Sep 25, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Greetings from D.C., where I'm in town for some Axios meetings. Quick reminder that you can send me tips and feedback via email (dan@axios.com) or anonymous message (http://axios.com/tips).

Top of the Morning
Source: Giphy

Federal restrictions on vaping sales might come sooner than expected, thus threatening an industry whose lead player, Juul, was recently valued by private market investors at over $15 billion.

Background: The FDA sent a letter earlier this month to e-cigarette companies, giving them 60 days to prove they can keep flavored products away from minors.

What's new: FDA Commissioner Scott Gottlieb this morning said at an Axios event that regulatory action could come as early as November. Not only could that include a ban on retail sales of flavored product, but also the launch of a rule-making process to restrict online sales of any tobacco products.

  • The FDA in November also is planning to release new e-cig usage data, which will show that year-over-year usage among high schoolers has risen by at least 80% (. It also will detail middle-school usage increases, which is lower than the high school figure but still quite high.
  • The vaping companies aren't tipping their hands, but expect them to suggest tech-based age verification solutions for both point-of-sale and online purchases. But it would be impossible for them to guarantee either one — the former because they can't really control a retail counter, and the latter because they can't effectively stop online resale. So it's really a question of what level of "proof" Gottlieb is really going to require to stem what he today termed a "public health emergency."
  • NJoy, an early e-cig company that went bankrupt in 2016 after having been valued at around $1.2 billion by private investors like Fidelity, just raised $49 million in new equity funding, per an SEC filing. Unclear if there are any new investors beyond Homewood Capital, which bought NJoy out of bankruptcy, but there is a new CEO whose last job appears to have been running a Los Angeles-area landscaping company.

Upside down: The markets didn't react too positively to the SiriusXM-Pandora merger announcement. Sirius stock fell over 6% and Pandora shares fell 7.6%. And that latter figure suggests Pandora shareholders believe Sirius will fall even lower, as the $8.98 per share close is a three cent discount to the current value of Sirius stock that they'll get when the merger closes.

Two D.C. events of note today:

  • Rep. Warren Davidson is hosting a Congressional roundtable on the future of cryptocurrency regulation. Expect it to include discussion of ICOs and crypto ETFs. Participants are expected to include those from federal regulatory agencies, Wall Street, venture capital and large crypto companies like Coinbase and Ripple.
  • A group of state attorneys general will meet with Jeff Sessions about "a growing concern that [social media] companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms."

Off its high: Medical marijuana purveyor Tilray shares finished just below $100 yesterday, after peaking at $300 per share in intra-day trading last week.

Today in Social Capital: It gets worse, according to a Business Insider report I have not yet been able to independently confirm (but am working on it).

Podcast: Our new episode focuses on for-profit colleges, and the Trump administration's efforts to roll back Obama-era oversight rules. Listen here.

The BFD
Source: Estrop/Getty Images

Michael Kors (NYSE: KORS) confirmed it has agreed to buy control of Italian fashion house Versace for $2.12 billion, and that it will rename the combined company Capri Holdings. Donatella Versace will continue to lead the label.

  • Why it's the BFD: Not only is Kors moving from "affordable luxury" into full-on luxury, but this is also a U.S. company daring to play in a part of the European fashion market that is relatively unaccustomed to outsiders.
  • Bottom line: "The push further into luxury serves also as a defense for the next economic downturn, more than a decade after the last one in the U.S. Those that can afford a Versace dress are among the most likely to continue to spend during a recession than those who shop more affordably, industry experts say." — Lauren Hirsch, CNBC
Venture Capital Deals

• OYO, an Indian budget hotel operator, raised $800 million in new funding (with another $200m expected). SoftBank Vision Fund led, and was joined by Lightspeed Venture Partners, Sequoia Capital and GreenOaks Capital. http://axios.link/ISBY

• Highspot, a Seattle-based provider of sales enablement software, raised $35 million in Series C funding. OpenView Venture Partners led, and was joined by Madrona Venture Group, Salesforce Ventures and Shasta Ventures. http://axios.link/55ZM

• Lionano, a Woburn, Mass.-based developer of performance-boosting solutions for lithium-ion batteries, raised $22 million in Series B funding from Wave Equity Partners, Helios Capital Ventures and NXT Ventures. http://axios.link/7zXE

