| | | | | | | Presented By Cooley | | | | Pro Rata | | By Dan Primack ·May 17, 2021 | | 🎧 Axios Re:Cap talks to Chipotle CEO Brian Noccol about wages, the labor shortage and indoor mask mandates. Listen via Apple or Spotify. 💉 Programming note: Kia Kokalitcheva has the Pro Rata reins tomorrow, since I get my second Moderna shot this afternoon and expect to be sidelined. | | | | | | Top of the Morning |  | | | Illustration: Annelise Capossela/Axios | | | | AT&T is unwinding a huge part of its $84 billion acquisition of Time Warner, less than three years after it closed. Driving the news: AT&T this morning announced that it will merge its WarnerMedia properties with Discovery Inc.'s media assets. - AT&T's contributions will include cable networks CNN, TNN, TNT, Cartoon Network and HBO, plus streaming service HBO Max. Discovery's will include its Discovery-branded content, TLC, Food Network, Eurosport and its Discovery+ streaming service.
- The deal is expected to close in the middle of next year, via a joint venture that would have projected 2023 revenue of $52 billion and adjusted EBITDA of around $14 billion.
The big winner is Elliott Management, the activist investor which last year took a $3.2 billion stake in AT&T and publicly argued that the Time Warner acquisition didn't make strategic sense. - Elliott later signed a ceasefire with new AT&T CEO John Stankey, who agreed to spin off DirecTV via a deal with TPG Capital.
- There were reports in November that Elliott divested its AT&T stake, but my understanding is that it just sold off its small amount of common stock, but maintain most of its swaps. It subsequently purchased new common stock, to be reflected in a 13F being filed today.
- It does not appear that AT&T reached out to private equity firms to help buttress the deal.
The big loser is former AT&T CEO Randall Stephenson. Not only were Time Warner and DirecTV his two biggest acquisitions, but his failed pursuit of T-Mobile triggered a massive termination fee that financially strengthened a smaller rival and arguably caused AT&T to sell off wireless spectrum. The big comp is Verizon, which also has a (relatively) new CEO who views networking as the crown jewel and content as a pricey distraction. The big note is how rushed this morning's announcement felt, despite some background insistence that it wasn't, per Axios media reporter Sara Fischer. - They didn't announce the new company's name, instead saying they'll drop it "later this week."
- No disclosed decisions yet on if the two streaming services will be merged.
- Reporters had 30 minutes notice this morning of the Zoom call.
- No clarity on the future of WarnerMedia boss Jason Kilar, who was notably absent from the press release. Stankey simply said that Discovery CEO David Zaslav — who will run the new business — has lots of discussions ahead of him.
The bottom line: Two things you can always count on after acquiring Time Warner are big controversy and big regrets. |     | | | | | | The BFD |  | | | Photo: Wahyu Romadhon / EyeEm via Getty Images | | | | Gojek, an Indonesian ride-hail and payments company, formally announced its long-rumored merger with online marketplace Tokopedia. - Why it's the BFD: It will become the largest tech company in the world's fourth most populous country.
- Look ahead: The merged company will be called GoTo Group, and plans a dual listing in New York and Jakarta for later this year.
- ROI: Gojek raised around $5.5 billion from firms like Sequoia Capital India, Visa, Tencent and Warburg Pincus, while Tokopedia has raised over $2.4 billion from firms like SoftBank Vision Fun, Alibaba and Sequoia Capital India.
- The bottom line: Each company knows it's the other's second choice. Gojek held merger talks last year with Grab (which since agreed to a giant SPAC deal), while Tokopedia was in talks to go public via a SPAC sponsored by Thiel Capital and Pacific Century.
| | | | | | | | Venture Capital Deals | | • Moglix, a Singapore-based industrial B2B marketplace, raised $120 million in Series E funding at a $1 billion valuation. Falcon Edge Capital and Harvard Management Co. co-led, and were joined by insiders Tiger Global, Sequoia Capital India and Venture Highway. http://axios.link/oY5c • Pine Labs, a merchant commerce platform in Southeast Asia, raised $285 million at a $3 billion valuation from Baron Capital Group, Duro Capital, Marshall Wace, Moore Strategic Ventures, Ward Ferry Management and insiders Temasek, Lone Pine Capital and Sunley House Capital. http://axios.link/sIjJ 🚑 Eleanor Health, a Waltham, Mass.-based outpatient addiction and mental health provider, raised $20 million in Series B funding from Warburg Pincus and insiders Town Hall Ventures, Echo Health Ventures and Mosaic Health Solutions. www.eleanorhealth.com • Telda, an Egyptian digital bank, raised $5 million in seed funding. Sequoia Capital led, and was joined by Global Founders Capital and Class 5 Global. http://axios.link/P6yW • Forager, a Portland, Maine-based digital procurement platform for connecting local farmers with groceries, raised $4 million from ICM and Coastal Enterprises. http://axios.link/FWv2 | | | | | | | | A message from Cooley | | The private financing environment remains resilient through Q1 | | |  | | | | The remarkable strength of the 2020 venture financing environment continued into the first quarter of 2021. Median pre-money valuations increased significantly across all stages, and up rounds represented 93% of all Cooley deals. See more on the Cooley GO venture financing dashboard. | | | | | | Private Equity Deals | | • Abry Partners agreed to buy the third-party administration operations and software unit of customer experience company Concentrix (Nasdaq: CNXC). www.concentrix.com • Advent International shortlisted several PE firms for King Koil China, a