Axios Pro Rata: The sunny side of SPACs — Tribune play — Private equity's record 2020

Top of the Morning | Monday, January 04, 2021

Open in app View in browser     Pro Rata By Dan Primack ·Jan 04, 2021 👋 Hello again, and welcome to 2021. A quick reminder that you can send me feedback, news and tips via email (dan@axios.com), my anonymous tip-line (http://tips.axios.com) or Signal/Telegram (just ask). Okay, here we go...     Top of the Morning Illustration: Aïda Amer/Axios   The SPAC avalanche didn't slow over the holidays, as 25 new ones were formed since our last newsletter. And, despite froth fears, this sustained surge might be a net positive for the U.S. economy, Axios' Kia Kokalitcheva writes. Between the lines: More SPACs should result in more companies going public sooner, against the backdrop of a decades-long decline in the number of domestic operating companies listed on major U.S. exchanges. Public companies provide greater corporate transparency than do private companies. They also offer more retail investor opportunity, whereas private company investments are often limited to the wealthy. Jay Clayton, the recently departed SEC chair, said in his 2017 confirmation hearings: "I believe that a reduction in the number of public companies, which is a function of fewer companies becoming public, is a problem for our capital markets." Read Kia's full piece here.     The BFD Illustration: Aïda Amer/Axios   Alden Global Capital offered to buy the remaining 68% stake in Tribune Publishing Co. (Nasdaq: TPCO) at around a $521 million enterprise value. Why it's the BFD: This would create a more formidable rival to local news king Gannett, which Alden last year tried to purchase, although it's still a bit like being the healthiest patient in the hospice. Details: Alden's bid is at $14.25 per share (11% premium to last Wednesday's closing price), and Tribune formed a special committee to review the proposal. Alden, which already holds hundreds of local papers via its majority ownership of MediaNews Group, became Tribune's largest shareholder in 2019. The bottom line: "Given Alden's history, a takeover is expected to result in a restructuring of the company that could result in more local news jobs being cut." — Sara Fischer, Axios     Venture Capital Deals • Flexiv, a Chinese robotics company, raised over $100 million in Series B funding from Meituan, Meta Capital, New Hope Group, Longwood, YF Capital, Gaorong Capital, GSR Ventures and Plug and Play. http://axios.link/dpDd • Kong, a San Francisco-based API platform, raised $93 million in new funding, per an SEC filing. Existing backers include Andreessen Horowitz, CRV and Index Ventures. www.konghq.com • CRED, an Indian bill payment and rewards platform, raised $81 million in Series C funding. DST Global led, and was joined by insiders Sequoia Capital, Ribbit Capital, Tiger Global and General Catalyst. http://axios.link/VGIs • AMP Robotics, a Denver-based developer of robots for sorting recyclable materials, raised $55 million in Series B funding. XN led, and was joined by GV, Valor Equity Partners and return backers Sequoia Capital, Sidewalk Infrastructure Partners, Congruent Ventures, and Closed Loop Partners. www.amprobotics.com • Oxygen, a San Francisco-based digital banking platform, raised $17 million in Series A funding from Runa Capital, S7V, 1984 VC, EFG Hermes, Rucker Park and Inventures. www.oxygen.us • Betterfly, a Chilean life insurance startup, raised $9 million in new Series A funding (round total now $17.5m) led by QED Investors. http://axios.link/iEQs     A message from Axios Market news worthy of your time     Get a daily look at the news and trends dominating the worlds of global business and finance. Sent every weekday to your inbox by our markets editor Dion Rabouin. Why it matters: We highlight the stories that matter and share crucial economic insights. Stay informed in just a few short minutes. Subscribe for free     Private Equity Deals • Clayton, Dubilier & Rice agreed to buy Wolseley UK, a British plumbing parts distribution business, from Ferguson (LSE: FERG) for £308 million. http://axios.link/ByrJ • Golden Gate Capital acquired Covia, an Independence, Ohio-based provider of mineral-based material solutions for the industrial and energy markets, out of Chapter 11 bankruptcy protection. www.coviacorp.com • H.I.G. Capital acquired Crothall Laundry Services, a Manassas, Va.