| | | | | | | Presented By Koch Industries | | | | Pro Rata | | By Dan Primack ·Dec 02, 2020 | | 🎧 Axios Re:Cap focuses on the Nasdaq's new board diversity rules for listed companies. Listen via Apple, Spotify or Axios. 🚴 Let's ride again: Saturday, Dec. 12, at 11am ET. More details soon. | | | | | | Top of the Morning |  | | | Illustration: Annelise Capossela/Axios | | | | Companies have two basic choices when faced with an antitrust lawsuit from the U.S. Justice Department: Fight or flee. Visa plans to fight. Driving the news: The credit card giant filed its legal response to DOJ's efforts to block its $5.3 billion purchase of fintech "connector" company Plaid. Its primary arguments are that regulators gerrymandered an industry definition and conjured competition. Industry: The DOJ believes that Visa is a monopolist in the online debit card space, arguing that its market share exceeds 70%. Visa doesn't dispute that figure, but instead argues it's arbitrary. - Visa claims that the relevant industry is online payments, which would include not just online debit, but also credit cards and services like Apple Pay. Or at least would include other methods of direct debit from bank accounts, such as PayPal and using routing numbers to satisfy utility bills, etc.
- Also worth noting is that Visa's overall debit card market share drops to 60%+ when in-person purchases are included (it increases for online since few e-commerce merchants accept PIN cards).
Competition: The DOJ argues that Plaid could become a major competitor in the online debit space, and that Visa's acquisition is designed to extinguish that nascent threat. - In short, Visa calls this nonsense, claiming Plaid has no online debit efforts in its product pipeline.
- DOJ had obtained communications from a Visa biz dev exec who said that Plaid "threatens Visa" in terms of online debit, analogizing it to an underwater volcano that has explosive potential despite being barely visible. Visa asks in its reply for the entirety of those communications to be reviewed by the court.
- A source familiar with the situation tells Axios that the executive was deposed by DOJ and testified that his statement — which was part of a research document from early 2019 — was not seen by senior Visa executives who had a decision-making powers on the Plaid deal.
Timing: There's also a dispute over when this trial might begin, with DOJ asking for next September and Visa saying it could be ready by late February. An upcoming case management conference should sort all of that out. The bottom line: There's no structural remedy available here, because Plaid doesn't have an online debit business that Visa could divest. And there really isn't a Plaid rival of similar scale. So unless DOJ's next antitrust chief chooses to reverse course, this one is headed to court. |     | | | | | | The BFD |  | | | Illustration: Sarah Grillo/Axios | | | | Salesforce (NYSE: CRM) yesterday made it official, agreeing to buy workforce collaboration platform Slack (NYSE: WORK) for $27.7 billion in cash and stock. - Why it's the BFD: This is the largest software merger since IBM agreed to buy Red Hat in late 2018, and creates a cloud giant that can better compete with Microsoft. It's also the second time that Stewart Butterfield has launched a gaming startup, failed and then refashioned the ashes into something much more valuable (the first was Flickr).
- Details: Slack shareholders will receive the equivalent of $45.86 per share, including $26.79 in cash, which represents a 55% premium to Slack's trading price before deal news leaked. Slack's clearing price after its June 2019 direct listing was $38.50.
- Flashback: In early 2015, Erin Griffith and I wrote a Fortune Magazine cover story titled "The Age of Unicorns," which led with an anecdote from Butterfield about the importance of being valued at $1 billion. Never thought to ask about $28 billion.
- The bottom line: "The death of a standalone Slack is a blow to those who held up the company as proof that small companies could still take on the Big Tech giants. Indeed, DOJ antitrust chief Makan Delrahim had specifically held up Slack as an example that competition still works in tech." — Ina Fried, Axios
| | | | | | | | Venture Capital Deals | | Source: Giphy • Olive, a Columbus, Ohio-based developer of health care services bots, raised $225.5 million at a $1.5 billion post-money valuation. Tiger Global led, and was joined by GV, Sequoia Global Capital Equities, Dragoneer, Transformation Capital Partners and return backers Drive Capital, General Catalyst and SVB. http://axios.link/v5D6 • Shipmonk, a Fort Lauderdale, Fla.