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Private equity takeovers of public companies are becoming an endangered species, according to new data from PitchBook.
- There have only been 39 take-privates so far this year, which puts us on pace for a decade-long low.
- This reverses a three-year upswing in such deals, and remains well below the 2007 high-water mark of 174 take-privates.
- PitchBook (correctly) suggests that this is mostly about supply and demand, given that "there are fewer publicly traded companies than at any point in the past four decades" and that the market caps for many of those companies keep rising.
- It's also something that feeds on itself, with buyout firms able to fish in a much deeper pool of private companies.
• Legal spin: Peloton, the connected indoor cycling company valued at $4 billion by VCs, yesterday sued rival Flywheel for allegedly stealing some of Peloton's proprietary technology, such as displaying live classes, tracking rider performance and competing with other at-home riders.
- But the real news here is that Peloton is accusing Michael Milken of being the thief.
- It alleges that Milken, the former junk bond king turned think tank titan, approached Peloton CEO John Foley about possibly becoming an investor, and "pressed for — and obtained — information from Foley about Peloton’s technology and business strategy."
- What Milken allegedly didn't tell Foley was that he already had an investment in privately-held Flywheel, and Peloton thinks he passed on the info.
- Milken, who isn't named as a defendant, told WSJ via a rep that he did nothing wrong.
• Unicorn dreams: When interviewing venture capitalists, a favorite question of mine is if they'd buy the entire basket of "unicorn" companies at their current valuations. I've always framed it as a hypothetical, of course, but maybe not for much longer.
A company called Lagniappe Labs, which regularly scours Delaware stock filings, has created something called the Prime Unicorn Index and word is that it's talking to banks about bringing related notes to the institutional investor market.
- The notes would basically work as long/short securities with matched trades.
- The marketing pitch would be twofold: Long appeal for those without direct equity exposure to unicorns, and downside protection for those with lots of exposure (e.g., LPs in VC and growth equity funds).
- Yes, we're talking about startup stock derivatives just as we approach the 10-year anniversary of Lehman's collapse. Hey, I don't make the calendar.
- There are currently 102 companies in the index, with prices recast weekly and the index refreshed monthly. Only US-incorporated companies qualify, and the valuation threshold is $500 million instead of $1 billion.
Hershey Co. (NYSE: HSY) agreed to buy Pirate Brands, the Parsippany, N.J.-based maker of cheese puff snacks like Pirate’s Booty, from B&G Foods (NYSE: BGS) for $420 million in cash.
- Why it's the BFD: Because it's part of the chocolate giant's pricey diversification efforts into both healthier and saltier snacks, including prior deals for the makers of SkinnyPop popcorn and Krave jersey.
- ROI: B&G paid $195 million to buy Pirate Brands in 2013 from private equity firm VMG Partners.
- Bottom line: "Please buy me Pirate's Booty when you go to the store." — Regular refrain of Emma Primack, age 7
Venture Capital Deals
🚑 Atreca, a Redwood City, Calif.-based developer of a solid tumor drug, raised $125 million in Series C funding led by an undisclosed investor. Other backers include Wellington Management, Cormorant Asset Management, Aisling Capital, Tavistock Group, EcoR1 Capital, Redmile Group, Samsara BioCapital and Tekla Capital Management. http://axios.link/AR7G
• Wasabi, a Boston-based cloud storage company, raised $68 million in Series B funding from firms like Forestay Capital. http://axios.link/ekCZ
🛴 Yellow, a Brazilian e-scooter company, raised $63 million in Series A funding. GGV Capital led, and was joined by return backers Monashees, Grishin Robotics, Base10 Partners and Class 5.
• Datrium, a Sunnyvale, Calif.-based provider of unified hybrid cloud computing and data management solutions, raised $60 million in Series D funding. Samsung Catalyst Fund led, and was joined by Icon Ventures and return backers NEA and Lightspeed Venture Partners. www.datrium.com
• StockX, a Detroit-based online marketplace for buying and selling items like sneakers and watches, raised $44 million in Series B funding co-led by Battery Ventures and GV. http://axios.link/Bpgr
• Cocos-BCX, a blockchain game development platform, raised $40 million in new funding from Binance Labs, NEO Global Capital and 500 Startups. www.cocosbcx.io/en
• Integrate.ai, a Canadian provider of decision-making SaaS for consumer-centric businesses, raised US$30 million in Series A funding. Portag3 Ventures led, and was joined by Georgian Partners and Real Ventures. http://axios.link/33Y9
🚑 System1, a San Francisco-based neurotherapeutics startup, raised $25 million in Series A funding co-led by CRV and Pfizer Ventures. http://axios.link/T28f
• Moka, an Indonesian provider of payment management software for retailers and SMEs, raised $24 million in Series B funding. Sequoia Capital led, and was joined by SoftBank Ventures Korea, EDBI, East Ventures and return backers Mandiri Capital, Convergence and Fenox. http://axios.link/bkYi
🚑 Coda Biotherapeutics, a San Francisco-based developer of a chemogenetic gene therapy platform, raised $19 million in Series A funding. MPM Capital and Versant Ventures co-led, and were joined by Astellas Venture Management and Novartis. http://axios.link/CCVT
• Job Today, a European job-finding app, raised $16 million in new Series B funding from 14W (round total now $36m, including prior close led by Accel). http://axios.link/ZULo
