Nov 8, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

📺 This Sunday's episode of "Axios on HBO" includes an interview with Uber CEO Dara Khosrowshahi, where we talk everything from profits to Saudi Arabia. Plus: five whistle-blowers discuss the life-changing costs of their actions, and a trip to the Mexico border followed by exclusive interviews with U.S. immigration officials Ken Cuccinelli and Mark Morgan.

Top of the Morning

Illustration: Lazaro Gamio/Axios

The $26 billion merger between T-Mobile US and Sprint might be worth less than $26 billion.

  • That's the word from T-Mobile CEO John Legere, who acknowledged in a webcast that the two sides are in talks after their original merger agreement expired last Friday.

State of play: The mega-merger already won regulatory approval from the DOJ and FCC, but remains the subject of litigation by 10 state attorneys general.

Legere says the two companies remain committed to closing the deal, and have made unfruitful settlement offers to the state AGs. He's also dangling all sorts of 5G carrots to legislators and consumers, but adds that the original deal expiration means some terms may need to be renegotiated:

"How do you handle things that have happened that need to possibly to be indemnified, how do you agree on future things that you will share in order to settle the deal? It’s a broad array of things... It’s not a hostile conversation. It’s an active one."

Collateral damage: The prospect of a price cut is bad news for Sprint owner SoftBank, which already was sweating the rising merger costs from the delay and litigation. The last thing Masa Son needs right now is more headaches and less cash.

Speaking of SoftBank: Vision Fund CFO Navneet Govil tells the WSJ's Katie Roof that critics mistook giant checks for investment strategy: "There was never the belief that more money would make a company successful."

  • That wheezing sound you hear is people laughing so hard they can't breath.

It's not just tech unicorns: Waste management firm GFL Environmental has indefinitely postponed what would have been the largest-ever U.S. IPO of a Canadian company.

  • GFL sought to raise upwards of $2.4 billion by pricing shares at between $20-$24.
  • It was faced instead with pricing at $18 per share, and opted to walk.
  • GFL has red ink in common with many of the tech unicorns, although its big losses are largely due to debt from a 2018 buyout led by BC Partners.

🎧 Pro Rata Podcast digs into the growing controversy over TikTok, including a new CFIUS investigation into its 2017 purchase of Music.ly. I'm joined by Sen. Marsha Blackburn (R-TN). Listen here.

The BFD
Source: Giphy

Cue & Co., a Chinese digital marketing agency, reportedly hired bankers for a U.S. IPO that could seek to raise upwards of $400 million at a $2 billion valuation.

  • Why it's the BFD: This is the latest in a flurry of U.S. IPO activity by Chinese companies, reflecting how no one in either country is taking Washington's de-listings threat seriously.
  • History: Cue was formed in early 2019 when KKR backed a roll-up of four Chinese digital ad agencies. It then raised an undisclosed amount of Series A funding from Anchor Equity Partners and Princeville Global.
  • Bottom line: "Cue works with Chinese tech companies like ByteDance, Baidu and Tencent to source advertising on their popular Chinese apps like WeChat, Douyin, Jinri Toutiao, and Kuaishou." — Scott Murdoch & Julie Zhu, Reuters
Venture Capital Deals

🚑 Arkuda Therapeutics, a Cambridge, Mass.-based biotech focused on dementia, raised $44 million in Series A funding. Atlas Venture and Pfizer Ventures co-led, and were joined by Tekla Capital and BioInnovation Capital. http://axios.link/yEwD

Snapdocs, a San Francisco-based home mortgage closing platform, raised $25 million in Series B funding. F-Prime Capital led, and was joined by return backers Sequoia Capital, Freestyle Capital, and Founders Fund. http://axios.link/HZvD

Wrench, a Seattle-based on-demand vehicle repair service for consumers and fleets, raised $20 million in Series C funding. Vulcan Capital led, and was joined by Marubeni Corp. and return backers Madrona Venture Group and Tenaya Capital. http://axios.link/hghI

Extend, a San Francisco-based extended warranties-as-a-service startup, raised $16.4 million. GreatPoint Ventures led, and was joined by Pritzker Group VC, Lightbank, and Shah Capital Partners. www.extend.com

Nightfall, a San Francisco-based data loss prevention platform, raised $15.5 million in Series A funding co-led by Bain Capital Ventures and Venrock. http://axios.link/Uler

LogRocket, a Cambridge, Mass.-based startup focused on identifying and fixing software bugs, raised $15 million in Series B funding led by Battery Ventures. http://axios.link/OYZ2

Ursa, an Ithaca, N.Y.-based geospatial analytics-as-a-service startup, raised $15 million in Series B funding. Razor’s Edge Ventures led, and was joined by New York City Ventures, Paladin Capital Group, RRE Ventures, and S&P Global. http://axios.link/zZen

Anonos, a Princeton, N.J.-based data privacy platform, raised $12 million led by Edison Partners. http://axios.link/ee5I

