Feb 16, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• Ballgame: I spent most of yesterday getting details of a plan to sell the Miami Marlins baseball club to an investor group that included venture capitalist Joshua Kushner, his father Charles and brother-in-law Joseph Meyer. There had been an initial AP report about the negotiations late last week, suggesting a $1.6 billion price-tag, but I had since learned: (1) The price was bumped down just below $1.3 billion; (2) There were no other bidders; (3) Myers would have been listed as principal owner; and (4) MLB was likely to bless the deal, despite Charles Kushner's past felonies, since there is widespread interest in being rid of current Marlins owner Jeffrey Loria.

As of late yesterday afternoon, all of the above was still true and active.

Then came several news reports that President Trump may name Loria as Ambassador to France, as part of what seems to be an Administration program to rid American pro sports leagues of its least effective owners (read: Johnson, Woody). Shortly thereafter came the following statement from Meyer:

"Our family has been friends with Jeff Loria for over 30 years, been in business together, and even owned an AAA baseball team together. Although the Kushners have made substantial progress in discussions for us to purchase the Marlins, recent reports suggest that Mr. Loria will soon be nominated by the President to be Ambassador to France. If that is true, we do not want this unrelated transaction to complicate that process and will not pursue it. The Kushners remain interested in purchasing a team and would love to buy the Marlins at another time."

There was probably no other option for Meyer and the Kushners, given the discounted price and their familial relationships with the White House. If Loria goes to Paris and the Kushners had bought the Marlins for less than Loria had originally asked (that $1.6 billion figure), it would have opened both sides up to allegations of quid pro quo (and perhaps made MLB approval more difficult).

• That's so MAVENS: Bloomberg yesterday reported that Verizon is likely going through with its Yahoo purchase, so long as it gets a $250 million discount. Just hours later came reports of yet another Yahoo security breach, which would be the third such incident to be disclosed since Verizon agreed to pay $4.8 billion for Yahoo's core Internet assets last July. Then came a Recode report that the price cut was actually $350 million, with the remaining Yahoo property (to be renamed Altaba) assuming "much of the future liability for security breaches that might still be discovered."

If either of these reports is even close to correct, then Yahoo negotiators deserve some sort of award. While it's true that Verizon could have faced difficult legal hurdles in killing the transaction ― particularly if it tried convincing Delaware courts of material adverse events ― that paled in comparison to the prospect of Yahoo having to maintain employee and shareholder confidence in the event of a dead (or even severely delayed) deal.

• Bizarro: It's an upside-down world where Snap is listing on the NYSE and Hamilton Lane is listing on the Nasdaq.

• Recommended reading: The media IS the opposition party.

• Hmmmmm: CKE Restaurants, the parent company of burger chains Hardee's and Carl's Jr., declined yesterday to say if Andy Puzder will remain as CEO, following his withdrawal as President Trump's nominee for U.S. Labor Secretary. Also not commenting was private equity firm Roark Capital, which bought CKE from Apollo Global Management in 2013.

Puzder has been with CKE since 1997, and has run the show since 2001. After his December nomination, the company declined to identify a successor.

The BFD: Snap sets its price

The deal: Snapchat's parent company has set its IPO terms to 200 million shares being offered at between $14 and $16 per share. It would have an initial market cap of around $17.4 billion were it to price in the middle of its range, or around $19,.5 billion on a fully-diluted basis (per Renaissance Capital). It plans to trade on the NYSE under ticker symbol SNAP, with Morgan Stanley listed as left-lead manager. It's also worth noting that Evan Spiegel is selling 16 million shares in the offering, while certain early investors (Benchmark, Lightspeed, General Catalyst, SV Angel) also are unloading some shares.

• Why it's the BFD: Snap looks to be the only hive of activity in what has been a dormant 2017 tech IPO market, with what should be the largest tech offering since Alibaba in 2014. It also could be a valuation reality check for crossover investors in the private markets, since even the high end of this offering is below the $25 billion mark that Snap got in its May 2016 Series F round (I know, I know... wait for the lockup to expire before passing valuation judgment).

