's hacks is based in Ukraine and "owned by a very rich Ukrainian" ― apparently trying to imply that its analysis is politically biased.

  • The facts: The company, CrowdStrike, actually is based in Irvine, California. Its major shareholders are U.S.-based venture capital firms, including one affiliated with Google. Another investor is Warburg Pincus, a private equity firm that used to employ Trump economic advisor Kenneth Juster.
  • CrowdStrike's reply: The company says that it assumes Trump's comment is in reference to CrowdStrike co-founder and chief technology officer Dmitri Alperovitch, who is an American citizen of Russian heritage.

• ROI: Desktop Metal ― the 3D metal printing startup that has raised around $100 million from Kleiner Perkins, Google Ventures, BMW and others ― this morning is publicly unveiling its technology for the first time. Here's a sneak peak.

The BFD

Tyson Foods (NYSE: TSN) has agreed to acquire Ohio-based packaged sandwich company AdvancePierre Foods (NYSE: APFH) for around $4.2 billion (including the assumption of $1.1b in debt), or $40.25 per share in cash (9.8% premium on yesterday's closing price). Sellers include Oaktree Capital Management, which holds around a 42% of AdvancePierre's common stock and said that it will support the transaction.

  • Why it's the BFD: This is really the first in a two-step process for Tyson Foods, which announced just yesterday that it will refocus on its core proteins biz by selling off its three non-protein brands (Sara Lee Frozen Bakery, Kettle and Van's). It's also a pretty rich price, as AdvancePierre shares had climbed 33.2% so far in 2017, prior to the premium being paid by Tyson. Or, for more context, the $40.25 per share price is nearly double the $21 per share where AdvancePierre went public just seven months ago.
Venture Capital Deals

• Babylon Health, a UK-based mobile healthcare consultation app, has raised $60 million in Series B funding. New investors reportedly include Egypt's Sawairis family. Existing backers include AB Kinnevik and Hoxton Ventures. http://tcrn.ch/2q0Ihxk

Science 37, a Playa Vista, Calif.-based developer of "site-less" clinical trials, has raised $29 million in Series C funding. Glynn Capital Management led the round, and was joined by Amgen Ventures and return backers Lux Capital, Redmile Group, dRx Capital and Sanofi Ventures. http://tcrn.ch/2pvHTao

Twistlock, a San Francisco-based provider of cloud container security solutions, has raised $17 million in Series B funding. Polaris Partners led the round, and was jined by return backers YL Ventures, TenEleven and Rally Ventures. http://bit.ly/2pdXGHW

Forge Therapeutics, a San Diego-based antibodies developer, has raised $15 million in Series A funding. MagnaSci Ventures led the round, and was joined by Evotec AG, Alexandria Venture Investments, MP Healthcare Venture Management, Red Apple Group and WS Investments. www.forgetherapeutics.com

LoveCrafts, a UK-based ecommerce marketplace and social network for home crafters, has raised £26 million in Series C funding. Scottish Equity Partners led the round, and was joined by return backers Highland Europe and Balderton Capital Partners. http://tcrn.ch/2oEYkMF

Sienna Biopharmaceuticals, a Westlake Village-based medical dermatology and aesthetics startup, has raised $40 million in Series B funding. ARCH Venture Partners and Venvest Capital co-led the round, and were joined by Partner Fund Management, Altitude Life Science Ventures, Fidelity, Clough Capital Partners and Omega Fund Management. www.siennabio.com

Sensoro, a Seattle-based IoT sensor device and network technology startup, has raised $18 million in Series B funding from Bosch, Sumitomo and Tsing Capital. www.sensoro.com

Hibob, an HR and employee benefits platform for SMEs, has raised $17.5 million in Series A funding. Battery Ventures led the round, and was joined by Arbor Ventures, Eight Roads Ventures and return backer Bessemer Venture Partners. http://tcrn.ch/2oHLA8K

Token, a San Francisco-based startup that helps financial services companies comply with EU regulations, has raised $15.7 million in Series A funding from EQT Ventures, Octopus Ventures and OP Financial Group. http://bit.ly/2pYYrED

Doc Halo, a Cincinnati-based provider of real-time clinical communication solutions, has raised $11 million in Series A funding. Bain Capital Ventures led the deal, and was joined by seed backer Refinery Ventures. www.dochalo.com

Shadow Creator, a Shanghai-based VR headset maker, has raised $14 million in Series A funding. Fortune Capital led the round, and was joined by Everest Venture Capital and Initial Venture Capital. http://bit.ly/2opDkys

Kidfresh, a New York-based maker of "better for you" frozen kids meals, has raised an undisclosed amount of Series B funding. Monogram Capital Partners led the round, and was joined by return backers Emil Capital Partners and AccelFoods. www.kidfresh.com

Improbable Worlds, a London-based VC startup backed by Andreessen Horowitz, is nearing an investment from SoftBank, per Bloomberg. https://bloom.bg/2q6HaZy

Rubrik, a Palo Alto, Calif.-based provider of converged data management solutions, is raising between $150 million and $200 million at a $1 billion valuation, according to TechCrunch. The company previously raised around $110 million from backers like Khosla Ventures, Greylock and Lightspeed Venture Partners. http://tcrn.ch/2q8HUgJ

