Feb 12, 2020

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Eniola Odetunde/Axios

The Federal Trade Commission announced yesterday that it will review the past decade of takeovers by the tech giants. Not only the large acquisitions, but also the hundreds of smaller ones that didn't trigger automatic antitrust reviews.

  • Apparently the FTC thinks it has a technique for getting toothpaste back into the tube.

The big picture: Lots of intrigue here, outside of the knotty logistics of unwinding something like Facebook/Instagram or some random Google acqui-hire from 2015.

  1. Antitrust regulators typically get their way just by threatening to block a deal (see: Edgewell/Harry's). But they've recently suffered two huge defeats when going after deep-pocketed tech defendants: DOJ on AT&T/Time Warner and state AGs on Sprint/T-Mobile. No pockets are deeper than the ones that FTC is now digging around in.
  2. Sen. Josh Hawley (R-MO) just proposed to remove the FTC's antitrust function altogether. And it's notable that this announcement wasn't made in concert with DOJ, which today happens to be holding an antitrust workshop at Stanford University.
  3. This is going to take a while. Maybe even into a new presidential administration. We're talking about tons of small, niche acquisitions that involve people who may no longer be involved with the participating companies, let alone acquired products that have since been mothballed. Plus possible re-reviews of mega-deals like Microsoft/LinkedIn, Amazon/Whole Foods, Google/Nest, Facebook/WhatsApp, Apple/Beats, and more.

The bottom line: This could become a massive headache for the five target companies — Alphabet, Amazon, Apple, Facebook and Microsoft — but more of a "take some aspirin and a nap" than "go to the ER."

  • Corporate M&A sources have consistently told me that Washington, D.C., rhetoric isn't having too much impact on their acquisition activities, believing that their bark is much worse than their bite.

Battery Ventures this morning announced that it raised $2 billion for its latest funds, including $1.2 billion for early-stage and $800 million for later-stage, which will continue to focus on enterprise software.

  • Battery partner Michael Brown tells me that venture fundraising has never been easier than it is now, due to the deep stack of capital sources, although he cautions that for legacy firms it still remains subject to past returns.
  • Reporters like me used to focus more on VC firm fundraises because they were a tougher slog and had lengthier cycles. Now they feel as mundane as annual holiday parties.

🚑 Deal scoop: Meditation app maker Headspace raised $53 million in new VC funding and another $40 million in debt, Axios' Kia Kokalitcheva reports.

  • Proceeds will be used to help Headspace differentiate itself from rivals, via the development of mental health tools for patients with certain chronic diseases.

Brandless isn't the only discount DTC startup to fall on hard times. Los Angeles-based Hollar, which had raised more than $75 million from firms like Kleiner Perkins and Index Ventures, is also winding down.

🎧 Pro Rata Podcast digs into how Amazon is escalating its legal fight for the Pentagon's giant JEDI contract, including a new request that President Trump testify. Listen here.

Source: Giphy

Skydance Media, a Hollywood film studio whose franchises include "Mission Impossible" and "Terminator," raised $275 million in new equity funding at around a $2.3 billion valuation. RedBird Capital Partners led and was joined by South Korea's CJ Entertainment and return backer Tencent.

  • Why it's the BFD: This comes just days after CJ Entertainment's Parasite became the first foreign-language film to win the Academy Award for best picture, and could help Skydance access a deep library of IP that hasn't yet been introduced to U.S. audiences.
  • Bottom line: "I've looked at this space for the past 25 years and was uncomfortable with it, but the real game-changer is subscription video-on-demand... The model is phenomenal for financial investors because you can usually get costs back the day you deliver to an Amazon or Netflix, and then earn a contractual return over the next two to four quarters." — Gerry Cardinale, RedBird Capital Partners
Venture Capital Deals

Fenergo, an Irish provider of compliance and customer onboarding solutions for financial institutions, raised $80 million at an $800 million post-money valuation from ABN Amro and DXC Technology. http://axios.link/EYYU

Carbon Relay, a Boston-based startup focused on optimizing app performance in Kubernetes environments, raised $63 million from Insight Partners. http://axios.link/s2gy

Deep Instinct, a New York-based cybersecurity startup, raised $43 million in Series C funding. Millennium New Horizons led, and was joined by Unbound, LG, and Nvidia. http://axios.link/Bxj1

CybelAngel, a Paris-based provider of digital risk management solutions, raised $36 million in Series B funding. Prime Ventures led, and was joined by Tempocap, Bpifrance, and Open CNP. http://axios.link/skuG

Alpha Foods, a New York-based provider of vegetarian prepared meals, raised $28 million led by AccelFoods led, and was joined by return backers New Crop Capital, Green Monday Ventures, and Blue Horizon. http://axios.link/qsSi

Sixgill, an Israel-based dark web intelligence platform, raised $15 million in Series B funding. Sonae IM and REV Venture Partners co-led, and were joined by Our Crowd and return backers Elron and Terra Venture Partners. http://axios.link/8SzS

