Aug 10, 2018

Axios Pro Rata

Dan Primack

Situational awareness: Stocks are way down as Trump tweeted plans to double steel and aluminum tariffs on Turkey, whose currency is in free-fall.

Top of the Morning
Source: Giphy

WeWork saw its revenue, losses and membership grow substantially in the second quarter of 2018, and also disclosed that it has struck a large new investment agreement with existing investor SoftBank.

Why it matters: The co-working company continues to work toward a 2019 IPO and, if Tesla goes private, this could take its place as the stock that most fiercely divides longs and shorts.

  • WeWork disclosed the information via its first-ever earnings presentation, owing to its April bond sale.
  • Revenue run rate is now $1.8 billion (up from $1.5b at the end of Q1), while first half loss hit $723 million.
  • The new investment is structured as a convertible note, and includes at least $1 billion from SoftBank that will be funded by month's end. WeWork also remains in talks with several other investors to provide at least another $1 billion, which would come with a valuation floor of $42 billion (unless there's an IPO).
  • We've posted a much more detailed breakdown.

Speaking of Tesla: The SEC reportedly is investigating Elon Musk's tweets from earlier this week, which is really just another way of saying that the SEC is doing its job.

  • It may be telling that the SEC is investigating "funding secured," since that would seem to be something Musk could clear up quite quickly. You know, if the funding was actually secured.
  • Ditto for Tesla's board which, according to Reuters, has as little info as the rest of us on the supposed investors. That would contradict the board's Wednesday statement, however, which claimed it had already met "several times" to discuss Musk's intentions, during which it "addressed the funding for this to occur."
  • CNBC reports that the board plans to meet with advisors next week and consider forming a special committee. Ummm.... again: Aren't those steps that would have been put into motion after meeting "several times" about Musk wanting to take the company private?
  • Also a quick reminder that Tesla director Steve Jurvetson appears to remain indefinitely suspended from the company's board, as he didn't sign the Wednesday statement. It's now going on nine months, with zero information publicly disclosed.

Local color: Sinclair's failed acquisition of Tribune Media will not slow down local broadcast mergers, Axios' Sara Fischer reports: "Consolidation will inevitably mean that fewer voices reach more people, but some in the industry argue it's the only way local broadcasting will be able to compete with big tech."

  • Tribune's lawsuit against Sinclair for breach of contract shows that a tie-up would have been pretty uncomfortable for both sides. Tribune says it first considered suing Sinclair in February, and alleges that the latter was "belligerent" toward regulators, who Tribune believes Sinclair "fought, threatened, insulted and misled." Variety has a good summary.

🎧 Hear hear: The latest Pro Rata podcast focuses on new ride-hail rules in NYC, and my guest is the Uber public policy exec who ran point on its efforts there. Listen via Apple, Google Play or stream direct at Axios.com.

The BFD
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Campbell's Soup Co. (NYSE: CPB) is under pressure from activist investor Dan Loeb, who disclosed around a 6% ownership stake and is pushing for a sale.

  • Why it's the BFD: Because Loeb also revealed an unexpected ally in George Strawbridge, the 80 year-old grandson of company founder Joseph Campbell, who disclosed a 2.8% stake of his own. This could create an inter-family rift, as other Campbell descendants hold both sizable ownership positions and board seats.
  • Bottom line: "Campbell is at a pivotal moment in its 150-year history as its namesake canned soups and other heavily processed foods have fallen out of favor with consumers, and attempts to pivot to fresher offerings such as Bolthouse Farms juices have stumbled. Former CEO Denise Morrison stepped down abruptly in May after a seven-year run and the company said it would review its product portfolio." — Cara Lombardo, WSJ
Venture Capital Deals

🚑 TOT Biopharm, a Chinese maker of anti-tumor drugs, raised $102 million in Series B funding. 99Fund led, and was joined by return backers Centerlab Group, Vivo Capital, Chengwei Capital, Yuanda Financial Holdings and Gold Tech Venture Capital. http://axios.link/QCaU

🚑 Artios Pharma, a UK-based “DNA damage response” company focused on cancer, raised £65 million in Series B funding. Andera Partners and LSP co-led, and were joined by Pfizer Ventures, Novartis Venture Fund and return backers Arix Bioscience, SV Health Investors, M Ventures, IP Group and AbbVie Ventures. www.artiospharma.com

Navya, a French developer of autonomous shuttles, raised €30 million from European Investment Bank. http://axios.link/oJLf

🚑 Lacerta Therapeutics, an Alachua, Fla.-based gene therapy startup focused on CNS-targeted treatments and lysosomal storage diseases, raised $30 million in strategic funding from Sarepta Therapeutics (Nasdaq: SRPT). The deal also includes a license and option agreement. http://axios.link/C2NV