Private Equity Deals

• Canada Pension Plan Investment Board and Baring Private Equity Asia have agreed to acquire Nord Anglia Education (NYSE: NORD), a UK-based operator of schools in Asia, Europe and the Middle East, for around $4.3 billion. http://reut.rs/2pvPNRj

• Deutsche Invest Equity Partners has won the auction for a majority stake in Greece's Thessaloniki Port with a bid of nearly $252 million. http://on.ft.com/2pu688S

• JustFoodForDogs, a Los Alamitos, Calif.-based retailer of small batch pet food, has raised an undisclosed amount of growth equity funding from L Catterton. http://lat.ms/2pvz3JC

Insight Equity has agreed to acquire the soup and infant feeding business of TreeHouse Foods (NYSE: THS). No financial terms were disclosed, except that the unit generated around $210 million in 2016 sales. www.treehousefoods.com

One Equity Partners has acquired German power transformer manufacturer SGB-SMIT from BC Partners for an undisclosed amount. The deal comes after BC failed to sell the business to Schneider Electric, and reportedly is valued just south of €700 million. http://reut.rs/2pbKd3x

Profisee, an Alpharetta, Ga.-based provider of master data management software, has raised an undisclosed amount of private equity funding from ParkerGale Capital. www.profisee.com

Public Offerings

• Antero Midstream, a Denver-based holder of GP interests in natural gas master limited partnership Antero Midstream Partners (NYSE: AM), has set its IPO terms to over 37 million shares being offered at between $22 and $25 per share. It would have a fully diluted market value of around $4.4 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol AMGP, with Morgan Stanley listed ass left lead underwriter.

BioHaven Pharmaceutical, a New Haven, Conn.-based developer of drugs to treat neurological diseases, has set its IPO terms to 8.33 million shares being offered at between $14 and $16 per share. It would have a fully diluted market value of $546 million, were it to price in the middle of its range. The pre-revenue company plans to trade on the NYSE under ticker symbol BHVN, with Morgan Stanley listed as left lead underwriter. Shareholders include Portage Biotech (28.3% pre-IPO stake), Vivo Capital (6.7%) and RA Capital (5.1%).

• Five Points Holdings, a developer of planned communities in coastal California, has set its IPO terms to 21 million shares being offered at between $18 and $20 per share. It plans to trade on the NYSE under ticker symbol FPH, with Citigroup and J.P. Morgan serving as lead underwriters.

Liberty Oilfield Services, a Denver-based provider of hydraulic fracturing services, has set its IPO terms to 22.86 million shares being offered at between $16 and $19 per share. It plans to trade on the NYSE under ticker symbol BDFC, with Morgan Stanley and Goldman Sachs serving as lead underwriters. Shareholders include Riverstone Holdings.

• UroGen Pharma, an Israel-based developer of chemotherapies to treat urological cancers, has set its IPO terms to 3.5 million shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol URGN, with Jefferies and Cowen & Co. serving as lead underwriters. Shareholders include Arkin Communication (21% pre-IPO stake), Pontifax (16.7%), ProQuest Investments (10.2%), Telomedix (8.4%) and Tatham Investments (5.1%).

Liquidity Events

• Arsenal Capital Partners has agreed to sell Flowchem, a Waller, Texas-based maker of pipeline performance products, to KMG (NYSE: KMG) for $495 million in cash. http://on.mktw.net/2q8iccl

• BICS of Belgium has agreed to acquire TeleSign, a Marina Del Rey, Calif.-based provider of smartphone-based verification tools for online accounts, for $230 million. Sellers would include Summit Partners, Adams Street Partners, March Capital Partners and Telstra Ventures. www.telesign.com

More M&A

• Distell Group of South Africa has agreed to acquire a 75% stake in Cruz Vodka from Blue Sky Brand Company. http://reut.rs/2oF1Nek

Fresenius, a listed German healthcare company, has agreed to acquire Illinois-based generic drugmaker Akorn (Nasdaq: AKRX) for $4.75 billion (including the assumption of debt), or $34 per share. http://bit.ly/2pe6ygJ

• LVHM (Paris: LVMH) has agreed to acquire the Christian Dior Couture brand from Christian Dior (Paris: DIOR) for around €6.5 billion (including assumed debt). http://reut.rs/2orQAT7

Fundraising

Abraaj Capital is targeting $12 billion for its twelfth North American buyout fund, with a close on up to $4.5 billion slated for June, according to Bloomberg. https://bloom.bg/2q6huvW

• Aurica Capital, a Spanish private equity firm focused on growth equity deals for SMEs, has closed its third fund with €140 million in capital commitments. www.auricacapital.com

• Cornell Capital, a New York-based private equity firm led by ex-Goldman Sachs dealmaker Henry Cornell, has closed on $965 million for its third fund, per an SEC filing. The firm reportedly is targeting a total of $2 billion. www.cornellcapitalllc.com

YI Capital, a Beijing-based VC firm, has closed its debut fund with $116 million in capital commitments. http://bit.ly/2opINoTi

It's Personnel

• Andrew Aldrich has joined American Family Ventures as a principal. He previously was with AXA Strategic Ventures. www.amfamventures.com

Final Numbers: American incomes

Dan Primack