Country Archer Jerky, a San Bernardino, Calif.-based meat jerky brand, raised $12 million from existing backer Monogram Capital Partners. www.countryarcher.com

Docugami, a Seattle-based document engineering startup, raised $10 million in Series A funding led by SignalFire. www.docugami.com

Model9, a New York-based, raised $9 million in Series A funding. Intel Capital led, and was joined by StageOne, North First Ventures, and GlenRock Israel. www.model9.io

iDonate, a Plano, Texas-based provider of digital giving solutions, raised $8.7 million led by Performance Edge Partners. http://axios.link/G1xZ

Nerdio, a Chicago-based startup focused on Microsoft Azure deployment automation, raised $8 million in Series A funding led by MK Capital. http://axios.link/bd2n

EquityBee, an Israeli liquidity platform for startup employee stock, raised $6.6 million. Group11 led, and was joined by Battery Ventures and LocalGlobe. http://axios.link/lPnI

Bit Fry Game Studios, a Portsmouth, N.H.-based developer of arcade-action games, raised $3.5 million from 1Up Ventures and BitKraft Esports Ventures. www.bitfry.com

Private Equity Deals

AnaCap Financial Partners agreed to buy Wealthtime, a UK-based company that consolidates investment portfolios and financial assets for those working with financial advisors. www.wealthtime.co.uk

Ardurra Group, a Houston-based portfolio company of RTC Partners, acquired LNV, an architectural and surveying firm with three Texas offices. www.ardurra.com

Brentwood Associates acquired Parchment, a Scottsdale, Ariz.-based digital credentialing service. www.parchment.com

Entrepreneurial Equity Partners acquired Kronos Foods Corp., a Glendale Heights, Ill.-based provider of Mediterranean food products. www.kronosfoodscorp.com

E Source, a Boulder, Colo-based portfolio company of Align Capital Partners, acquired Trove, a Buffalo, N.Y.-based provider of predictive analytics for the utility industry. www.esource.com

I Squared Capital acquired a 22.4% stake in Colombia’s Ocensa crude oil pipeline from Advent International. http://axios.link/XyUF

🐟 Investcorp acquired Fortune International, a Bensenville, Ill.-based distributor of seafood and gourmet food products. www.fortunefishco.net

Pennon Group (LSE: PNN) is seeking upwards of $5 billion for its Viridor waste management unit, with interested suitors including EQT, KKR and Macquarie Group, per Bloomberg. http://axios.link/GKEl

Permira agreed to buy Italian luxury sneaker brand Golden Goose from The Carlyle Group, per Reuters. Earlier reports suggested a minimum price of €1.2 billion. http://axios.link/aX5H

Royston Group, a portfolio company of Industrial Opportunity Partners, acquired Hamilton Laboratory Solutions, a Manitowoc, Wis.-based lab equipment designer and manufacturer. www.hamiltonlab.com

Public Offerings

🚑 DRI Healthcare, a UK-based healthcare royalties investment firm, said it plans to raise upwards of $350 million in a London IPO. http://axios.link/kkmk

🚑 Revolution Medicines, a Redwood City, Calif.-based cancer drug developer, raised its IPO terms to 14 million shares at $16-$17 from 10 million shares at $14-$16. It now would have a fully-diluted market value of $1 billion, were it to price in the middle, and plans to trade on the Nasdaq (RVMD) with JPMorgan as lead underwriter. Shareholders include Third Rock Ventures (28.8% pre-IPO stake), Column Group (18.6%), and Sanofi (7.8%).

More M&A

AngloGold Ashanti (JSE: ANGJ) agreed to sell its remaining South African assets to Harmony Gold (JSE: HARK) for around $300 million. http://axios.link/WyLJ

EG Group and Macquarie Group may partner on a takeover bid for Caltex Australia (ASX: CTX), with EG to own the company’s retail unit, per Bloomberg. http://axios.link/OATw

JPMorgan was picked to advise on a privatization sale of a stake for a $7.3 billion motorway in Turkey, per Reuters. http://axios.link/2mD1


The Blackstone Group will replace Canada Pension Plan Investment Board as the anchor investor of hedge fund Engineers Gate, following last month’s retirement of fund founder Glenn Dubin. http://axios.link/LQLt

It's Personnel

🚑 Robert Carroll joined Sofinnova Partners, a Paris-based life sciences VC firm, as head of investor relations. He previously co-led PwC's global fundraising advisory group. www.sofinnovapartners.com

Greenbriar Equity Group promoted Michael Weiss and Niall McComiskey to managing partners. www.greenbriarequity.com

Osage University Partners promoted Kirsten Leute to partner of university relations. www.oup.com

Sacha Romanovitch, CEO of Fair4All Finance, joined LeapFrog Investments as a non-executive director. www.leapfroginvest.com

Sapphire Ventures promoted Abigail Johnson to managing director, general counsel, and COO, and Shruti Tournatory to VP of biz dev. www.sapphireventures.com

Final Numbers
Source: LevFin Insights
Dan Primack

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