Nov 28, 2017

Axios Pro Rata

Early greetings from 30,000 feet, as I'm heading down to D.C. for some meetings at Axios HQ. And big congrats to flight attendant Bette Nash, who is celebrating her 60th year with American Airlines (an NBC Nightly News crew is filming on the plane, and you can watch tonight). Okay, here we go...

Top of the Morning

SoftBank today is expected to launch its long-awaited tender for Uber shares, with an opening gambit that would value the company at around $48 billion. What to know:

  • This deal is not getting done at that price. SoftBank has spent the past month engaged in price discovery, and is now low-balling so as to make its eventual increase look generous.
  • Expect some early employees to bite, given that it's exhausting to be a paper millionaire who has to keep dodging rent collectors. And all indications are that chairman Garrett Camp will tender shares. Later-stage investors are unlikely to bite, given the prices they initially paid. The real questions revolve around early shareholders like Benchmark, First Round Capital and Menlo Ventures, which may feel the governance changes tied to this deal will create more long-term value than what is being lost in the short-term. And then there is the Google Ventures wildcard, particularly given the Waymo litigation and its sister firm's recent investment in Lyft.
  • Reminder that the most recent 409a valuation works out to around $60 billion, and the discount on that number is far more consequential than the discount on the last private funding round.
  • Potential sellers will have 20 business days to tender, and expectations are that most paperwork will be submitted late in the process. If the tender were to fail, SoftBank couldrestart the process in January.
  • Three days ago I would have said that most sellers will value Uber's strong financial performance and continued growth more than its many PR nightmares, particularly given that a new CEO is now in charge. However, the revelation that Dara Khosrowshahi told SoftBank about its 2016 data breach weeks before telling the public has taken some shine off his nascent regime.
  • Speaking of the hack, some valuation context: SoftBank is asking for around a 30% discount to Uber's last valuation. Equifax currently is trading 21% lower to its pre-hack price, and obviously the Equifax situation was much more consequential for users.
  • Related: SoftBank Vision Fund announced its $93 billion first close on May 20, and said it would hold a final close within six months. But a source tells Axios that the timeline has been pushed back a bit, as SVF continues to negotiate with six potential limited partners. That said, SVF has agreed that $100 billion will be a hard cap.

• Ummmm... Koch Equity Development's $650 million equity commitment letter for Meredith Corp.'s purchase of Time Inc. was filed with the SEC yesterday, and there is a very interesting clause vis-a-vis the "passivity" debate:

On a quarterly basis, Issuer's senior management will meet with the Purchaser to discuss then current business, financial and strategic matters relating to the Issuer and share the same materials that are being shared with the Issuer's Board of Directors for such quarter, subject to applicable non-disclosure and other obligations. In the event that the Issuer issues PIK Dividend Shares, the Purchaser will be provided the right to designate one observer to observe Issuer's board meetings.

• Blast off: SpaceX has added $100 million to a Series H funding round that held a $350 million first close over the summer at a post-money valuation of around $21 billion. The new infusion was first disclosed in an SEC filing, and the company declined to identify any participating investors.

  • One possible backer is GigaFund, launched earlier this year by SpaceX director and former Founders Fund partner Luke Nosek. GigaFund is designed to raise money for SpaceX, so that the company doesn't hit capital constraints, although SpaceX itself said there were no allocation guarantees. And, coincidentally, the GigaFund target was $100 million...
  • SpaceX did say that venture capitalist Steve Jurvetson remains on leave from its board of directors.

WeWork has agreed to acquire MeetUp, a New York-based social network that helps organize offline meetings around common interests. No financial terms are being disclosed, but a source says that it's valued at around $200 million (including employee retention incentives). MeetUp had raised around $18 million in venture funding since 2002, from firms like DFJ, Omidyar Network, Allen & Co. and Union Square Ventures.

  • Why it's the BFD: Because WeWork has been on a shopping spree in 2017, as it seeks to expand its value-add beyond beer taps and an almost impossible to believe enthusiasm. Other acquisitions this year have included Flatiron School (coding training), Fieldlens (mobile collaboration), Wavegarden (wave pools) and Unomy (sales & marketing). It also invested in The Wing (women's co-working club) and purchased the former Lord & Taylor store on 5th Ave. in Manhattan (which will serve as its new HQ).
  • Bottom line: "WeWork's roughly 10 million square feet of leased office space, spread out over more than 170 locations in 16 countries, is used primarily during the day. By contrast, meetups happen primarily outside of working hours... Already, roughly 100,000 people have attended a Meetup gathering at a WeWork location, according to the companies." — Michael de la Merced, NYT
Venture Capital Deals

🚑 Fullerton Healthcare, a Singapore-based provider of corporate healthcare solutions, has raised over $121 million in new funding led by the investment arm of Chinese insurer Ping An.

🚑 Medeor Therapeutics, a San Mateo, Calif.-based developer of personalized cellular immunotherapies for kidney transplant patients, has raised $57 million in Series B funding. RA Capital Management led, and was joined by Sofinnova Ventures, 6 Dimensions Capital and return backers Vivo Capital and WuXi Healthcare Ventures.