Bottom line: Last month we wrote about Snap's possible valuation trap. I think it still applies, although Snap's willingness to price below its last private round suggests a certain maturity at a company that often has the opposite reputation.

Venture Capital Deals

• Rhythm, a Boston-based developer of peptide therapeutics for "rare genetic deficiencies that result in life-threatening metabolic disorders," has raised $41 million in new VC funding. Backers include Deerfield Management, Ipsen, OrbiMed, MPM Capital, New Enterprise Associates, Pfizer Venture Investments, Third Rock Ventures and an undisclosed public healthcare investment fund. www.rhythmtx.com

uShip, an Austin, Texas-based online shipping marketplace and provider of freight automation software, has raised $25 million in Series D funding led by DB Schenker. The company has now raised a total of $50 million, with other shareholders including Benchmark Capital, DAG Ventures and Kleiner Perkins Caufield Byers. http://bit.ly/2llrBOT

• Canvo, a San Francisco-based device that integrates multiple streaming boxes and services, has raised $15 million in new VC funding. Backers include DCM, Greylock, Sky PLC and Hearst Ventures. http://tcrn.ch/2lNL4nN

• OpenFin, a "common operating layer for financial desktop applications," has raised $15 million in Series B funding from Bain Capital Ventures, DRW Venture Capital, J.P. Morgan, Euclid Opportunities, Nyca Partners and Pivot Investment Partners. www.openfin.co

• Xcell Biosciences, a San Francisco-based developer of a cell culturing platform, has raised $12 million in Series A funding led by HBM Genomics. www.xcelbio.com

• ReplyYes, a Seattle-based conversational commerce platform, has raised $6.5 million in Series A funding. Madrona Venture Group led the round, and was joined by Cross Culture Ventures, Lowercase Capital, Muse Capital and Arnold Venture Group. http://bit.ly/2kWiXVS

• StockX, a Detroit-based limited edition sneaker marketplace, has raised $6 million in new VC funding. Backers include Scooter Braun, Mark Wahlberg, Eminem, SV Angel and Detroit Venture Partners. http://tcrn.ch/2lPvPvC

• Get Spiffy, a North Carolina-based on-demand car care startup, has raised $5 million in Series A funding led by Bull City Venture Partners. Other backers include Industry Ventures, IDEA Fund Partners and a Florida car cash operator and investor called Development 72. http://bit.ly/2kWglHB

• Pleo, a Danish expense automation startup, has raised $3.25 million in new seed funding (bringing the round total to $5.5 million). Creandum led the round, and was joined by Seedcamp and Founders.vc. http://bit.ly/2lbk9Dp

• Ozobot, a developer of small and social robots that teach coding for kids, has raised $3 million in Series A funding led by Tribeca Venture Partners. http://tcrn.ch/2kr58jY

• MiDrive, a UK-based driving test app and instructor marketplace, has raised £2 million in Series A2 funding led by Initial Capital. http://tcrn.ch/2lKGXNB

Private Equity Deals

• The Blackstone Group has acquired Cloudreach, a London-based provider of cloud computing and consulting services. No financial terms were disclosed. http://reut.rs/2kW09Gw

• Convey Park Energy, a Dallas-based E&P company, has acquired additional assets located in the Haynesville shale area of North Louisiana from a subsidiary of Chesapeake Energy (NYSE: CHK) for $465 million. The deal was partially funded via new equity commitments from Magnetar Capital, KKR, Triangle Peak Partners and existing backer Denham Capital. www.conveypark.com

• Vitruvian Partners has acquired OAG, a UK-based provider of real-time flight status and schedules data. No financial terms were disclosed. www.oag.com

• Warburg Pincus is in "advanced discussions" to acquire a minority stake in the engineering unit of India's Tata Motors, according to Bloomberg. The deal would be valued at around $450 million. http://bloom.bg/2kAgld8

Public Offerings

Canada Goose, an outerwear maker and retailer owned by Bain Capital, has filed for an IPO that would see the company trade on both the NYSE and Toronto Stock Exchange. CIBC Capital Markets is listed as left lead underwriter for Canada Goose, which reports $45 million of net income on $353 million in revenue for the last nine months of 2016. http://bit.ly/2kLlaB0

• Hamilton Lane, a Bala Cynwood, Penn.-based alternative asset manager and advisor, has set its IPO terms to 11.875 million shares being offered at between $15 and $17 per share. It would have an initial market cap of around $720 million, were it to price in the middle of its range. The group plans to trade on the Nasdaq under ticker symbol HLNE, with J.P. Morgan and Morgan Stanley serving as lead underwriters.

