May 18, 2020

Axios Pro Rata

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Top of the Morning

Illustration: Eniola Odetunde/Axios

Democratic politicians are coming out in strong opposition to a merger that doesn't yet exist.

Driving the news: Sen. Amy Klobuchar (D-Minn.), a possible running mate for Joe Biden, yesterday tweeted: "If Uber takes over Grubhub it isn’t good for competition and it isn’t good for you."

  • This follows an even more bombastic statement from Rep. David Cicilline (D-R.I.), chair of the House Judiciary's antitrust subcommittee, who called the possible deal "a new low in pandemic profiteering."

State of play: The two sides hadn't agreed on price as of yesterday, per multiple sources, let along the dozen or so other items that would have to be subsequently decided.

  • Grubhub rejected a reported offer of 1.9 Uber shares per Grubhub share.
  • Uber stock soared upon initial reports of a possible deal ⁠— at one point adding creating around $5.2 billion in extra value, compared to a proposed deal value just shy of $6 billion. Grubhub's calculation is that markets typically discount deal rumors by around 20%, which means Uber's offer was too low.

What dealmakers aren’t discussing is the Democratic opposition.

  • One source close to the deal hadn’t even seen the Klobuchar tweet when I rang yesterday afternoon (“Can you read it to me?).
  • Uber never offered to buy Lyft because of antitrust concerns, but that would have been consolidating two major players into one. In this case, Uber-Grub would barely have more market share than DoorDash.
  • Congress can make lots of noise, but it can’t actually sue to block a merger. That’s up to an Executive Branch department like the DOJ or FTC. As one source familiar with Uber texted me: “Might as well take a shot on goal while Trump is still in office.”
  • Cicilline could hold hearings into the merger, but Klobuchar would need buy-in from Sen. Mike Lee (R-Utah), who chairs the Senate Judiciary Committee’s antitrust subcommittee.

But, again, there is no deal yet to oppose (or support), which means it's more about political posturing than policy-making. It's also remarkable to hear the sound and fury over Uber/Grubhub, and not a political peep over Facebook's agreement to buy Giphy.

  • Deal or no deal, most everyone agrees that the prices for meal delivery must rise, as Uber EATS, Grubhub, Doordash, and Postmates are all unprofitable.
  • There is a legit debate over who should bear those increased costs – as many restaurants argue they already are being charged past their margin breaking point – but consolidation alone won’t be the reason for higher fees.
  • Unprofitability could work its way into an antitrust defense, kind of like what Amazon used in the U.K. to defend its investment in struggling food delivery company Deliveroo.

Go deeper: Antitrust clouds darken over emboldened tech giants

Update: An earlier version of this story misstated the reported price that Grubhub rejected.


Illustration: Aïda Amer/Axios

General Atlantic agreed to invest $870 million into Jio Platforms, the telecom and tech subsidiary of Indian conglomerate Reliance Industries, at a $65 billion valuation.

  • Why it's the BFD: Jio is the world's largest mobile provider in the world's second-largest country, with around 35% market share and 400 million subscribers. It also is General Atlantic's largest-ever investment in Asia, despite a long history in the region.
  • Context: This is Jio's fourth major investment in the past month, following infusions from Facebook ($5.7b), Silver Lake ($750m) and Vista Equity ($1.5b). Expect a few more deals to be announced shortly, with Jio to go public in a couple of years.
  • The bottom line: Investors are betting on Jio being the infrastructure for India's shift to digital, and becoming a local mobile champion in a country dominated by foreign players like Facebook/WhatsApp and Google.
Pro Rata for Kids

Today’s project is for your kids to recreate a scene from their favorite movie, TV show, or book. Costumes, props, etc.

  • Per usual, please send me photos of what they come up with.
Venture Capital Deals

Wolt, a Finnish food delivery company, raised €100 million from Goldman Sachs Growth Equity and return backers Iconiq Capital, Highland Europe, 83North, and EQT Ventures.

🚑 SQZ Biotech, a Watertown, Mass.-based cell therapy, raised $65 million in Series D funding. Temasek led, and was joined by GV, Illumina Ventures, Invus, JDRF T1D Fund, NanoDimension, and Polaris Partners.

🚑 Holmusk, a Singapore-based real-world evidence platform for mental health, raised $21.5 million. Optum Ventures and Health Catalyst Capital co-led, and were joined by return backer Heritas Capital.

