Mar 5, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

Semiconductors are boring, but the battle between Broadcom and Qualcomm has become fascinating.

The latest: CFIUS has asked Qualcomm to delay Tuesday's planned shareholder vote by 30 days, so that it can review the national security implications of a potential takeover by Broadcom.

  • Last week we reported on how Sen. John Cornyn (R-TX) had asked Treasury for a CFIUS review prior to Tuesday's vote, and we've also similar letters sent by Rep. Duncan Hunter (R-CA) to both President Trump and Defense Secretary Mattis.
  • The WSJ's editorial board reported last night that CFIUS had declined to conduct such a review, which probably is why editorial boards aren't usually in the business of reporting.
  • Broadcom is accusing Qualcomm of surreptitiously asking for a review. No response from Qualcomm, but expect one shortly.

Also: Qualcomm today extended its tender for NXP Semiconductors to market close Friday. Remember that Qualcomm recently raised the price to both appease NXP shareholders and also to poison the waters for Broadcom.

Bottom line: CFIUS is being used as a bulwark against a hostile takeover bid, which is unprecedented.

Best picture: Global media and entertainment M&A is at $112.6 billion so far in 2018, which is up more than 600% from this time last year, per Thomson Reuters.

  • Among those at the winner's podium last night was venture capitalist David Fialkow (General Catalyst), who co-produced the winning documentary, Icarus.

ICYMI: On Friday afternoon I delved deeper Apollo Global Management's controversial loan to Kushner Cos., which I still believe is more about the appearance of conflict without evidence of actual conflict. Read it here.

  • Subsequently there were reports that the SEC in December dropped an investigation into Apollo without filing charges. Or, more specifically, reporters found the disclosure in Apollo's annual report, which said it had received a subpoena one year earlier for information on IRR calculation disclosures, costs associated with a European service provider and certain personnel changes.
  • A reminder that the SEC previously fined Apollo in 2016 for misleading investors, and it remains in litigation with a former Apollo partner who allegedly misappropriated funds (he was fired by Apollo, and reimbursed the funds and their investors).

Coming attractions: Only one company (BioXcel Therapeutics) is expected to price an IPO this week, but March should soon heat up. Likely issuers this month include Zscaler, Dropbox, Sundlands Online Education and Spotify.

The BFD
Source: Giphy

AXA (Paris: CS) has agreed to acquire Bermuda-based property and casualty insurer XL Group (NYSE: XL) for around $15.3 billion in cash, or $57.60 per share (33% premium to Friday's closing price).

  • Why it's the BFD: Because is the largest whitecap on what has been a massive wave of consolidation this year in the global insurance sector.
  • Bottom line: The deal, if completed, would end a three-decade run as an independent company for XL, which was founded by 68 of the world's biggest companies in 1986 to keep coverage affordable after a crisis in US liability insurance... Today [it] is best known for reinsurance." — Financial Times
Venture Capital Deals

Chehaoduo (f.k.a. Guazi), a Chinese used car buying and selling platform, has raised around $818 million in Series C funding. Tencent led, and was joined by ICBC International, Yunfeng Capital, FountainVest Partners, GIC, IDG Capital, Taihe Capital and return backers Sequoia Capital China, H Capital, DST Global, Capital Today, Shougang Fund and Shanhang Capital Investment. http://axios.link/q86g

Wecash, a Chinese online credit rating platform, has raised $160 million in Series D funding. ORIX Asia Capital and SEA Group co-led, and were joined by Sagamore Investments, SIG Asia, Forebright Capital, Lingfeng Capital and Hongdao Capital. http://axios.link/lvaY

C2FO, a Leawood, Kansas-based online marketplace for working capital, has raised $100 million in VC funding. Allianz X and Mubadala co-led, and were joined by Temasek, Union Square Ventures and Mithril Capital. http://axios.link/3D9a

NestAway Technologies, an Indian home rental platform, has raised $51 million in Series D funding. Goldman Sachs and UC-RNT Fund were joined by return backers IDG India and Tiger Global. http://axios.link/SfMz

Magazino, a German developer of intralogistics robots, has raised €20.1 million in new VC funding. Körber Group led, and was joined by Cellcom, Zalando and Fiege Logistics. www.magazino.eu

🚑 Owlstone Medical, a UK-based developer of a breathalyzer for disease analytics, has raised £11 million co-led by Horizons Ventures and Aviva Ventures. http://axios.link/3kQ2

Trizic, a San Francisco-based provider of digital workflow and automation technology for the wealth industry, has raised $10 million in Series A funding. Sorenson Ventures led, and was joined by Fidelity National Information Services, Betsy Cohen and return backers Freestyle Capital, Broadhaven Capital Partners, PEAK6 and Commerce Ventures. www.trizic.com

Scalefast, a Los Angeles-based provider of personalized ecommerce experience solutions, has raised $8 million in Series A funding. BGV led, and was joined by Adara Ventures, B&Y, French Partners and CIC Capital. http://axios.link/vD6g

Ascent Technologies, a Chicago-based developer of regulatory compliance software, has raised $6 million in Series A funding led by Alsop Louie Partners. http://axios.link/scCG

NewsGuard, a media review startup aimed at detecting "fake news," has raised $6 million in funding led by Publicis Groupe. It's co-founders are journalists and media entrepreneurs Steven Brill and Gordon Crovitz. http://axios.link/wxA6

• Paro, a Chicago-based labor marketplace for financial back-office professionals, has raised $5 million in Series A funding. Revolution Ventures led, and was joined by Global Founders Capital. http://axios.link/jdMF

