Jul 3, 2019

Axios Pro Rata

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Top of the Morning

Source: Giphy

When T-Mobile US and Sprint first announced their $26 billion merger in early 2018, the endgame was to reduce the country's number of major mobile carriers from four to three ⁠— thus letting the new partners better compete with AT&T and Verizon. But that ship appears to have sailed.

  • Multiple reports are that the Department of Justice is insisting on the maintenance of four majors, despite T-Mobile CEO John Legere's still-available tweet about how DOJ doesn't believe the deal needs any restructuring.
  • Enter Dish, which currently is a satellite TV company without any mobile telecom offering. But it does have a bunch of spectrum, which makes it one of few viable partners to get this thing over the finish line.
  • The idea is that T-Mobile/Sprint would make divestitures to ensure Dish could become the fabled fourth player — albeit possibly more as a reseller on the existing network, rather than a new network itself.

It's an elegant solution, but not without its own challenges.

The biggest obstacle may be Dish chairman and former CEO Charlie Ergen, who holds nearly a 37% stake in the company and is known to be a very tough negotiator. What Ergen wants may not ultimately be palatable to T-Mobile, and he appears to have most of the leverage.

  • Plus, it's possible that DOJ won't like the final compromise, assuming there is one.
  • Sprint owner SoftBank recently hired another lobbyist to work on the transaction, per Axios' David McCabe.

The bottom line: When announced, this deal was presented as a much easier regulatory pass than was AT&T-Time Warner, even though it's a very vertical merger. It was wishful thinking.

• Growth: Private equity firm Permira this morning announced that it has raised $1.7 billion for its first-ever fund focused on non-control investments, with expectations that it will mostly buy into tech and tech-enabled services companies. So far the portfolio already includes Minted (graphic design and art marketplace) and Klarna (online payments platform).

  • What it didn't announce: Permira's growth equity effort has quietly formed a partnership with Bryant Stibel, the venture capital firm co-founded by Kobe Bryant.
  • The two groups first got to know each other as co-investors in LegalZoom, and Bryant Stibel has invested in Permira's fund and is expected to co-invest on many of its deals. A source compares it to the ongoing relationship between Hellman & Friedman and JMI Equity.

🎧 Pro Rata Podcast: We dig into why so many political candidates, like Mayor Pete Buttigieg, are taking the risk of letting themselves become the subjects of documentary films. Listen here.


Illustration: Aïda Amer/Axios

Broadcom (Nasdaq: AVGO) is in advanced talks to buy Symantec (Nasdaq: SYMC) for more than $15 billion, as first reported by Bloomberg.

  • Why it's the BFD: Symantec is the world's largest provider of cybersecurity software.
  • Investor reax: Symantec shares jumped in early trading, giving it a market cap of nearly $16 billion. No surprise there, as investors often expect a premium to the leaked premium. Broadcom shares are down more than 3%, perhaps over fears that this could be like the last time a chipmaker paid big for a cybersecurity company (i.e., Intel buying McAfee, and then later selling it at a major discount to TPG).
  • Bottom line: Broadcom is using M&A to move deeper into software than into its core competency of chips, after last year being blocked by regulators from buying Qualcomm but permitted to buy CA Technologies.
Venture Capital Deals

• Cubyn, a Paris-based provider of outsourced logistics for ecommerce companies, raised €12 million. DN Capital led, and was joined by Partech Ventures, 360 Capital Partners, BNP Paribas Developpement and BPI France. http://axios.link/rkWe

• Georges, a French provider of accounting automation software for freelancers, raised €10 million in Series A funding. Alven led, and was joined by seed backers Kerala and Fast Forward. http://axios.link/E30J

🎧 Podomo, a Denmark-based podcast subscription network, raised €6 million in seed funding co-led by E.ventures and Heartcore. http://axios.link/MIiS

• Ironhack, a Miami-based coding bootcamp operator, raised $4 million. JME Capital led, and was joined by All Iron Ventures and Brighteye Ventures. http://axios.link/9sYY

