January 31, 2023

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Top of the Morning

Illustration: Aïda Amer/Axios

Johnson & Johnson tried to do the Texas two-step, and ended up flat on the ground.

Driving the news: A federal court yesterday rejected the health giant's efforts to shed its talcum powder liabilities by cramming them into a special-purpose subsidiary and then having that subsidiary file for bankruptcy.

Why it matters: J&J isn't the first company to use this corporate slight of hand, but yesterday's ruling could make it the last.

  • This also comes ahead of J&J's planned spinoff of its consumer health business via IPO.

What to know: The Third Circuit Court of Appeals effectively ruled that a company must be facing financial distress in order to file for bankruptcy. J&J, which reported nearly $18 billion in 2022 profits, didn't meet that threshold.

  • J&J said it will appeal.
  • Axios' Felix Salmon wrote the following when J&J first disclosed its liability-dumping plan, which is known in legal circles as the Texas two-step: "That would normally be a 'fraudulent transfer' — but under Texas law it would be a 'divisive merger' and therefore wouldn't count as a transfer at all, fraudulent or otherwise."
  • 3M did a similar bankruptcy dance last year with its Aearo Technologies subsidiary, which makes ear plugs, in an effort to settle more than 230,000 hearing loss lawsuits from military service members.

Zoom in: J&J recently filed IPO papers for its consumer health spinout, to be named Kenvue, which could be the largest U.S. listing in more than a year.

  • Kenvue would include the baby powder business at the heart of J&J's liability troubles, but the registration document says that those liabilities would remain with the parent company.
  • A company spokesperson reiterated the plan yesterday in an email to Axios, saying that "this ruling has no impact on the planned separation of the consumer health business ... LTL will remain within the Johnson & Johnson family of companies following completion of the separation."

The bottom line: This is a win for around 38,000 plaintiffs who claim that J&J's talc powder caused cancer in either themselves or deceased relatives, but who were concerned that the Texas two-step would effectively cap liabilities. Now J&J may be forced to dance with each case in court, out of court or via a massive group settlement.


Illustration: Sarah Grillo/Axios

Lotus Technology, a luxury electric vehicle maker majority owned by China's Geely, agreed to go public at an implied $5.4 billion enterprise value via L Catterton Asia Acquisition Corp. (Nasdaq: LCAA).

Why it's the BFD: This suggests that Geely hasn't soured on EV SPACs, despite the poor stock market performance of its Polestar unit. Or perhaps it's more about how Geely views the moribund IPO market, given its prior float plans.

Details: Lotus Technology does not include the traditional sports car assets of Lotus, which was founded in 1948. Geely, which also owns Volvo, is joined on the Lotus cap table by Malaysia's Etika Automotive.

The bottom line: "Building cars is enormously expensive, especially when they’re electric and tied to seesawing commodity prices for battery components. Competitors larger and smaller, such as Rivian, Canoo and (yes) Polestar have plowed through mountains of cash." Alan Neuhauser, Axios Pro

Venture Capital Deals

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Source: Giphy

• Colossal Biosciences, the Austin, Texas-based "de-extinction" startup, raised $150m in Series B funding. Thomas Tull's U.S. Innovative Technology Fund led, and was joined by Breyer Capital, Bob Nelsen, Animal Capital, Victor Vescovo, In-Q-Tel, Animoca Brands, Peak 6, BOLD Capital and Jazz Ventures.

• Stripe, the payments infrastructure giant, is in talks to raise around $2.5b led by Thrive Capital at between a $55b-$60b valuation, as first reported by the NY Times. The down-round would be aimed at funding employee liquidity and related tax liabilities.

