Nov 19, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Situational awareness: Longtime Nissan chairman Carlos Ghosn was arrested in Japan for allegedly under-reporting his income "over many years" and utilizing company assets for personal use. The company today plans to oust both Ghosn and director Greg Kelly, who it says has also been under investigation.

Per Axios' auto reporter Joann Muller: "For most of his career, Carlos Ghosn had this superhero mystique — a turnaround expert and automotive visionary who favored corporate alliances, not mergers, for global success. But Ghosn never came close to achieving his vision of an all-electric world and his edicts for 10% U.S. market share led Nissan to engage in unprofitable discounting and corner-cutting that led to quality problems."

Top of the Morning

Illustration: Lazaro Gamio/Axios

Last night I made my debut on our HBO program, with a piece on sports betting that took me from Boston to New York to Las Vegas. My mother says it was "great!"

The big idea: You'd have to go back nearly 100 years to the last time a large, legal sin industry was created in the U.S., and now we have two (sports betting and cannabis).

  • The battle to legalize sports betting was won in May at the Supreme Court, and the specifics are now being worked out in state legislatures all over the country.
  • The next fight will be over whether or not sports leagues get a piece of the action.

View from New York: NBA Commissioner Adam Silver has been talking for years about the need for book-makers to pay his league an integrity fee, which would be used to offset increased expenses that he believes would come with increased betting. In an interview with "Axios on HBO," he used that term interchangeably with royalty.

"If we're going to spend $8 billion this year producing those games, I feel that we should receive a share of the proceeds from a business that's being generated exclusively on our games."

View from Boston: DraftKings is already running a sports book in New Jersey, and just agreed to open a physical location in Mississippi, without paying the leagues, but co-founder and chief revenue officer Matt Kalish sees room for compromise:

"It's very rapidly evolving and I certainly think the leagues have access to a lot of proprietary information. For example, they put a tracking chip in the football to see the speed of the pass... that's information that you really couldn't get unless you're partnering with the league. I think they could do really well monetizing that data."

Bonus fact: DraftKings quietly raised $150 million at a $1.5 billion valuation two months ago, led by insiders. Kalish declined to confirm or deny, when asked during the "Axios on HBO" interview.

View from Vegas: Jay Kornegay runs the largest sports book in Las Vegas, and has no intentions of paying the leagues, and bristles at the idea of needing to preserve integrity:

"I met with the leagues and the NCAA and the FBI back [years ago] and told that we are on the same side because integrity is our product as well... We have an audit department that... looks at everybody that's wagering, looking at what type of background they have, source of funds and anything like that. We want to work with the league to protect the game but the integrity process has been going on forever."

Kornegay adds that leagues stand to make plenty of money off increased sports betting, without being paid directly, because it will increase fan interest and engagement.

The bottom line: We're beginning to see voluntary, non-exclusive partnerships between bookmakers and sports leagues/teams, in lieu of mandatory payments. That seems to be the most likely, and least contentious, path forward. Go deeper here.

The BFD
Source: Giphy

Beyond Meat, an El Segundo, Calif.-based maker of vegan meats, filed for a $100 million IPO. It plans to trade on the Nasdaq (BYND) with Goldman Sachs as lead underwriter.

  • Why it's the BFD: Because this will be the first public market test for meatless meat, with VC-backed rivals Impossible Foods and Just (f.k.a. Hampton Creek) waiting in the wings.
  • Breadcrumbs: Two weeks ago we scooped that Beyond Meat added Coca-Cola CFO Kathy Waller and Twitter CFO Ned Segal to its board of directors.
  • Financials: The company reports a $22 million net loss on $56 million in revenue for the first nine months of 2018, versus a $23 million net loss on $21 million in revenue for the year-earlier period. It raised $142 million in VC funding, most recently at a $550 million valuation, from firms like Kleiner Perkins (16.1% stake), Obvious Ventures (10.4%), Tyson Foods (6.6%), Cleveland Avenue (5.4%), Union Grove Partners, Bill Gates and Leonardo DiCaprio.
  • Bottom line: "At one of the nation’s largest conventional grocers, Kroger, 93% of Beyond Burger buyers over the 26-week period ended June 30, 2018 also purchased animal protein during the same period." — Beyond Meat's S-1 filing
Venture Capital Deals

🚑 Alphamab Oncology, a Chinese immuno-oncology startup, raised more than $100 million in Series A funding from Advantech Capital, PAG, China VC Fund, OrbiMed, Heritage Provider Network and Janchor Partners. http://axios.link/qEny

VOI Technology, a Sweden-based e-scooter startup, raised $50 million in Series A funding. Balderton Capital led, and was joined by Vostok New Ventures, LocalGlobe and Raine Ventures. http://axios.link/lTjo

AEye, a Pleasanton, Calif.-based lidar technology startup, raised $40 million in Series B funding. Taiwania Capital led, and was joined by return backers Kleiner Perkins, Intel Capital, Airbus Ventures and Tychee Partners. http://axios.link/4cWl

🚑 Inflazome, an Ireland-based drug startup focused on inflammation, raised €40 million in Series B funding. Forbion led, and was joined by Longitude Capital and return backers Novartis Venture Fund and Fountain Healthcare Partners. http://axios.link/VcC5

🚑 Camel-IDS, a Belgian biotech whose lead candidate treats breast cancer that has spread to the brain, raised €37 million in Series A funding. V-Bio Ventures and GIMV co-led, and were joined by HealthCap, Novo Seeds, Pontifax and BioMedPartners. http://axios.link/MzI2

Wonolo, a San Francisco-based platform for on-demand blue collar staffing, raised $32 million in Series C funding. Bain Capital Ventures led, and was joined by DAG Ventures, Sequoia Capital, Base10, AMN Healthcare and Cendana Capital. http://axios.link/OFDn