Saturas, an Israeli precision irrigation startup, has raised $4 million in Series A funding from backers like Hubei Forbon Technology Co., Ramat Magshimim, Miguel Torres Winery, Gefen Capital, Trendlines and the Israel Farm Union. http://axios.link/clB8

Private Equity Deals

Equistone has agreed to buy French online travel agency Karavel-Promovacances and tour operator Fram from LBO France. http://axios.link/quua

⛽ Mettle Midstream Partners has launched as a Dallas-based midstream infrastructure company with up to $100 million in equity commitments from Pearl Energy Investments and Natural Gas Partners. www.mettlemidstream.com

⛽ NBK Capital Partners has invested in Energia Model Trading & Contracting, a Saudi energy rental business. http://axios.link/4hTA

⛽ NorthStar Group Services has struck a deal with Vermont to purchase and decommission the shuttered Vermont Yankee nuclear facility from Entergy Corp. (NYSE: ETR). NorthStar is a portfolio company of private equity firm JF Lehman, while fellow portfolio company Waste Control Specialists would also be a partner in the deal. http://axios.link/2VHt

OpenGate Capital has completed its purchase of Jøtul Group, a Dutch manufacturer of residential stoves and fireplaces, from Ratos AB. www.jotul.com

Pamplona Capital Management and BlackRock have acquired Leesburg, Va.-based cybersecurity company PhishMe from Paladin Capital Group for around $400 million. http://axios.link/yNzJ

Public Offerings

⛽ ACWA Power, a Saudi developer of electricity and water projects, has picked JPMorgand and Citigroup to manage a Riyadh IPO that could raise upwards of $1 billion, according to Reuters. http://axios.link/EYwO

Bilibili, a Chinese animation streaming platform, has filed for a $400 million IPO. It plans to trade on the NYSE under ticker BILI, with Morgan Stanley as lead underwriter. The company reports a $28 million net loss on $379 million in revenue for 2017, and shareholders include IDG-Accel (7.6% pre-IPO stake), Legend Capital (5.9%) and Tencent (5.2%). http://axios.link/RKcA

🚑 Tasly Pharmaceutical Group, a Shanghai-listed medicine maker, is prepping a Hong Kong IPO for its biopharma unit that could raise up to $1 billion, according to Reuters. http://axios.link/Z65o

Volkswagen is prepping an IPO for its trucks business, according to Handelsblatt. http://axios.link/tBqN

Liquidity Events

🐻 Enesco, a portfolio company of Balmoral Funds, has agreed to sell stuffed toy brand GUND to Spin Master Corp. (TSX: TOY) for US$79.1 million. http://axios.link/YPbC

More M&A

⛽ Erasmo Battistella, CEO of Brazilian biodiesel company BSBios, said he plans to acquire the 50% stake in his company currently owned by state-run Petrobras. http://axios.link/aq3P

Hercules Capital (NYSE: HTGC) has acquired Gibraltar Business Capital, a provider of working capital to small and mid-market businesses. www.htgc.com

Qingdao Doublestar has agreed to acquire a 45% stake in listed South Korean tire maker Kumho Tire Co. for around $597 million. http://axios.link/L90z

Telia (Oslo: TELIA) has agreed to sell its 51.3% stake in Azerbaijan mobile operator Azercell for €222 million to state-owned Azintelecom. http://axios.link/Q0X6

Tesco (LSE: TSCO) has completed its £4 billion acquisition of British wholesaler Booker. http://axios.link/V80C

Fundraising

Liquid 2 Ventures, a seed-stage firm led by Joe Montana (yeah, that one), is raising up to $50 million for its second fund, per an SEC filing.

It's Personnel

Zoltan Berty has joined ORIX Mezzanine & Private Equity as a managing director. He previously was a managing director with Gladstone Capital. www.orixmpe.com

Greg Byrnes and Tom Wyler have joined PSP Capital as a managing director and SVP of global strategy and biz dev, respectively. Byrnes previously was a partner with Moorad Sports Partners, while Wyler worked in the U.S. Commerce Department under former Secretary (and PSP founder) Penny Pritzker. www.psppartners.com

Sarah Cannon has agreed to join Index Ventures as a U.S.-based partner. She previously was a principal with CapitalG. http://axios.link/aGFW

Matt Horten and Kevin Moore have joined VC fund-of-funds manager Spur Capital Partners as partners. Horten previously was chief investment officer at family office WSS Holdings, while Moore was director of angel investments at i2E. www.spurcapital.com

Ed Mallon, a former BlackRock managing director, has joined VC-backed fintech platform Pagaya as chief investment officer. www.pagaya-inv.com

Paul McElhinney, former CEO of GE Power Services, has joined AE Industrial Partners as an operating partner. He also will serve as a director of AEI portfolio companies Belcan and Kellstrom Aerospace. www.aeroequity.com

Final Numbers: Trade tariffs
Source: World Trade Organization
  • Go deeper: Inside the bitter Oval Office tariff fight
  • What to remember: Trump has not yet instituted any new tariffs, and even the White House "winners" on this — Peter Navarro and Wilbur Ross — gave themselves some wiggle room in Sunday show interviews, when it came to company exemptions/exclusions (no, they're not the same... but they got conflated in the interviews).
  • The latest: Trump this morning suggested via Twitter that he is using these tariffs as a cudgel in NAFTA negotiations — Canada is the top exporter of steel and aluminum to the U.S. — which might perk up some WTO ears, given that the White House is expected to implement the new tariffs via a national security rationale.
Dan Primack