• Fairphone, a Dutch maker of modular consumer electronics, raised €49m from Invest-NL, ABM AMRO Sustainable Impact Fund and insider Quadia. https://axios.link/3JpDf63

• Luxwall, a Ypsilanti, Mich.-based developer of insulated windows, raised $33m in Series A funding. 2150 led, and was joined by Khosla Ventures and insiders Breakthrough Energy Ventures and Prelude Ventures. https://axios.link/3RroBxa

• Sentra, an Israeli cloud data security startup raised $30m in Series A funding. Standard Investments led, and was joined by Munich Re Ventures, Moore Strategic Ventures, Xerox Ventures and insiders Bessemer Venture Partners and Zeev Ventures. www.sentra.io

Q-CTRL, an Australian developer of quantum-sensing software, raised US$27.4m in Series B extension funding from Salesforce Ventures, Alumni Ventures, ICM Allectus and Mindrock Capital. https://axios.link/3Ju2vYL

Finley, an SF-based provider of software for companies to manage private credit loans, raised $17m in Series A funding. CRV led, and was joined by Upper90 and insiders Bain Capital Ventures, Haystack, Y Combinator and Nine Four Ventures. https://axios.link/40ecXJT

Fuergy, a Slovakian energy storage and management provider, raised €16m from Pro Partners Holding. https://axios.link/3Ya5864

Nobl9, a Waltham, Mass.-based service-level observability startup, raised $15.8m from ServiceNow, Cisco Investments and insiders Battery Ventures and CRV. www.nobl9.com

🚑 Spark Advisors, a retirement benefits navigation software startup, raised $15m in Series A funding, per Axios Pro. American Family Ventures led, and was joined by Primary Ventures, Torch Capital and Vine Ventures. https://axios.link/3RlTrXN

BridgeWise (fka Deshe Analytics), an Israeli equity research startup,, raised $13m. Group11 led, and was joined by L4VB and Mangrove VC. www.desheanalytics.com

Profit.co, a Fremont, Calif.-based provider of OKR software, raised $11m led by Elevation Capital. https://axios.link/3Y7DGpE

• Guardz, a Dallas-based cyber insurance startup focused on attack-as-a-service breaches, raised $10m in seed funding. Hanaco Ventures led, and was joined by with iAngels, GKFF Ventures and Cyverse Capital. https://axios.link/40dt6iK

Plantd, a Durham, N.C.-based developer of building materials made from grass, raised a $10m Series A led by American Family Ventures. www.plantdmaterials.com

Hypernative, a web3 cybersecurity startup, raised $9m in seed funding. Boldstart Ventures and IBI co-led, and were joined by Blockdaemon, Alchemy, Borderless, CMT Digital and Nexo. https://axios.link/3HGR0Mp

🚑 Teal Health, an SF-based provider of virtual health screenings for women, raised $8.8m in seed funding, per Axios Pro. Backers include Emerson Collective, Serena Ventures, Metrodora Ventures and Felicis Ventures. https://axios.link/3HJfmoT

Lemu, a Chilean online community of nature lovers and environmental projects stewards, raised $8m in Series A funding led by Arauco Ventures. www.le.mu

TigerBeetle, a financial accounting infrastructure startup, raised $6.4m from Amplify Partners and Coil. www.tigerbeetle.com

🥬 Pigmentum, an Israeli developer of lettuce-based milk and cheese, raised $6m in seed funding. Kibbutz Yotvata and IsraeliArkin co-led, and were joined by Tnuva, Tempo, and OurCrowd. https://axios.link/3kS0jQL

Entocycle, a London-based insect farming tech provider, raised €5m in Series A funding. Climentum Capital led, and was joined by Lowercarbon Capital, Teampact Venturesm and Ace & Company. https://axios.link/3Jq9dyP

🚑 VitaDAO, a DAO designed to support longevity science projects, raised $4.1m in token funding from Pfizer Ventures, Shine Capital, L1 Digital and Balaji Srinivasan. https://axios.link/40dsee0

Baobab, a Berlin-based cyber insurance startup, raised €3m from Augmentum. https://axios.link/3JtMyll

BibeCoffee, a developer of connected coffee-makers to reduce waste, raised €2.1m. Eleven Ventures led, and was joined by Venture Friends and Uni.Fund. https://axios.link/3YcpWdn

• Secai Marche, a Tokyo-based provider of agricultural supply chain solutions, raised $1.6m in Series A funding from The Agribusiness Investment and Consultation Co., Spiral Ventures Asia Fund I and Beyond Next Ventures. https://axios.link/40aKzbL

Raylo, a London-based electronic device subscription service, raised £110m in equity and debt. Lenders include NatWest and Quilam Capital. https://axios.link/408ige1