• Growers Holdings, a Raleigh, N.C.-based provider of agricultural analytics software, raised $5 million in Series A funding led by Lewis and Clark Ventures. www.growers.ag
• Logiwa, a Chicago-based provider of warehouse and inventory management software, raised $3 million. Runway Venture Partners led, and was joined by Revo Capital, Spider Capital and Launch Capital. http://axios.link/HefV
Private Equity Deals
• August Corporate Partners bought Exocor, a Canadian maker of welding filler metals, from Saugatuck Capital. www.exocor.com
• The Blackstone Group acquired a 60% stake in Baltic bank Luminor from Nordea and DNB for €1 billion in cash. http://axios.link/8TYo
• KKR is in talks to buy car parts company Magneti Marelli from Fiat Chrysler for more than €6 billion, and then merge it with Japanese parts maker Calsonic Kansei, according to Bloomberg. http://axios.link/gdTW
🚑 IZI Medical Products, an Owings Mills, Md.-based interventional medical device company owned by Shore Capital, acquired Benvenue Medical’s vertebral augmentation systems. Benvenue backers include CRG, InterWest Partners, Domain Associates and Versant Ventures. www.izimed.com
• Meituan Dianping, a Chinese online e-commerce and delivery marketplace, raised $4.2 billion in a Hong Kong IPO, pricing near the top of its offering range. Reuters reports it's "the world’s biggest internet-focused IPO in four years." The company previously raised over $7 billion from such backers as Tencent, Sequoia Capital, GIC, Coatue Management, Tiger Global and Mubadala. http://axios.link/UeId
⛽ Mubadala Investment Co. has decided to pursue an IPO for Spanish oil company Cespa, after ending talks to sell the business to Carlyle Group, according to Bloomberg. The IPO could raise upwards of $3.5 billion at an $11.6 billion valuation. http://axios.link/jb0h
• SurveyMonkey, a San Mateo, Calif.-based maker of online survey software, set IPO terms to 13.5 million shares at $9-$11. It would have an initial market cap of around $1.2 billion, were it to price in the middle, and plans to trade on the Nasdaq (SVMK) with J.P. Morgan serving as lead underwriter. The company reports a net loss of $27 million on $121 million in revenue for the first half of 2018 and that its largest shareholder is Tiger Global, with a 29.3% pre-IPO stake. http://axios.link/GfGd
• Westwing, a German online furniture retailer, is prepping a €120 million float in Frankfurt. The company has raised over $260 million in VC funding from firms like Rocket Internet, Fidelity, Kreos Capital, Access Technology Ventures, Summit Partners and Kinnevik. http://axios.link/KF4K
• Adobe (Nasdaq: ADBE) is in talks to buy Marketo, a San Mateo, Calif.-based marketing software company taken private for $1.8 billion by Vista Equity Partners in 2016, according to Reuters. http://axios.link/BjvW
🚑 Boehringer Ingelheim exercised its option to buy ViraTherapeutics, a German developer of cancer immunotherapies, for €210 million. Sellers include EMBL Ventures. http://axios.link/nc0o
• iHeartMedia agreed to buy Stuff Media, including the HowStuffWorks podcasting business, for a reported $55 million. Atlanta-based Stuff media raised $15 million last year in a funding round led by Raine Ventures.
• North Castle Partners hired Rothschild to explore a possible sale of weight loss company Jenny Craig, which is expected to generate $400 million of revenue and $35 million in EBITDA this year, according to the WSJ. http://axios.link/4Jsq
• WeWork agreed to buy Teem, a Salt Lake City-based provider of office management SaaS. Teem had raised over $20 million from Greycroft, GE Ventures, NGP Capital, Origin Ventures, Kickstart Seed Fund and Zetta Venture Partners. http://axios.link/NKJN
• GTY Technology Holdings (Nasdaq: GTYHU), a special purchase acquisition company whose team includes ex-EMC CEO Joe Tucci, agreed to buy CityBase, a Chicago-based provider of software for interacting with utilities and government agencies, for $160 million. www.thecitybase.com
🚑 Takeda Pharmaceutical (Tokyo: 4502) is weighing a sale of Shire PLC’s (LSE: SHP) eyecare business once its $62 billion purchase of Shire is complete, according to Bloomberg. http://axios.link/Ra91
🚑 Teva Pharmaceutical (NYSE: TEVA) is receiving takeover interest in Medis, an outsourced Icelandic generic drug developer that could fetch around $500 million, per Bloomberg. Suitors could include private equity, Sweden’s Recipharm and Brazil’s EMS. http://axios.link/rEH3
• Volkswagen agreed to sell a 20% stake in Heycar, a used car marketplace it launched last year, to Daimler. http://axios.link/fa7t
• Hustle Fund, a new pre-seed firm, raised $11.5 million for its debut fund. Its general partners are 500 Startups vets Elizabeth Yin and Eric Bahn, plus former NerdWallet exec Shiyan Koh. http://axios.link/qEvB
• Ribbit Capital, a fintech-focused VC firm, is raising up to $420 million for its fifth fund, per an SEC filing. www.ribbitcap.com
• Quad Partners raised $229 million for its fifth private equity fund focused on mid-market companies in the education industry. www.quadpartners.com
• Tera Ventures of Estonia held a €21 million first close on its €55 million-targeted second fund. www.tera.vc
• White Oak raised around $2.1 billion for its latest flagship private credit fund. www.whiteoaksf.com
• Stefan Hoefer joined private credit investment firm Crayhill Capital as a managing director. He previously was with BBT Capital. www.crayhill.com
Final Numbers: LBO leverage creeps up
More from Debtwire's CJ Doherty:
Less focus on leveraged lending guidelines has helped boost leverage at the upper end, while private equity funds remain eager to put their dry powder to work, even if it means having to pay up for businesses in the current environment.