📺 Octopus Interactive, a Bethesda, Md.-based provider of interactive TVs in taxis and ride-hail vehicles, raised $10.3 million led by Sinclair Digital Group. http://axios.link/UNHb

Cover Genius, a New York-based insuretech startup focused on e-commerce customers, raised $10 million in Series B funding. King River Capital led, and was joined by the Belfer Family, Jasper Tans, Regal Funds Management, and Marinya Capital. www.covergenius.com

Replenium, a Seattle-based provider of retail subscription and automated replenishment SaaS, raised $8 million in Series A funding led by GLP. http://axios.link/OTNp

Aircam, a “real-time photo-sharing platform for professional and consumer photos,” raised $6.5 million in seed funding. Upfront Ventures led, and was joined by Comcast Ventures. http://axios.link/Bh6L

Private Equity Deals

DoubleVerify, a New York-based portfolio company of Providence Equity Partners, acquired Ad-Juster, a San Diego-based provider of analytics SaaS for digital publishers, from Innotech Capitals. www.doubleverify.com

Gemspring Capital invested in Crafty Apes, a visual effects company with offices in Atlanta, LA, and New York. www.craftyapes.com

🍅 Hanover Partners acquired Westside, a Madera, Calif.-based maker of tomato and pistachio harvesting equipment. www.westsideequipment.com

Kaho Partners acquired North American Manufacturing, a Scranton, Penn.-based provider of rugged field equipment to the U.S. military.

NSi Industries, a Huntersville, N.C.-based portfolio company of Blue Sea Capital, acquired SullStar Technologies, a Simi Valley, Calif.-based maker of telecom and datacom connectors. http://axios.link/qZCV

Public Offerings

🚑 Centogene, a German rare disease diagnostics startup, raised $56 million in its IPO. The company priced 4 million shares at $14 (low end of range), for a fully-diluted market value of $289 million shares, and will trade on the Nasdaq (CNTG) with SVB Leerink and Evercore ISI as lead underwriters. Backers include TVM Capital Life Science. http://axios.link/APtb

F5 Finishes, a Livermore, Calif.-based commercial flooring company, filed for a $49 million IPO. It plans to trade on the Nasdaq (FLRZ) with Maxim Group and Zelman Partners as lead underwriters, and reportedly nearly $1 million of net income on $54 million in revenue for the first half of 2019. http://axios.link/KJja

SITime, a Santa Clara, Calif.-based MEMS company being spun off of Japan’s MegaChips, set IPO terms to 4.3 million shares at $13-$15. It would have a market cap of $200 million, were it to price in the middle, and plans to trade on the Nasdaq (SITM) with Barclays as lead underwriter. http://axios.link/zMxI

Liquidity Events

Breitling, a Swiss luxury watchmaker, completed a €269 million leveraged recap that includes a €130 million dividend to majority-owner CVC Capital Partners. http://axios.link/N1XB

More M&A

Air Liquide (Paris: AI) is seeking a buyer for German disinfectants maker Schuelke, which could fetch upwards of €1 billion, per Reuters. http://axios.link/ic7A

Alibaba (NYSE: BABA) will invest another $3.33 billion into Chinese logistics company Cainiao, increasing its equity stake from 51% to 63%. http://axios.link/Evny

Calbee (Tokyo: 2229) acquired Warnock Food Products, a Madera, Calif.-based contract manufacturer of snack foods. www.warnockfoods.com

Carrefour (Paris: CARR) is in talks to sell its Rue du Commerce unit to French e-commerce company Shopinvest. http://axios.link/5GoH

DuPont (NYSE: DD) is considering a sale process for its transportation and industrial unit, which generated $1.5 billion in 2018 EBITDA, per Bloomberg. http://axios.link/uIFZ

Equinor (Oslo: EQNR) agreed to sell its shale assets in South Texas’ Eagle Ford to Repsol (Madrid: REP) for $325 million. http://axios.link/BfUm

Veeva (NYSE: VEEV) acquired Physicians World, a Lyndhurst, N.J.-based provider of speakers bureau services. http://axios.link/YQBS

Fundraising

Acton Capital, a German growth equity firm, raised $215 million for its fifth fund. www.actoncapital.com

Newbury Partners, a Connecticut-based private equity firm, is raising up to $1.75 billion for its fifth fund, per an SEC filing. www.newbury-partners.com

Pathlight Capital raised $540 million for its debut fund, which will make asset-based loans. www.pathlightcapital.com

It's Personnel

Jeff Steinhorn joined Connecticut-based private equity firm Gridiron Capital as an operating partner. He previously was a CIO for Johnson & Johnson. www.gridironcapital.com

TowerBrook Capital Partners promoted Jonathan Bilzin and Karim Saddi to newly-created co-president roles. It also named Andrew Rolfe as vice chairman, Gordon Holmes and CIO, and added CFO Jennifer Glassman to the firm’s management committee. http://axios.link/k5rc

Final Numbers: VC round price changes
Source: Fenwick & West quarterly VC Survey
Dan Primack

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