Jul 13, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Credit: Buena Vista Pictures

The IPO window is out. The SPAC vacuum is in.

Driving the news: Churchill Capital Corp. III agreed to acquire health cost management services provider Multiplan at an initial enterprise value of $11 billion.

  • This is the largest-ever SPAC merger, and also includes the largest-ever PIPE associated with a SPAC.
  • Existing Multiplan owners like Hellman & Friedman will roll over more than 75% of their collective stake, and own over 60% of the public company.
  • A source tells Axios that negotiations began before the pandemic.

This too: Spartan Energy Acquisition Corp., a SPAC backed by Apollo Global Management, agreed to buy electric car maker Fisker at a $2.9 billion enterprise value.

Oh, and this: Two more SPACs on Friday filed to go public.

Why now? SPACs have been around for years, but what we're seeing now seems largely driven by public equity froth.

  • Stock markets are salivating for almost any new issue, whether or not it includes an operating company. That's the perfect petri dish for SPACs, and they're raising billions.
  • IPOs are also going gangbusters, but often take longer to complete with far more disclosure than do reverse mergers via SPAC. Plus there's rampant underpricing. So why not strike while the iron is hot and (relatively) easy?

Going public via SPAC does have some downsides. For example, you still need shareholder approval, could get hammered by redemptions, and need to give a large slice of economics to the SPAC sponsor.

The bottom line: SPACs, not direct listings, are the 2020 challenge to IPOs and IPO bankers.

The BFD

Illustration: Rebecca Zisser / Axios

Analog Devices (Nasdaq: ADI) agreed to buy Maxim Integrated Products (Nasdaq: MXIM) in an all-stock deal valued at $20.9 billion.

  • Why it's the BFD: This would be the year's largest tech merger so far.
  • Details: Analog will pay the equivalent of $78.43 per Maxim share, which represents a 22% premium to Friday's closing price. Following the deal, Analog shareholders would hold around 69% of the combined company.
  • The bottom line: "Analog Devices is currently less than half the size of market leader Texas Instruments by revenue. While Maxim wouldn’t allow it to close the gap totally, it would broaden the range of products in the analog portfolio, something that Texas Instruments has touted as helping to cement its dominance." ⁠— Liana Baker & Ian King, Bloomberg
Venture Capital Deals

Illustration: Sarah Grillo/Axios

Robinhood, a no-fee digital brokerage, raised $320 million in new Series F funding at an $8.6 billion valuation from such backers as TSG Consumer Partners and IVP. This follows a $280 million first close on the round that was announced in May.

UiPath, a New York-based developer of robotic process automation software, raised $225 million in Series E funding, at a $10.2 billion post-money valuation. Alkeon led, and was joined by Accel, Coatue, Dragoneer, IVP, Madrona Venture Group, Sequoia Capital, Tencent, Tiger Global, Wellington, T. Rowe Price. http://axios.link/efgk

🚑 Paige, a New York-based computational pathology startup, raised $20 million in new Series B funding from Goldman Sachs Merchant Banking and Healthcare Venture Partners. www.paige.ai

K4Connect, a Raleigh, N.C.-based provider of smart home and on-demand app integration for senior-living facilities, raised $7.7 million in new Series B funding led by Forte Ventures. www.k4connect.com

Swap, a Brazilian platform for developing fintech products, raised $3.3 million in Series A funding led by OneVC. http://axios.link/clKV

Private Equity Deals

H.I.G. Capital acquired a control stake in Project Informatica, an Italian IT consultant. www.project.it

KCM Capital Partners acquired Mason West, a Placentia, Calif.-based provider of engineered seismic restraint and vibration isolation products. www.masonwest.com

Presidio Petroleum, a Fort Worth, Texas-based portfolio company of Morgan Stanley Energy Partners, won a bankruptcy auction for Oklahoma City-based E&P company Templar Energy. http://axios.link/oDPs