Plastiq, a San Francisco-based solution for paying bills via credit card, raised $27 million in Series C funding. Kleiner Perkins led, and was joined by DST Global. http://axios.link/6gWx

ISARA, a Canadian provider of “quantum-safe security solutions,” raised US$10 million in Series A funding led by Shasta Ventures. www.isara.com

Visor, a San Francisco-based online tax advisor, raised $9 million. Defy led, and was joined by Unusual Ventures, SVB Capital, Obvious Ventures, Fika Ventures and Boxgroup. http://axios.link/uBWl

BOU, a New York-based provider of “better for you” cooking and grab-and-go products, raised $4 million in Series B funding from FounderMade and Nebari Ventures. http://axios.link/vZvo

Private Equity Deals

Aethon Energy Management agreed to buy oil and gas assets in Louisiana’s Haynesville-Cotton Valley from QEP Resources (NYSE: QEP) for $735 million. http://axios.link/Esk3

🚑 Apollo Global Management completed its $5.6 billion take-private acquisition of LifePoint Health, a Brentwood, Tenn.-based hospital operator. http://axios.link/zxN4

Balmoral Funds bought Vesta Modular, a Los Angeles-based renter of modular buildings, from Soaring Pine Capital and Wells Fargo Central Pacific Holdings. http://axios.link/LaFU

CVC Capital Partners acquired a 20% stake in family-owned, German fleet-services company DKV Mobility Services Group at an enterprise value of around €2 billion. http://axios.link/ydM5

🚑 EyeSouth Partners, an Atlanta-based eyecare physician services group owned by Shore Capital Partners, acquired Georgia Eye Associates. www.eyeasouthpartners.com

Gemspring Capital acquired the assets of Bobit Business Media, a Torrance, Calif.-based B2B publisher operating in the fleet, transportation, beauty and law enforcement sectors. www.bobitbusinessmedia.com

KKR agreed to buy GeoStabilization International, a Grand Junction, Colo.-based provider of geotechnical maintenance services for critical infrastructure in the U.S. and Canada, from CAI Capital Partners. www.geostabilization.com

KPS Global, a Fort Worth, Texas-based portfolio company of D Cubed Group, acquired Custom Cooler, a San Dimas, Calif.-based maker of walk-in coolers and freezers. www.customcooler.com

Zayo Group Holdings (NYSE: ZAYO), a Boulder, Colo.-based fiber network operator with a market cap of around $5.6 billion, has received takeover interest from a variety of private equity funds, per Bloomberg. http://axios.link/gF50

Public Offerings

Two companies plan to price IPOs on U.S. exchanges this week: Taiwan Liposome and TuanChe. http://axios.link/c7oW

🌱 Cibus, a San Diego-based developer of plant and microbial platforms for breeding technologies, filed for a $100 million IPO. It plans to trade on the Nasdaq (CBUS) with Morgan Stanley as lead underwriter. The company reports a $30 million net loss on $2.6 million in revenue for the first nine months of 2018, and raised around $180 million in VC funding from firms like Fidelity, New Ventures Fund, Alexandria Venture Investments and Cormorant Asset Management. www.cibus.com

Liquidity Events

🚑 The Blackstone Group agreed to sell DJO Global, a Vista, Calif.-based provider of orthopedic devices and software, to Colfax (NYSE: CFX) for $3.15 billion in cash. www.djoglobal.com

Perstorp, a Swedish chemicals company owned by PAI Partners, is in talks to sell its caprolactone-making unit, per Bloomberg. Suitors include Cinven and Ingevity (NYSE: NGVT). http://axios.link/E4Nz

Quilvest Private Equity sold Small Tube Products, a Duncansville, Penn.-based redrawer of small-diameter copper and aluminum tubes, to Waybill, a platform formed by Ospraie Management’s Dwight Anderson. www.smalltubeproducts.com

The Riverside Company agreed to sell Barcelona-based plant extracts company Euromed Botanicals to Germany’s Dermapharm Holding. www.euromed.es

More M&A

Caterpillar (NYSE: CAT) is in talks to sell an undisclosed business unit to South Africa’s Barloworld. http://axios.link/vKvL

Cimarex (NYSE: XEC) agreed to buy Denver-based oil and gas company Resolute Energy (NYSE: REN) for around $1.6 billion (including assumed debt), or $35 per share in cash and stock (14.87% premium to Friday’s closing price). www.resoluteenergy.com

ConocoPhillips (NYSE: COP) is in exclusive talks to sell its British oil and gas fields to Ineos Group for upwards of $3 billion, per Bloomberg. http://axios.link/joS5

🚑 GE Capital, a unit of General Electric (NYSE: GE), sold a $1.5 billion healthcare equipment finance portfolio to TIAA Bank. http://axios.link/aWqM

Virgin Mobile MENA hired Evercore to explore strategic options, including a sale of all or part of the business, per Bloomberg. http://axios.link/dM8m

Fundraising

PAG of Hong Kong closed its third Asia-focused buyout fund with $6 billion. http://axios.link/TbW5

Verdane Capital of Norway is raising around $550 million for its second direct secondaries fund, per WSJ. http://axios.link/g2vz

Warburg Pincus is raising $13.75 billion for its latest flagship private equity fund, per an SEC filing. It also is raising $2.5 billion for its second energy-focused private equity fund, per Reuters.

It's Personnel

Peter Tague, Citigroup’s former global head of M&A, has joined In-Q-Tel, the CIA’s venture capital arm. http://axios.link/GiFd

Final Numbers
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Data: Factset; Chart: Lazaro Gamio/Axios
Dan Primack

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