• Snyk, a London-based startup that helps companies securely use open-source code, raised $22 million in Series B funding. Accel led, and was joined by GV and return backers Boldstart Ventures and Heavybit. http://axios.link/u2Qs

• Shopal, a Chinese provider of marketing solutions to online and offline retailers, raised $29 million in Series B funding led by Youngor Group Co. http://axios.link/U3S9

🚑 Luciole Medical, a Swiss maker of a device for measuring blood oxygen levels in the brain, raised around $5.5 million in Series A funding. SVC led, and was joined by Blue Ocean Ventures, Investiere and B-to-V. http://axios.link/b51K

• DreamTeam, a Ukrainian infrastructure platform and payment gateway for esports and gaming, raised $5 million in seed funding from Mangrove Capital Partners. http://axios.link/H01a

• Taxfyle, a Coral Gables, Fla.-based on-demand accounting platform, raised $4.1 million in Series A funding. Rokk3r led, and was joined by Ocean Azul Partners. http://axios.link/r84Z

🚑 MouSensor, a New York-based biotech startup that’s building a database of scent, raised $3.3 million in seed funding co-led by IMEC.xpand and Alexandria Venture Investments. www.mousensor.com

• Mode, a San Mateo, Calif.-based real-time sensor database, raised $3 million in a round led by True Ventures. http://axios.link/94UZ

Private Equity Deals

• Apax Partners bought Authority Brands, a Columbia, Md.-based franchisor of home services, from PNC Riverarch Capital.

• Audax Private Equity acquired a control stake in Acuant, a Culver City, Calif.-based provider of identity verification solutions, from Insight Venture Partners, Lightview Capital and Egis Capital Partners. www.acuantcorp.com

• TPG and Blackstone each submitted bids for a stake in the frequent flier loyalty program of India’s Jet Airways, per a local television report. http://axios.link/vkTo

Public Offerings

• Exyte, a German builder of semiconductor fabs, said it is planning a Frankfurt IPO for later this year. http://axios.link/SgEB

🚑 Kodiak Sciences, a Palo Alto, Calif.-based developer of antibodies for treating age-related macular degeneration, set IPO terms to 9 million shares at $13-$15. It would have a fully-diluted market value of $350 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq (KOD) with Morgan Stanley as lead underwriter, and raised over $30 million from firms like Baker Brothers, Perceptive Advisors and ArrowMark Partners.

• Niu Technologies, a Chinese e-scooter maker, filed for a $150 million IPO. It plans to trade on the Nasdaq (NIU) with Credit Suisse as lead underwriter. The company reports a $48 million net loss on $84 million in revenue for the first half of 2018. Shareholders include GGV Capital (11.2% stake). http://axios.link/5ZhP

• Valtech, a London-based provider of digital agency services, filed for a $100 million IPO. It plans to trade on the Nasdaq (VTEC) with JPMorgan as lead underwriter. The company reports $6 million of net income on $159 million in revenue for the first half of 2018, while shareholders include Verlinvest. www.valtech.com

Liquidity Events

• General Atlantic is selling MeteoGroup, a British provider of weather forecasting services, to Switzerland’s TBG AG. http://axios.link/WVRt

• Slack acquired Astro, a Palo Alto-based email assistant that had raised just over $10 million from firms like Redpoint Ventures, Upside Partnership, Aspect Ventures and Harrison Metal. http://axios.link/u0n4

More M&A

• Apple (Nasdaq: AAPL) completed its $400 million purchase of London-based music identification app Shazam, after receiving EU approval. http://axios.link/UVaI

• Careem, a UAE-based ride-hail company that reportedly is in talks to be bought by Uber, has acquired Indian mass transportation app Commut. www.commut.co

• China Baowu Steel Group is denying a Reuters report that it’s in talks to acquire rival Chinese steelmaker Magang Group.

• United Technologies (NYSE: UTX) is considering a sale of its Chubb fire and security unit for more than $3 billion, per Reuters. http://axios.link/O6gm

It's Personnel

• Gabriel Chahine joined turnaround firm AlixPartners as head of the Gulf region, including a to-be-opened office in Riyadh. He previously was with Strategy&.

• Stewart Hanlon joined Monroe Capital as co-head of technology. He previously was with White Oak Global Advisors. www.monroecap.com

Dan Primack