🚑 Doctolib, a French online booking platform for doctor appointments, has raised €35 million in new funding from Eurazeo and return backer Bpifrance.

• Reliam, a Los Angeles-based provider of managed services, has raised $17 million from Great Hill Partners (which is reserving another $75m for future growth and/or acquisition purposes).

• ClimaCell, a Boston-based hyper-local weather forecasting startup, has raised $15 million in Series A funding. Canaan Partners led, and was joined by Fontinalis Partners and return backer Square Peg Capital.

🚑 Biolinq, a San Diego-based developer of a biosensor patch for monitoring multiple biomarkers, has raised $10 million in Series A funding. M Ventures led, and was joined by Hikma Ventures, Grey Sky Venture Partners, Three Leaf Ventures and LifeSci Venture Partners.

🚑 Qool Therapeutics, a Menlo Park, Calif.-based developer of a device for device for targeted temperature management and exercise recovery, has raised $8 million in Series A-1 funding from Zhongji Holdings/Join Medical Technology, TAMCAP, BrilliMedical International Corp., BioPacific Investors, Western Technology Investment and FundRx.

• Libra, a New York-based maker of cryptocurrency tax and auditing software, has raised $7.8 million in Series A funding led by an undisclosed European family office. Other backers include Liberty City Ventures, XBTO, Boost VC and Lee Linden.

🚑 LabGenius, a London-based synthetic biology startup, has raised $3.66 million in seed funding. Kindred Capital and Acequia Capital co-led, and were joined by Backed VC, Beast Ventures, Berggruen Holdings and SystemOne.

Private Equity Deals

• Abraaj Group has acquired a 35% stake in Tunisie Telecom, a state-owned telecom company in Tunisia, from Dubai Holdings.

🚑 Avista Capital Partners has agreed to acquire United BioSource, a Blue Bell, Penn.-based provider of pharma and patient support services, from Express Scripts (Nasdaq: ESRX).

• General Tools & Instruments, a New York-based portfolio company of High Road Capital Partners, has acquired the assets of PacTool International, a Kinston, Wash.-based maker of tools for used in construction, renovation and remodeling.

• Nordic Capital is nearing an agreement to acquire Ullink, a Paris-based provider of electronic trading software, from HgCapital for around $650 million, per the WSJ.

• Roark Capital Group has agreed to acquire restaurant chain Buffalo Wild Wings (Nasdaq: BWLD) for around $2.4 billion, or $157 per share in cash (34% premium to Nov. 14, when Roark's interest was first reported).

🚑 StatLab, a McKinney, Texas-based portfolio company of Cressey & Co., has acquired American MasterTech Scientific, a manufacturer and distributor of stains and other specialty lab products.

• Sunsea, a Chinese parking lot operator, has raised around $227 million in equity funding led by Warburg Pincus. Also participating is Warburg Pincus portfolio company Red Star Macalline, which will grant Sunsea operating rights to 300,000 spaces.

• Thoma Bravo has agreed to acquire Barracuda Networks (NYSE: CUDA), a Campbell, Calif.-based cybersecurity company, for $1.6 billion in cash, or $27.55 per share (16.4% premium to Friday's closing price).

• Tinicum has acquired Astrodyne, a Hackettstown, N.J.-based maker of electromagnetic interference filters.

Public Offerings

• SpringerNature, publisher of magazines like Nature and Scientific American, has hired J.P. Morgan to lead a 2018 IPO, according to Reuters. The company is 53% owned by German publisher Holtzbrinck, while BC partners holds the remainder.

Liquidity Events

• Bain Capital has agreed to sell Sundial Brands, a New Jersey-based hair and skincare products company with around $240 million in annual revenue, to Unilever.

Temasek is considering a sale of its 20% stake in Hong Kong-based drug distributor Zuellig Pharma, which could garner around $1 billion, according to Bloomberg.

More M&A

• Bank of Nova Scotia (TSX: BNS) has offered to pay $2.2 billion for a majority stake in the Chilean operations of Spanish bank BBVA.

• Emerson (NYSE: EMR) said that it has withdrawn its $29 billion, or $225 per share, takeover offer for Rockwell Automation (NYSE: ROK) "due to the Rockwell Board of Directors' continued unwillingness to engage in discussions about a potential combination."

"The Rockwell Board again rejected our offer, which would⛽ Statoil (Oslo: STL) has agreed to acquire stakes in two Norwegian oilfields from Total (Paris: TOTF) for $1.45 billion.

• Mizrahi-Tefahot Bank (TASA: MZTF) has agreed to acquire smaller Israeli lender Union Bank of Israel (TASA: UNON) for around $400 million in stock.


• 3Rodeo has been launched by Noah Heller (ex-Hulu) as a Los Angeles-based venture firm, according to Variety.

• NFX (f.k.a. NFX Guild) has closed its debut venture capital fund with $150 million in capital commitments.

• Root Ventures is raising up to $75 million for its second hardware-focused seed fund, per an SEC filing.

It's Personnel

• Bhaskar Ghosh has joined 8VC as a partner and chief technology officer. He previously was with Nerdwallet as VP of engineering, operations and security.

Final Numbers