Public Offerings

Nine companies and one SPAC plan to raise around $1.5 billion in IPOs this week. http://axios.link/9T1Y

IBEX, a Bermuda-based customer support services provider being spun out of The Resources Group International, filed for an IPO. It previously filed for a $60 million IPO in 2018, but later withdrew the offering, and plans to list on the Nasdaq (IBEX) with Citigroup as lead underwriter. http://axios.link/9IQn

Li Auto, a Chinese maker of electric SUVs, filed for a $100 million IPO. It plans to list on the Nasdaq (LI) with Goldman Sachs (Asia) as lead underwriter, and reports an $11 million net loss on $120 million in revenue for Q1 2020. http://axios.link/Xx6b

NewHold Investment, a SPAC targeting an industrial tech business, filed for a $150 million IOPO. It’s led by Kevin Charlton, co-founder of private equity firm River Hollow Partners. http://axios.link/O8Eq

🚑 Oak Street Health, a Chicago-based operator of primary health clinics, filed for a $100 million IPO. It plans to list on the NYSE (OSH) with JPMorgan as lead underwriter, and reports a $15 million net loss on $202 million in revenue for Q1 2020. Shareholders include General Atlantic, Humana, and Harbour Point Capital. http://axios.link/bCWG

Rackspace, a San Antonio-based managed cloud solutions company owned by Apollo Global Management, filed for an IPO that Renaissance Capital estimates could raise $1 billion. It plans to list on the Nasdaq (RXT) with Goldman Sachs as lead underwriter, and reports a $48 million net loss on $653 million in revenue for Q1 2020. http://axios.link/QdhJ

Vistas Media Acquisition, a SPAC targeting a media or entertainment business, filed for a $100 million IPO. It’s led by Jacob Cherian, whose prior SPAC acquired Simplicity Esports and Gaming. http://axios.link/7kV3

Liquidity Events

Hewlett Packard Enterprise (NYSE: HPE) will pay $925 million to buy Silver Peak Systems, a Santa Clara, Calif.-based networking company that had raised over $200 million from firms like Greylock, Benchmark, Artias Capital and TCV, and could fetch around $1 billion. http://axios.link/cQWR

🎧 SiriusXM (Nasdaq: SIRI) agreed to buy podcast player Stitcher from E.W. Scripps (Nasdaq: SSP) for $325 million. http://axios.link/8iIk

More M&A

Chatham Asset Management, a New Jersey-based hedge fund manager whose assets include the National Enquirer, won a bankruptcy auction for McClatchy, America's second largest newspaper chain. http://axios.link/eovv

Jack Ma lowered his stake in Alibaba Group (NYSE: BABA) over the past year from 6.2% to 4.48%, per an annual filing. At its current share price, the divestitures are valued at around $8.2 billion. http://axios.link/TPVa

KLM, the Dutch unit of airline Air France-KLN (Paris: AIRF) received EU approval for a €3.4 billion bailout package from the Dutch government. http://axios.link/sXmn

Qualcomm agreed to invest $97 million in Indian telco Reliance Jio Platforms. http://axios.link/YT3s

RTW Retailwinds, parent company of retailer New York & Co., filed for Chapter 11 bankruptcy protection.

Fundraising

Actis held a $2.9 billion first close on its fifth renewable energy fund, which is targeting a total of $4 billion, per the WSJ. http://axios.link/qss7

It's Personnel

Giuseppe De Filippo is leaving UBS to joined Swiss wealth manager Julius Baer as head of a new unit that will offer private equity and debt investments to select clients. http://axios.link/kVra

Pascal Meysson joined H.I.G. Capital as a managing director and head of European direct lending. He previously was a managing director with Alcentra. www.higcapital.com

Bessemer Venture Partners promoted Trevor Neff to vice president. www.bvp.com

Final Numbers
Source: Refinitiv Deals Intelligence. Data through July 9
Dan Primack

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