-based provider of e-commerce fulfillment solutions, raised $290 million in growth equity funding led by Summit Partners. http://axios.link/7jw9 🛴 Voi, a Sweden-based e-scooter company, raised $160 million. Raine Group led, and was joined by insiders VNV Global, Balderton Capital, Creandum, Project A, Inbox and Stena Sessan. http://axios.link/yacR • Scale AI, a San Francisco-based data labeling company, raised $155 million at a $3.5 billion post-money valuation led by Tiger Global. http://axios.link/GM3U • Function of Beauty, a New York-based maker of customizable hair and skin care products, raised $150 million. L Catterton led, and was joined by insiders GGV Capital and CircleUp. http://axios.link/svrK • Bizzabo, a New York-based virtual conference platform, raised $138 million in Series E funding. Insight Partners led, and was joined by insiders Viola Growth, Next47, and OurCrowd. http://axios.link/6Bxu • Flock Freight, a Solana Beach, Calif.-based freight logistics platform, raised $113.5 million in Series C funding. SoftBank led, and was joined by Volvo and return backers GLP Capital Partners, GV and SignalFire. http://axios.link/9aeN • Monzo, a British challenger bank, raised £60 million in new funding from Novator, Kaiser, TED Global and return backers Goodwater Capital. http://axios.link/CoWN 🚑 Noema Pharma, a Swiss developer of neurological disease drugs, raised around $60 million in Series A funding. Sofinnova Partners and Polaris Partners co-led, and were joined by Gilde Healthcare, Invus and BioMed Partners. http://axios.link/zLvN 🚑 Genesis Therapeutics, a Burlingame, Calif.-based AI drug discovery startup, raised $52 million in Series A funding. Rock Springs Capital led, and was joined by T. Rowe Price, Andreessen Horowitz, Menlo Ventures and Radical Ventures. http://axios.link/l2Lf • Step, a San Francisco-based provider of financial services for teens and families, raised $50 million in Series B funding. Coatue led, and was joined by Stripe, Crosslink Capital, Collaborative Fund, Dreamers VC and individuals. www.step.com • Ridecell, a San Francisco-based fleet services automation platform, raised $45 million in Series C funding. Fort Ross Ventures led, and was joined by Solasta Ventures and return backers Activate Capital, DENSO, LG Technology Ventures and Initialized Capital. www.ridecell.com • Deduce, a New York-based customer identity security startup, raised $7.3 million in seed funding. True Ventures led, and was joined by Ridge Ventures. http://axios.link/bwyL • AgentSync, a Denver-based insurance licensing and compliance automation startup, raised $6.7 million in new seed funding led by Craft Ventures. www.agentsync.io • Actasys, a Brooklyn, N.Y.-based vehicle sensor cleaning startup, raised $5 million in seed funding co-led by Volvo and NextGear Ventures. www.actasysinc.com • Novakid, a San Francisco-based English language learning platform for kids, raised $4.25 million in Series A funding. PortfoLion led, and was joined by LearnCapital VC, TMT Investments and Xploration Capital. http://axios.link/3baS • Antenna, a streaming measurement startup co-founded by Rameez Tase (Axios' former VP of growth), raised $4.2 million in seed funding led by Raine Ventures. http://axios.link/JNqk • CoreStack, a Seattle-based provider of cloud governance and compliance SaaS, raised $4 million from Iron Pillar. www.corestack.io • BuildBuddy, a code compilation and testing platform, raised $3 million from Addition, Scribble, Village Global and YC. http://axios.link/ZOEC | | | | | | | | A message from Koch Industries | | Maximizing human potential to change the world | | |  | | | | Job No. 1 at Koch: empowering employees. The starting point? Finding your aptitude and applying it to help others. Charles Koch and the Society for Human Resource Management CEO Johnny Taylor explain how business leaders can help individuals maximize their potential. Watch here. | | | | | | Private Equity Deals | | • ACON Investments acquired Novipax, an Oak Brook, Ill.-based maker of absorbent pads, from Atlas Holdings. www.novipax.com • Audax Private Equity acquired 48forty, an Atlanta-based maker of recycled pallets, from Grey Mountain Partners. www.48forty.com • The Carlyle Group and JD.com are among the bidders for the China logistics unit of South Korea's CJ Group, which could fetch over $1 billion, per Reuters. http://axios.link/Z2jT • Crest Rock Partners acquired Lumin8 Transportation Technologies, an Arvada, Colo.-based provider of traffic and transportation services and technology. • Garda World Security, a Canadian security firm owned by BC Partners, increased its hostile takeover offer for British rival G4S (LSE: GFS) to £3.68 billion. http://axios.link/Kwri • KPS Capital Partners received U.S. bankruptcy court approval to buy Hussey Copper, a Leetsdale, Penn.-based metal refiner and producer that had been tied up in disputes related to Lynn Tilton's Zohar funds. http://axios.link/Zn5i • MiddleGround Capital acquired a majority stake in Shiloh Industries, a Valley City, Ohio-based provider of light weighting technologies to vehicle and industrial customers. www.shiloh.com 🚑 Novacap acquired Logibec, a Montreal-based provider of health care information systems, from GI Partners. www.logibec.com • Recochem, a Montreal-based portfolio company of H.I.G. Capital, acquired KOST, a Cincinnati-based manufacturer and marketer of coolants. www.recochem.com 🚑 Serb, a European pharma group owned by Charterhouse Capital Partners, will pay $800 million for the specialty pharma unit of British oncology device maker BTG, which Boston Scientific (NYSE: BSX) acquired last year. http://axios.link/nLdr 🚑 Smile Brands, a portfolio company of Gryphon Investors, acquired Midwest Dental, a Mondovi, Wis.