mattress business that could fetch $2 billion, per Bloomberg. The suitors are Affinity Equity Partners Blackstone Group, KKR, Hillhouse Capital and FountainVest Partners (working with Ontario Teachers'). http://axios.link/3HeU 🚑 BlackRock Long Term Private Capital acquired a majority stake in Transaction Data Systems, am Orlando-based provider of pharmacy software, from GTCR. www.rx30.com • CAS Investment Partners, the largest shareholder of home décor retailer At Home Group (NYSE: HOME) with a 17% stake, said it opposes a $2.8 billion sale to Hellman & Friedman. http://axios.link/kxzq 🎲 Crown Resorts (ASX: CWN), an Australian casino operator, rejected a A$8.36 billion takeover bid from The Blackstone Group, saying it undervalued Crown's assets. Crown now is awaiting more info on a A$9 billion all-stock bid from rival Star Entertainment (ASX: SGR). http://axios.link/QCtE • Genstar Capital agreed to buy a majority ownership stake in Vector Solutions, a Tampa, Fla.-based provider of training and risk management solutions, from Golden Gate Capital (which retains a minority stake). http://axios.link/47xx 🚑 H.I.G. Capital invested $225 million for a minority stake in eHealth (Nasdaq: EHTH), a Santa Clara, Calif.-based online marketplace for health insurance. www.ehealthinsurance.com • KKR agreed to acquire a majority stake in global sustainability consultancy ERM for around $2.7 billion from OMERS Private Equity and Alberta Investment Management Corp. http://axios.link/ZaxU • KKR agreed to acquire a minority stake in Lenskart, an Indian omnichannel eyewear retailer, via a $95 million secondary purchase from TPG Growth and TR Capital (which both will retain positions). http://axios.link/n5QI • Roark Capital acquired Nothing Bundt Cakes, a Dallas-based franchisor and operator of bundt cake bakeries with around $470 million in system sales, from Levine Leichtman Capital Partners. www.nothingbundtcakes.com 🚑 Symplr, a Houston-based portfolio company of Clearlake Capital Group and SkyKnight Capital, agreed to buy HealthcareSource, a Woburn, Mass.-based provider of HR software to the healthcare market, from Francisco Partners. www.healthcaresource.com | | | | | | | | Public Offerings | | • Three companies plan to go public this week on U.S. exchanges: Oatly and Procure Technologies via IPOs, and Squarespace via a direct listing. http://axios.link/Fn9X • JD Logistics, a logistics unit of JD.com (Nasdaq: JD), disclosed plans to raise around US$3.4 billion in a Hong Kong IPO. http://axios.link/KW0J • Marqeta, an Oakland-based card issuing platform, filed for an IPO that Renaissance Capital estimates could raise $1.5 billion. It will list on the Nasdaq (MQ) and reports a $48 million net loss for 2020 on $290 million in revenue. Marqeta raised $525 million in VC funding, most recently at a $4.3 billion valuation, from Granite Ventures (11.2% pre-IPO stake), Iconiq (8.7%), 83North (8%), Discover Financial Services (5.4%), Coatue (5.3%), Visa, Goldman Sachs and Vitruvian Partners. http://axios.link/dd1E | | | | | | | | SPAC Stuff | | • Bright Machines, a San Francisco-based provider of software-defined manufacturing solutions, agreed to go public at a $1.6 billion implied valuation via SCVX (NYSE: SCVX). The deal includes a $205 million PIPE. Bright Machines had raised around $230 million from firms like Eclipse Ventures, BMW iVentures, Lux Capital and Flextronics. http://axios.link/NcUG • Redbox, the home entertainment company owned by Apollo Global Management, agreed to go public at a $693 million implied valuation via Seaport Global Acquisition (Nasdaq: SGAM). http://axios.link/XssK ⚡ Freestone Acquisition, an energy transition SPAC formed by Tailwater Capital, filed for a $200 million IPO. http://axios.link/aGbM • Macondray Capital Acquisition, a tech SPAC led by R. Grady Burnett (Bow Capital Partners) and W. Lance Conn (Charter board), filed for a $275 million IPO. http://axios.link/rECm | | | | | | | | More M&A | | • Granarolo, an Italian dairy group, acquired the 49% stake it didn't already own in its British distributor Granarolo UK. http://axios.link/ydFj • Greiner, an Austrian plastics maker, is prepping a 754 million takeover offer for listed Belgian foam company Recitel, per Bloomberg. http://axios.link/Ej7v ⚡ SoftBank and Bharti Enterprises are in talks to sell SB Energy, a based renewable energy group, for more than $650 million to Adani Green Energy, per Bloomberg. http://axios.link/HMhP • Telefonica (Madrid: TEF) is seeking a buyer for Zeleris, a logistics and express-delivery unit that could fetch around €100 million, per Reuters. http://axios.link/4G4S | | | | | | | | Fundraising | | • Zach Perret (CEO of Plaid) and Lauren Farleigh (CEO of DoteShopping) are raising a $30 million VC fund called Mischief, per an SEC filing. | | | | | | | | It's Personnel | | • Andreessen Horowitz promoted Chris Lyons to general partner. He's been with the VC firm for over eight years, most recently focused on its Cultural Leadership Fund. http://axios.link/1qNJ • Bank of America named Johnny Williams as co-head of global tech investment banking. He previously was vice chairman. http://axios.link/Pubu • Jana Messerschmidt stepped down as a partner with Lightspeed Venture Partners. She plans to focus on #Angels, which she helped found in 2015. http://axios.link/yUAZ | | | | | | | | Final Numbers |  Data: Company filings; Chart: Axios Visuals | | | | | | | | A message from Cooley | | What's new in mergers and acquisitions | | |  | | | | Cooley's Mergers and Acquisitions (M&A) team breaks down the SPAC boom, the rise of ESG and the defining market trends of 2021. Stay up to date on the latest in deal-making with insight, analysis and events on the Cooley M&A blog. Learn more. | | | | 📬 Thanks for reading Axios Pro Rata! 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