Dec 12, 2019

Axios Pro Rata

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

Governments around the world are taking a much closer look at proposed mergers, often on antitrust grounds, with bankers telling Axios that they've changed their approach with clients.

  • "We used to look for reasons that a regulator might object to a deal. Now we look at it from the opposite direction: We assume there will be objections, and then look for reasons why it won't get held up," said a senior deal-maker at a large Wall Street bank.

Some headlines from just the past week:

  • The U.S. Department of Justice is investigating Google's $2.1 billion purchase of fitness-tracking company FitBit.
  • Australian antitrust regulators are taking a harder look at Anheuser-Busch InBev’s $16 billion sale of Carlton & United Breweries to Japan's Asahi, over concerns about competition within the country's cider and beer markets.
  • British antitrust regulators have "serious competition concerns" over Amazon's decision to lead a $575 million investment in Deliveroo. This one is particularly notable because Amazon would only hold a minority stake.
  • Canadian transportation regulators are holding up Onex's C$3.5 billion deal for WestJet, over ownership rules.

The bottom line is that regulatory uncertainty is the new normal.

Also...

🎬 Casting call: Nicholas Braun (a.k.a. Cousin Greg) has been tapped to star in a limited series about the rise and fall of WeWork, based on an upcoming book from WSJ reporters Maureen Farrell and Eliot Brown. Yes, it's an inspired choice.

  • This is separate from the WeWork film based on an upcoming book from Fast Company's Katrina Brooker.
  • I asked for actor choices on the movie, and you delivered a lot of them.
    • Top picks for Adam Neumann were Ashton Kutcher, Adrian Brody and 1990's-era Keanu Reeves.
    • Jennifer Connelly came up twice for Rebekah Neumann.
    • One reader wondered if Marvel would lend out its Thanos CGI for Masa Son.

More WeWork: The company has sold SEO and content marketing company Conductor back to management, less than two years after buying it.

  • uCommune, WeWork's largest rival in China, yesterday filed for a $100 million IPO on the NYSE. This will test investor interest for WeWork's business model, minus the governance issues but possibly not without the valuation issues. Citi and Credit Suisse both were supposed to work on uCommune's IPO, but reportedly walked "over the past few days" after being unable to agree on valuation with company management.

Proxy Fight: Monday's BFD was Institutional Shareholder Services' recommendation that Hudson's Bay Co. shareholders vote against a C$1.9 billion takeover offer from company chairman Richard Baker, Rhone Capital, and WeWork Industrial Trust.

  • At issue was a richer offer from private equity firm Catalyst Capital Group.
  • But, yesterday, rival proxy advisor Glass Lewis said Hudson's Bay shareholders should support the Baker bid, arguing that it's more viable than Catalyst's.

🎧 Pro Rata Podcast digs into the business and political fight over surprise medical bills, in which private equity plays a central role. Listen here.

The BFD

Illustration: Eniola Odetunde/Axios

Nestlé agreed to sell its U.S. ice cream business for $4 billion to Froneri, a joint venture Nestlé formed in 2016 with private equity firm PAI Partners.

  • Why it's the BFD: This is America's second-largest ice cream group, but it's been losing market share to leader Unilever. Nestlé's plan is to follow the growth model it successfully used in Europe, under similar circumstances, whereby it merged operations with PAI-owned R&R Group to create Froneri.
  • Brands included in the deal are Häagen-Dazs, Drumstick, Edy’s, Dreyer’s, Outshine, and Skinny Cow.
  • Bottom line: "Americans eat more ice cream per capita than any other people in the world, with most bought in supermarkets for consumption at home, leaving the category open to intense discounting." — Saabira Chaudhuri, WSJ
Venture Capital Deals

LeanTaaS, a Santa Clara, Calif.-based provider of SaaS for managing operating room and infusion center operations, raised $40 million in Series C funding led by Goldman Sachs. http://axios.link/sOEI

PrecisionHawk, a Raleigh, N.C.-based developer of drones for the enterprise, raised $32 million from Millennium Technology Value Partners, Third Point Ventures, Eastward Capital Partners, and others. http://axios.link/uzc0

Viridi Parente, a Buffalo, N.Y.-based maker of renewable power systems for heavy machinery and storage applications, raised $29 million in Series B funding led by Grand Oaks Capital. http://axios.link/7MOU

Notal Vision, a Manassas, Va.-based provider of ophthalmic diagnostic services, raised $25 million from backers like Ganot Capital. http://axios.link/lNRf

LeanDNA, an Austin, Texas-based analytics platform for factory management, raised $15 million in Series B funding. S3 Ventures led, and was joined by return backer Next Coast Ventures. http://axios.link/s4d3

Yubo, a French social media app for teens and young adults, raised $12.3 million. Iris Capital and Idinvest Partners co-led, and were joined by return backers Alven, Sweet Capital, and Village Global. http://axios.link/wrhj

Augury, a New York-based industrial IoT startup focused on mechanical diagnostics, raised $8 million from Qualcomm Ventures. www.augury.com

Camino Financial, a Los Angeles-based online lending platform for small Latinx businesses, raised $8 million in Series A funding led by Crédito Real. http://axios.link/bLyx