🚑 Gatt Technologies, a Dutch developer of hemostatic solutions, raised €10.5 million in Series B funding. NGI led, and was joined by J&J Innovation and Oost.

Fly Now Pay Later, a London-based provider of payment tech for travel, raised £5 million in Series A equity funding and another £30 million in debt funding. Revenio Capital led, and was joined by Shawbrook Bank and BCI Finance.

SenseTime, a Hong Kong-based developer of facial recognition technology, is seeking to raise upwards of $1 billion at a $9.5 billion valuation, per the WSJ.

Private Equity Deals

🚑 ArchiMed acquired ActiGraph, a Pensacola, Fla.-based developer of wearable remote monitors for drug trials.

CVC Capital Partners entered exclusive talks to buy a 20% stake in Italy’s Serie A soccer league for €2.2 billion, per the FT.

Gavilan Resources, a Houston-based shale driller formed by The Blackstone Group, filed for Chapter 11 bankruptcy protection.

TA Associates agreed to invest in Hong Kong-based commercial insurance broker Honan Insurance Group.

Triton acquired a majority stake in Lamina Technologies, a Swiss manufacturer of carbide cutting tools.

Virgin Australia (ASX: VAH) short-listed Bain Capital, BGH Capital, Indigo Partners, and Cyrus Capital Partners for the second round of its takeover auction, per Reuters.

Public Offering

SelectQuote, an Overland Park, Kansas-based insurance policy comparison site, is expected to go public this week, in what could be the largest U.S. IPO since February. The week’s only other planned IPO is a SPAC from B. Riley Financial.

🚑 Inari Medical, an Irvine, Calif.-based maker of medical devices for treating venous diseases, set IPO terms to 7.33 million shares at $14-$16. It would have an initial market cap of $691 million, were it to price in the middle, and plans to list on the Nasdaq (NARI) with BAML as lead underwriter. The company reports a $1 million net loss on $51 million in 2019 revenue, and raised $53 million in VC funding from such firms as USVP (20% pre-IPO stake), Gilde Healthcare (19.6%), Versant Ventures (14.9%), and Crown Venture Fund (8.9%).

Saudi Arabia Public Investment Fund is considering an IPO of information security company Elm, per Reuters.

Shift4 Payments, an Allentown, Penn.-based payment tech company owned by Searchlight Capital Partners, filed for a $100 million IPO. It plans to list on the NYSE (FOUR) with Citigroup as lead underwriter, and reports a $5.2 million net loss on $199 million in revenue for Q1 2020.

Liquidity Events

AppLovin, a Palo Alto-based mobile ad network backed by KKR, acquired mobile game maker Machine Zone for around $500 million, per Bloomberg. Machine Zone had raised $725 million in VC funding, including at a $5 billion valuation in 2016, from firms like Menlo Ventures, KKR, Orient Hontai Capital, J.P. Morgan, Anthos Capital, SV Angel, and Baseline Ventures.

More M&A

Eni (Milan: ENI) hired Citi to find a buyer for upwards of $1 billion worth of natural gas assets in Australia, per Reuters.

First Abu Dhabi Bank tabled talks to acquire the Egyptian assets of Lebanon’s Bank Audi, per Reuters.

🚑 Thermo Fisher Scientific (NYSE: TMO) launched its $11.5 billion takeover offer for German genetic testing company Qiagen (DE: QIA), calling on investors to tender their shares at €39 a piece.

Total (Paris: TOTF) agreed to buy a portfolio of 2.5 million business customers from Energías de Portugal (LS: EDP), plus two gas-fired combined cycle power plants.


Bain Capital plans to seek around $9 billion for its 13th flagship buyout fund, per Bloomberg.

EIG Global Energy Partners raised $1.1 billion for its fifth fund, which focuses on direct lending to the energy and infrastructure sectors.

Northgate Capital secured $70 million for its seventh VC fund-of-funds, which is targeting a total of $250 million, per an SEC filing.

It's Personnel

Gaurav Trehan is joining KKR as head of India private equity, after having spent the past 16 years with TPG Capital, per Bloomberg.

Warburg Pincus named managing directors René Obermann and Adarsh Sarma as co-heads of European activities, effective June 1.

Final Numbers: SoftBank Vision Fund
Source: SoftBank earnings report. Data through March 31, 2020.
  • SoftBank Group reiterated that fundraising is paused for Vision Fund 2, and announced that Alibaba founder Jack Ma is leaving the board after 13 years.
  • Go deeper: SoftBank reports $18 billion loss

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