-based dental services organization with over 230 clinics in 17 states, from FFL Partners. www.midwest-dental.com 🚑 Svoboda Capital Partners acquired Clarion Healthcare, a Boston-based consultancy for life sciences companies. www.clarionhealthcare.com • The Vistria Group invested in Edmentum, a Bloomington, Minn.-based maker of K-adult educational software. www.edmentum.com | | | | | | | | Public Offerings | | • Conduit, a British reinsurer, raised £826 million in an London IPO. http://axios.link/LTAK • Hydrofarm, a Woodside, Calif.-based provider of hydroponics equipment and supplies, set IPO terms to 8.7 million shares at $14-$16. It would have a fully diluted value of $520 million, were it to price in the middle, and plans to list on the Nasdaq (HYFM) with JPM and Stifel as lead underwriters, and reports $2 million of net income on $255 million in revenue for the first nine months of 2020. http://axios.link/9DUt 🚑 JD Health, the medical unit of Chinese e-commerce company JD.com (Nasdaq: JD), raised $3.5 billion in a Hong Kong IPO. http://axios.link/0f6F • Tilman Fertitta, owner of the Houston Rockets, is considering an IPO of his casino and restaurant groups, which include the Golden Nugget and Del Frisco's, per Bloomberg. http://axios.link/esci | | | | | | | | SPAC Stuff | | • Ackrell SPAC Partners I, a consumer goods-focused SPAC, filed for a $100 million IPO. http://axios.link/PZha • Capitol Investment V, a SPAC formed by Mark Ein and Dyson Dryden, raised $300 million in its IPO. http://axios.link/S1lw • Golden Falcon Acquisition, a TMT and fintech-focused SPAC, filed for a $250 million IPO. http://axios.link/EBRp • Michael Moe, CEO of ThinkEquity Partners, filed confidential IPO docs for an education-focused SPAC that will seek to raise between $200 million–$250 million, per Bloomberg. http://axios.link/B3qr • Rodgers Silicon Valley Acquisition, a tech-focused SPAC led by Cypress Semiconductor co-founder Thurman Rodgers, raised $200 million in its IPO. http://axios.link/x4Jp • Seven Oaks Acquisition, an ESG-focused SPAC led by Gary Matthews (ex-CEO of IES Holdings) and Andrew Pearson (ex-Soundview Advisors, General Atlantic), filed for a $200 million IPO. http://axios.link/5nJS • Trepont Acquisition I, a tech-focused SPAC led by Arun Sarin (ex-CEO of Vodafone), raised $200 million in its IPO. http://axios.link/tvFO • Ventoux CCM Acquisition, hospitality-focused SPAC formed by Chardan, filed for a $150 million IPO. http://axios.link/uH6h | | | | | | | | Liquidity Events | | • Kind, the snack bar maker that recently agreed to be acquired by Mars, will pay $400 million to purchase Nature's Bakery, a Pasadena, Calif.-based snackmaker whose investors include VMG Partners. • Lightspeed POS (NYSE: LSPD) acquired Upserve, a Providence, R.I.-based restaurant management software provider, from Vista Equity Partners for $430 million in cash and stock. www.lightspeedhq.com • Roblox, the gaming company that's in registration for an IPO, acquired the IP assets of Imbellus, a Los Angeles-based cognitive assessment startup that had raised $21 million from firms like Owl Ventures, Upfront Ventures, Thrive Capital, Rethink Capital Partners and Torch Capital. http://axios.link/28nf • Tata Group is in talks to buy an 80% stake in Indian online grocer Big Basket for around $1.6 billion, per Bloomberg. Big Basket has raised around $770 million from firms like Alibaba, essemer Venture Partners, Ascent Capital, Baidu and Temasek. http://axios.link/fMT5 | | | | | | | | More M&A | | • Tailored Brands, the Houston-based owner of Men's Wearhouse and Jos. A. Bank, emerged from Chapter 11 bankruptcy protection. http://axios.link/z214 • Westpac Banking Corp. (ASX: WBC) agreed to sell its general insurance business to Germany's Allianz for A$725 million. http://axios.link/jO1m | | | | | | | | Fundraising | | • JMI Equity is raising $1.3 billion for its tenth flagship growth equity fund, per an SEC filing. www.jmi.com | | | | | | | | It's Personnel | | • Greenbriar Equity Group promoted Matthew Burke to managing director. He's been with the firm since 2010. www.greenbriarequity.com | | | | | | | | Final Numbers |  | | | | | | | | A message from Koch Industries | | Maximizing human potential to change the world | | | | | | | | Job No. 1 at Koch: empowering employees. The starting point? Finding your aptitude and applying it to help others. Charles Koch and the Society for Human Resource Management CEO Johnny Taylor explain how business leaders can help individuals maximize their potential. Watch here. | | | | ✔️ Thanks for reading Axios Pro Rata! Please ask your friends, colleagues, and slackers to sign up. | | | | Axios thanks our partners for supporting our newsletters.
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