• Klaus, an Estonian “conversation review and QA tool for support teams,” raised $1.9 million in seed funding led by Creandum. http://axios.link/8Kze

Private Equity Deals

🚑 EyeSouth Partners, an Atlanta-based eyecare physician services group owned by Shore Capital Partners, acquired Alabama-based practice Montgomery Eye. www.eyesouthpartners.com

• Fortress Investment Group, owned by SoftBank, is in talks to buy a portfolio of 200 UK stores from Majestic Wine (AIM: WINE), per Sky News. http://axios.link/dlLA

• KKR completed its purchase of Corel, a Canadian virtualization software company, from Vector Capital. http://axios.link/D0OT

• Kohlberg & Co. acquired Nelipak, a Cranston, R.I.-based maker of rigid packaging for the medical device and pharma markets, from Mason Wells. http://axios.link/7u7M

Public Offerings

🚑 Annovis Bio, a Berwyn, Penn.-based developer of drugs that treat neurodegeneration, filed for an $11.5 million IPO. The pre-revenue company plans to trade on the Nasdaq (ANVS) with ThinkEquity as sole underwriter. Shareholders include Ben Franklin Technology Partners. http://axios.link/UlRX

Vista Oil & Gas, a Mexico City-based oil and gas E&P backed by Riverstone Holdings, filed for a $100 million IPO. It plans to trade on the NYSE (VIST) with Citi as lead underwriter. http://axios.link/8fE7

Liquidity Events

The Blackstone Group is in exclusive talks to sell a portfolio of Center Parcs Europe resorts to German real estate firm Aroundtown for approximately $1.1 billion, per Bloomberg. http://axios.link/cNok

More M&A

AT&T (NYSE: T) is considering an auction for four of its regional sports networks, which could fetch nearly $1 billion, per Bloomberg. http://axios.link/QeJw

CBRE Group (NYSE: CRBE) agreed to buy British residential real estate developer Telford Homes (LSE: TELF) for £267 million. http://axios.link/BzHH

• Deutsche Bank has discussed selling parts of its equities business with such rivals as Citigroup and BNP Paribas, per the WSJ. http://axios.link/jsOw

• Exabeam, a San Mateo, Calif.-based provider of security intelligence solutions, acquired Israeli cybersecurity startup SkyFormation. Exabeam last month raised $75 million in Series E funding co-led by Sapphire Ventures and Lightspeed Venture Partners. http://axios.link/8wtc

• Keyfactor, an Independence, Ohio-based cybersecurity company backed by Insight Partners, acquired Redtrust, a Spain-based provider of centralized certificate and digital signature management software. http://axios.link/WFbR

• Synthomer (LSE: SYNTS) agreed to buy Ohio-based specialty chemicals company Omnova Solutions (NYSE: OM) for $824 million, or $10.15 per share in cash (58% premium to yesterday’s closing price). http://axios.link/U5nj

UGI (NYSE: UGI) agreed to buy some Columbia Midstream Group assets from pipeline operator TC Energy (TSC: TRP) for around US$1.28 billion. http://axios.link/zv3y

• Unite (LSE: UTG) and Canada Pension Plan Investment Board agreed to buy Canadian student housing provider Liberty Living Group for £1.4 billion in cash. http://axios.link/0h2n

• Vocus Group (ASX: VOC), an Australian telecom company, plans to split into three groups after failing to find a buyer for the entire company. http://axios.link/W9Dy

• Woolworths Group (ASX: WOW), Australia’s largest supermarkets operator, will merge and then spin off its liquor store and pubs groups. The new company could be valued at around A$10 billion. http://axios.link/b8G8


• The University of Texas Investment Management Co. (UTIMCO) plans to cut its number of private equity relationships by 50%, but maintain its $3 billion annual investment target by reallocating to large buyout funds. http://axios.link/TCLq

• Upfront Ventures of Los Angeles is seeking $250 million for its third growth equity fund, per an SEC filing. http://axios.link/d9rP

It's Personnel

• George Barsness joined mid-market private equity firm Gemspring Capital as a vice president. www.gemspring.com

Final Numbers

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