🚑 Laudio, a Boston-based personalized management platform for healthcare organizations, raised $7.3 million in Series A funding. InHealth Ventures and .406 Ventures co-led, and were joined by MemorialCare Innovation Fund. http://axios.link/qwwR

Portify, a London-based fintech startup focused on gig economy workers, raised £7 million in Series A funding. Redalpine led, and was joined by return backers Kindred and Entrepreneur First. http://axios.link/MPkP

🚑 Zero Card, a healthcare services marketplace for self-funded employers, raised $7 million in Series A funding. George Kaiser Family Foundation led, and was joined by Rise of the Rest. http://axios.link/SL2J

Bridge Connector, a Nashville-based workflow automation startup focused on health IT interoperability, raised $5 million. Jeff Vinik led, and was joined by return backer Axioma Ventures. http://axios.link/rxiM

The Renewal Workshop, a Cascade Locks, Ore.-based textile renewal startup, raised $5.5 million in Series A funding co-led by Social Impact Ventures, SHIFT Invest, and Quadia. http://axios.link/UV2v

Paragraf, a UK-based graphene electronics startup, raised £3.4 million in Series A funding led by Parkwalk. http://axios.link/JyfB

Arthur, a startup that monitors machine learning model performance, raised $3.3 million in seed funding. Work-Bench and Index Ventures co-led, and were joined by Homebrew and AME Ventures. http://axios.link/MVOK

Kinside, a childcare benefits startup, raised $3 million led by Initialized Capital. http://axios.link/CC0m

Private Equity Deals

Acquia, a Boston-based portfolio company of Vista Equity Partners, acquired AgilOne, a customer behavior data platform that had raised $41 million in VC funding from Sequoia Capital, Mayfield, Next World Capital, Tenaya Capital, and Four Rivers Group. http://axios.link/emzZ

CVC Capital Partners agreed to buy a majority stake in WebPros, a Swiss webhosting software company, from Oakley Capital (which retains a minority stake). Earlier reports were that a deal could be valued at between $1.2-$1.5 billion. http://axios.link/VVcV

FineLine Technologies, a Norcross, Ga.-based portfolio company of Summit Partners, acquired Consolidated Printing, a commercial printer of tickers for sporting events and major entertainment venues. www.teamcpi.com

Francisco Partners and Elliott Management are in talks to buy Boston-based workplace software company LogMeIn (Nasdaq: LOGM) for more than $4 billion, per Bloomberg. http://axios.link/3wXl

Growth Street Partners acquired a minority stake in HR Acuity, a Florham Park, N.J.-based provider of software to manage, track, and investigate employee issues. www.hracuity.com

KKR completed its $794 million purchase of a 70% stake in the China lighting business of NVC International (HK: 2222). www.kkr.com

One Equity Partners acquired a minority stake in Nexion, an Italian auto aftermarket solutions company.

🚑 VirTrial, an Essex, Va.-based portfolio company of Kinderhook Industries, acquired SnapMD Healthcare, a Glendale, Calif.-based provider of telemedicine tools and services. www.virtrial.com

Public Offerings

Bill.com, a Palo Alto-based provider of payment processing software for SMEs, raised $216 million in its IPO. The company pieced 8.8 million shares at $22 (above upsized range), for an initial market cap of $1.55 billion. It will trade on the NYSE (BILL) with Goldman Sachs as lead underwriter, and previously raised $320 million in VC funding from DCM, August Capita, Ossa Investments, Emergence Capital, Financial Partners, Scale Venture Partners, and Icon Ventures.

eHang, a Chinese drone-maker, raised $40 million in its IPO. The company priced 4.2 million shares at $12.50 (low end of range), for a fully-diluted market cap of $687 million. It will trade on the Nasdaq (EH) and used Morgan Stanley as lead underwriter. Backers include GGV Capital and Zhen Partners.

Triple Flag Precious Metals, a Toronto-based mine financier backed by Elliott Management, scrapped a planned Toronto IPO that could have raised $360 million, citing low investor demand. http://axios.link/Qa71

More M&A

Aurubis (DE: NAFG), Europe’s largest copper producer, said it’s in talks to sell its flat-rolled products unit. http://axios.link/8orh

Haier, the world’s largest household appliance maker, is planning a restructure that would lists its main unit in Hong Kong (it’s already listed in Shanghai) and then take its electronics group private for around $7.7 billion, per Reuters. http://axios.link/8IuC

Nomura agreed to acquire Greentech Capital Advisors, a boutique investment bank focused on sustainable tech and infrastructure. www.greentechcapital.com

🚑 Petrobras of Brazil has begun a sale process for its remaining 10% stake in natural gas pipeline operator TAG, after selling a 90% stake to France’s Engie and Canada’s CDPQ for $8.6 billion. Engie is expected to bid on the position. http://axios.link/OdiT

Fundraising

Piva, a San Francisco-based VC firm focused on industrial and energy tech, raised $250 million for its debut fund from Malaysia’s Petroliam Nasional Berhad. http://axios.link/jhZN

It's Personnel

Canaan Partners promoted both Brendan Dickinson (NYC, fintech) and Julie Grant (SF, biotech) to general partners. www.canaan.com

Shasta Ventures promoted Avery Cannon to CEO, succeeding Austin Grose (who will continue to serve as a venture partner). www.shastaventures.com

Dan Primack

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