Koala Reading, a Chinese online reading education platform, raised $20 million in Series B funding. GGV Capital and XVC co-led, and were joined by CMC Capital Partners and Qiming Venture Partners. http://axios.link/e7hy

Wonderschool, a startup that helps people launch in-home daycares and preschools, raised $20 million in Series A funding led by Andreessen Horowitz. http://axios.link/fuDf

Spoon Radio, a South Korean Internet radio company, raised $17 million from Goodwater Capital, Softbank Ventures and KB Investment. http://axios.link/T6Uy

Lyvly, a London-based shared living and apartment rentals marketplace, raised $4.6 million in Series A funding led by Mosaic Ventures. http://axios.link/gj7o

Blissfully, a New York-based provider of SaaS usage analytics, raised $3.5 million in seed funding led by Hummer Winblad Venture Partners. http://axios.link/0Qsk

Moved, a New York-based startup that helps coordinate residential moves, raised $3.2 million in seed funding from Lowe’s, FJ Labs, AngelPad and Real Estate Technology Ventures. http://axios.link/AA7b

Private Equity Deals

🚑 Apothecary Products, a Burnsville, Minn.-based portfolio company of Norwest Equity Partners, has acquired Soft Style, a Boulder, Colo.-based maker of breastfeeding support products. http://axios.link/rsA0

Northlane Capital Partners invested in Discovery Data, an Eatontown, N.J.-based provider of data on firms and professionals in the financial services and insurance industries. www.discoveryco.com

Olympus Partners has acquired Rise Baking Co., a Minneapolis-based baker of desserts and breads, from Arbor Investments. www.risebakingcompany.com

🍕 Peak Rock Capital agreed to acquire the TNT pizza crust business of Tyson Foods (NYSE: TSN). www.tntcrust.com

🚑 Simplura, a Lynbrook, N.Y.-based portfolio company of One Equity Partners, has acquired Helping Hand, a Philadelphia-based provider of non-medical home care services for seniors. www.all-metro.com

Public Offerings

Mesa Air, a Phoenix-based regional air carrier, raised $116 million in its IPO. The company priced 9.6 million shares at $12, versus plans to sell 10.7 million shares at $14-$16, for a fully-diluted market value of $426 million. It will trade on the Nasdaq (MESA) while Raymond James was lead underwriter. Shareholders include American Airlines (19.8% pre-IPO stake). www.mesa-air.com

🚑 Vaccinex, a Rochester, N.Y-based developer of antibody therapies for cancer and neurological diseases, raised $40 million in its IPO. The company priced 3.3 million shares at $12 (low end of range), and will trade on the Nasdaq (VCNX). www.vaccinex.com

Liquidity Events

Gryphon Investors sold Washing Systems, a Loveland, Ohio-based provider of products the commercial laundry market, to Kao (Tokyo: 4452). www.washingsystems.com

⛽ Hudson Clean Energy Partners has sold Eagle Creek, a Morristown, N.J.-based operator of hydro-electric facilities, to Ontario Power Generation. http://axios.link/RsMl

More M&A

Jin Jang International, a state-owned Chinese hospitality group, agreed to buy Minnesota-based Radisson Hotels from China’s HNA Group. http://axios.link/1j5T

🚑 Ligand Pharmaceuticals (Nasdaq: LGND) agreed to acquire British drug developer Vernalis (AIM: VRN) for just under £33 million. http://axios.link/6FfZ

Philippine regulators approved Grab’s already-completed purchase of Uber’s Southeast Asia operations, but also added new rules on what it called a “virtual monopolist.” http://axios.link/VIIe

⛽ Scientific Drilling International, a family-owned directional drilling firm based in Houston, is seeking a buyer in a deal that could fetch over $500 million, per Reuters. http://axios.link/Vaxn

Sports Direct (LSE: SPD) acquired bankrupt British department store operator House of Fraser for £90 million. http://axios.link/SZh0

Fundraising

Riverwood Capital is raising $1.25 billion for its third buyout fund, plus $250 million for a Latin American sidecar, per peHUB. www.riverwoodcapital.com

It's Personnel

Imraan Ahmed joined Armory Square Ventures as a general partner. He previously was a principal with Radius Partners. www.armorysv.com

🚑 Tracy Saxton, founder and CEO of Aucupo Biosciences, has joined Frazier Healthcare Partners as an entrepreneur-in-residence. The firm also added Vanessa Bhark (ex- Gilead Sciences corp dev) as a senior associate. www.frazierhealthcare.com

Final Numbers
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Data: WeWork; Chart: Andrew Witherspoon/Axios
Dan Primack