Saviynt, an El Segundo, Calif.-based provider of identity and access governance solutions, raised $205m from a private credit affiliate of AllianceBernstein. It previously raised $170m in VC funding. https://axios.link/3kVuk22

Private Equity Deals

ArcLight Capital Partners committed $150m in new equity funding to Elevate Renewable Energy, a company it formed last year to develop utility-scale battery storage resources co-located with existing power infrastructure. www.elevaterenewableenegy.com

Brookfield Asset Management is in talks to acquire the PE secondaries business of Deutsche Bank's asset management arm, per Bloomberg. https://axios.link/3Yc9ycU

EIV Capital invested in Intensity Infrastructure Partners, a Tulsa, Okla.-based company that acquires and develops midstream energy infrastructure.

GI Partners agreed to buy Atlas Technical Consultants (Nasdaq: ATCX), an Austin, Texas-based provider of infrastructure and environmental solutions, for around $1.05b, or $12.25 per share (124% premium over yesterday’s closing price). www.oneatlas.com

Northstar Recycling, an East Longmeadow, Mass.-based portfolio company of Ridgemont Equity Partners, acquired Sonoco Sustainability Solutions, a provider of waste diversion programs, from Sonoco (NYSE: SON). www.northstarrecycling.com

Slate Hill Partners acquired a minority stake in XO Wealth Management, a Dallas-based registered investment advisor with over $630m in AUM. www.xowealth.com

🚑 Vivo Infusion, a Lakewood, Colo.-based portfolio company of InTandem Capital Partners, acquired CIVIC Infusion, a provider of infusion services in Connecticut and New York. www.mppinfusion.com

Public Offerings

🚑 Structure Therapeutics, a South SF-based developer of G-protein-coupled receptors for chronic diseases, set IPO terms to 9m shares at $13-$15. The Phase 1 biotech would have a $511m fully diluted value, were it to price in the middle, and plans to list on the Nasdaq (GPCR). It has raised over $190m in VC funding from firms like Sequoia Capital China (10.3% pre-IPO stake), Biotechnology Value Fund (9.56%), Eight Roads (8.35%), F-Prime Capital Partners (7.5%) and Qiming Ventures (6.37%). https://axios.link/3HJ0feP

Liquidity Events

Marqeta, an Oakland-based fintech valued at nearly $3.7b, agreed to buy Power Finance, a co-branded credit card provider, for $223m in cash. Power Finance last fall raised $16m in seed funding co-led by Anthemis and Fin Capital. https://axios.link/3wDUUPA

The News Movement, a video news startup with offices in London and New York, acquired The Recount, which had raised more than $30m from backers like Foundry Group and USV. https://axios.link/3kUDJHd

🚑 TA Associates is seeking to sell its stake in Indian fertility clinic chain Indira IVF, which could fetch around a $1b enterprise value, per Bloomberg. https://axios.link/3XMOWrI

More M&A

CropX, an Anaheim, Calif.-based in-soil agricultural analytics startup that’s raised $30m in VC funding, acquired Davis, Calif.-based smart irrigation startup Tule, per Axios Pro. https://axios.link/3kVEdNc

Flight Centre Travel Group (ASX: FLT) agreed to buy London-based luxury travel agency Scott Dunn for A$211m. https://axios.link/40gXeK3

Tesco (LSE: TSCO) agreed to buy Paperchase, a bankrupt stationary retailer. https://axios.link/3wFSss0


Adenia Partners, an Africa-focused private equity firm, held a $300m first close on its fifth fund. The total target is $400m. www.adenia.com

BC Partners is raising $1.25b for its third credit opportunities fund, per Buyouts. https://axios.link/3XW8FoX

It's Personnel

Sarah Mears Kim joined Centana Growth Partners as a partner. She previously was CFO and chief business officer of Archipelago Analytics, and before that was with Iconiq Capital. www.centanagrowth.com

AnaCap Financial Partners promoted Nassim Cherchali and Tassilo Arnhold to co-managing partners. www.anacapfp.com

Neuberger Berman promoted Doug Manor and Matt Wiener to managing directors of private equity. www.nb.com

Final Numbers

Data: Yahoo Finance; Chart: Axios Visuals.

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