-based provider of outsourced laundry services to the health care and hospitality sectors, from Compass Group. www.crothall.com • Infinedi Partners invested in BWG Strategy, a Cranford, N.J.-based provider of market intelligence and data to investment management and corporate clients via a subscription-based model. www.bwgstrategy.com • Inflexion agreed to buy a minority stake in the cloud computing unit of U.K.-based Daisy Group at a business value north of £1 billion. http://axios.link/P02R • JLL Partners acquired Jonathan Engineered Solutions, an Irvine, Calif.-based maker of industrial slides and other custom engineered components environments like U.S. Navy ships, from Levine Leichtman Capital Partners. www.jonathanengr.com • Kinderhook Industries acquired Vesta Housing Solutions, a Southfield, Mich.-based provider of temporary and permanent modular space solutions, from Balmoral Funds. www.vestamodular.com • Monomoy Capital Partners acquired Astro Shapes, a Struthers, Ohio-based manufacturer of custom-finished aluminum extrusions. www.astroshapes.com • One Equity Partners acquired VASS, a Madrid-based provider of digital transformation, cloud infrastructure and managed IT solutions. www.vasscompany.com • Onex Credit acquired Falcon Investment Advisors, a Boston-based private credit manager with $3.8 billion in AUM. www.falconinvestments.com • QuantiTech, a Huntsville, Ala.-based portfolio company of Sagewind Capital, acquired Systems Engineering Group, a Columbia, Md.-based provider of threat engineering and modeling services to U.S. government clients, from Griffon Corp. (NYSE: GFF). www.quantitech.com 🚑 Waterland Private Equity agreed to buy Priory Group, a British provider of behavioral health care services, and will merge it with existing portfolio company Median. The seller is Acadia Healthcare (Nasdaq: ACHC). www.priorygroup.com     Public Offerings 🚑 Cullinan Oncology, a Cambridge, Mass.-based developer of cancer drugs, set IPO terms to 8.3 million shares at $17-$19. The pre-revenue company would have a fully diluted value of $750 million, were it to price in the middle, plans to list on the Nasdaq (CGEM) and raised around $380 million in VC funding from MPM Capital, F2 Ventures, Cowen Healthcare, Foresite Capital, OrbiMed, Schooner Capital and UBS Oncology Fund. http://axios.link/hsCx • RLX Technology, a Chinese e-cigarette maker, filed for a $100 million IPO. It plans to list on the NYSE (RLX) and reports $16 million of net income on $324 million in revenue for the first nine months of 2020. Backers include Sequoia Capital China (4.9% pre-IPO stake). http://axios.link/yAeO     SPAC Stuff Source: Giphy Don't worry, we're not going to list all 25. But some of particular note: Queen's Gambit Growth Capital was formed with an all-female team, led by Ascend Communications co-founder Betsy Atkins. Bridgetown, formed by Thiel Capital and Pacific Century, filed for a second, smaller SPAC. The first one raised $550 million, and this one is targeting $200 million. Thoma Bravo filed for a $900 million SPAC. Spinning Eagle, formed by the same crew that bought DraftKings via SPAC, launched a $1.5 billion SPAC called Spinning Eagle. If it uses only a portion of its proceeds for its initial acquisition, it can spin off the rest into a new SPAC that can then search out a different target.     Liquidity Events 🚑 Angelini Pharma of Italy agreed to buy Arvelle Therapeutics, a Swiss biotech focused on CNS disorders, for upwards of $960 million (including $610m upfront in cash). Arvelle last year raised $223 million in Series A equity and debt funding from Life Science Partners, NovaQuest, BRV Capital, Andera Partners, H.I.G. BioHealth Partners, F-Prime Capital and KB Investment. http://axios.link/OKaR • Freeman Spogli & Co. agreed to sell Green Garden Products, a Norton, Mass.