Liquidity Events

• Capgemini (Paris: CAP) has acquired Idean, a Palo Alto, Calif.-based digital strategy and experience design consultancy, from CapMan portfolio company Norvestia. No financial terms were disclosed. www.idean.com

• KKR has hired Goldman Sachs and Morgan Stanley to advise it on a possible sale of Mitchell International, a San Diego-based provider of insurance claims management software, according to the WSJ. The deal could be valued at between $2.5 billion and $3 billion. http://on.wsj.com/2lMitnc

• L Catterton has pulled Ferrara Candy Co. off the auction block, per Reuters. The maker of Now and Laters could have been valued at around $1.3 billion. http://reut.rs/2lbsRSb

• TPG Capital is considering a partial sale of its 34% stake in Russian supermarket operator Lenta, according to Reuters. http://reut.rs/2kBGqbu

• Vision Capital has sold its remaining 15 million shares in Nordic bank Nordax Group, which reportedly gives it a total return of 5.2x on its original investment (including prior sales after Nordax's June 2015 IPO). http://on.wsj.com/2lb2Mm9

More M&A

• Allianz SE and the Abu Dhabi Investment Authority each plan to submit binding offers for a 15% stake in Italian toll road operator Autostrade per L'Italia, per Bloomberg. Caisse de Depot et Placement du Quebec also is considering an offer. The position could be valued at around €2.5 billion. http://bloom.bg/2ktpIQF

• Goldman Sachs has agreed to acquire a 15% equity stake in MDC Partners (Nasdaq: MDCA), a New York-based marketing and communications networks, for $95 million. http://read.bi/2kNdrm1

• Intercontinental Exchange (NYSE: ICE) has agreed to acquire TMX Atrium, a Luxembourg-based operator of global exchanges and clearing houses, from Canadian exchange operator TMX Group. No financial terms were disclosed. http://bit.ly/2liH7uK

• State Grid Corp. of China has offered to acquire the shares it doesn't already own in listed Brazilian power company CPFL Energia. This comes less than a month after State Grid paid around $5.68 billion for a majority stake in CPFL. http://bit.ly/2lbegpT

• Walmart (NYSE: WMT) has agreed to acquire Moosejaw, a Madison, Wis.-based outdoor apparel retailer, for $51 million in cash. http://tcrn.ch/2lKPtwa


• Atomico, a European VC firm focused on tech startups, has closed its fourth fund with $765 million in capital commitments. http://bit.ly/2ktiJav

• PeakEquity Partners, a Radnor, Penn.-based private equity firm focused on enterprise software companies, has closed its debut fund at $137 million. www.peakequity.com

• True Wind Capital, a tech-focused private equity firm led by ex-KKR execs Adam Clammer and Jamie Greene, has closed its debut fund with $560 million in capital commitments. http://on.wsj.com/2kN8XvF

It's Personnel

• Mathew Cyriac is stepping down as The Blackstone Group's co-head of private equity in India, in order to launch his own firm. http://bloom.bg/2lRqLqJ

• Kimberly Massa as a Managing Director and Peter McLaughlin have joined WhiteHorse Capital, the direct lending affiliate of H.I.G. Capital as a managing director and principal, respective. Massa previously was chief credit officer for TMT at General Electric, while McLaughlin was with Medley Capital. www.whitehorsecapital.com

• Dave Prendergast has joined Waud Capital Partners as VP of business development. He previously was with Great Point Partners. www.waudcapital.com

• Mary Jo White, who served from April 2013 through January 2017 as chair of the SEC, is returning to law firm Debevoise as senior chair. She had chaired Debevoise's litigation department before taking the SEC job, and is a former U.S. Attorney for the Southern District of New York. http://nyti.ms/2kBBJOY

Final numbers
Dan Primack