-based provider of seed packets and plant nutrients, to Central Garden & Pet (Nasdaq: CENT) for $532 million. www.greengarden.com • Icahn Associates sold around a 9.5% stake in Herbalife (NYSE: HLF) back to the company for over $600 million, leaving it with around a 6% position. http://axios.link/mOwA     More M&A Illustration: Sarah Grillo/Axios   • Entain (LSE: ENT), the British gaming company that owns Ladbrokes, rejected an $11.1 billion takeover approach from MGM Resorts International (NYSE: MGM), saying it undervalues the company. http://axios.link/amAc 🚑 Centene (NYSE: CNC) agreed to buy Magellan Health (Nasdaq: MGLN), a Phoenix-based pharmacy benefits manager and provider of mental health-related services. The deal is valued at $2.2 billion (including debt), or $95 per share in cash (14.7% premium to Thursday's close). http://axios.link/y6tk • Connells, a privately held property firm, agreed to buy British realtor Countrywide (LSE: CWD) for around £134 million, besting a rival offer from Alchemy Partners. http://axios.link/FPgI • MJ Hudson (AIM: MJH) acquired PERACS, a German provider of private equity fund and portfolio performance analytics. www.mjhudson.com • Piper Sandler (NYSE: PIPR) acquired TRS Advisors, a New York-based restructuring firm. www.trsadvisorsllc.com • PSA (Paris: UG) shareholders approved the Peugeot maker's merger with Fiat Chrysler (BIT: FCA), which would create the world's fourth-largest automaker. http://axios.link/ZziB • PT MNC Kapital Indonesia acquired a control stake in New York-based brokerage Auerbach Grayson & Co. from by Egypt's Beltone Financial. http://axios.link/oMJZ 💍 Tiffany & Co. shareholders approved a $15.8 billion takeover offer from LVMH (Paris: MC), following the companies' resolution of their legal dispute. http://axios.link/TiXA     Fundraising • Ares Management raised around $11 billion for its fifth European credit fund, per an SEC filing. http://axios.link/zq4n • BlackRock has scaled back its private equity fundraising plans, cutting a new fund target from $12 billion to between $4 billion to $6 billion, per the WSJ. In a press release this morning, BlackRock said it's secured $3.44 billion to date. http://axios.link/GXvW • Union Square Ventures raised $250 million for its latest early-stage fund and $162 million for its first fund focused on climate tech startups. www.usv.com     It's Personnel • Eric Doyal formed Briarwood Partners, a Houston-based mid-market private equity firm. He previously was a VP with Rock Hill Capital. • Steve Emerson joined private equity firm Dry Creek Partners as a partner. He previously was a principal with Excelsior Capital Partners. www.drycreekllc.com • Accolade Partners promoted Brandon Kumar to vice president. www.accoladepartners.com • Ardian promoted Derek Lim to managing director of North American direct buyouts. www.ardian.com • Castle Harlan promoted Patrick Zyla to managing director. www.castleharlan.com 🚑 HealthCare Royalty Partners promoted Anthony Rapsomanikis to managing director. www.healthcareroyalty.com • Spectrum Equity promoted Julia Kuo Chen, Adam Gassin, Matt Neidlinger and Michael Radonich to principals. It also promoted Jamie Mitchell, Kevan Olander and Sam Todd to vice presidents and Angus Wilson to senior associate. www.spectrumequity.com     Final Numbers: 2020 in review Source: Refinitiv. Data through 12/29/20. Global M&A roared back in the second half, virtually erasing the 41% year-over-year decline at the end of June, per Refinitiv. That said, it was still the slowest year for global deal-making since 2017, and down 5% from 2019. Goldman Sachs retained its spot as top adviser, with Morgan Stanley leapfrogging JPMorgan for second place. Tech was the top macro sector (18.9%), followed by financials (13.6%) and energy/power (11.9%). Private equity deal value hit its highest level since 2007, both globally and for U.S. targets. The number of private equity deals reached levels never before seen.     A message from Axios Market news worthy of your time     Get a daily look at the news and trends dominating the worlds of global business and finance. Sent every weekday to your inbox by our markets editor Dion Rabouin. Why it matters: We highlight the stories that matter and share crucial economic insights. Stay informed in just a few short minutes. Subscribe for free   ✔️ Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and SPAC sponsors to sign up.   Axios thanks our partners for supporting our newsletters. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Suite 1300, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: