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Plus: Antitrust, scoops, and more | Saturday, February 26, 2022

Open in app View in browser   Presented By EY   Axios Pro Rata By Kia Kokalitcheva ·Feb 26, 2022 Welcome to a special Saturday edition of Pro Rata featuring some of the best content from our Axios Pro newsletters and reporters. What's more... 💰 You can try Axios Pro free for the entire month of March, no credit card required. Sign up by Feb. 28 to secure your invitation to our Pro-exclusive events featuring Jeremy Allaire (CEO, Circle), Kristen Green (co-founder, Forerunner), and Julia Cheek (CEO, EverlyWell Health). Sign up here for your one-month preview. Today's newsletter is 1221 words, a 5-minute read.     1 big thing: Optum plans to fight DOJ Illustration: Aïda Amer/Axios   The U.S. Justice Department's lawsuit to block Optum's planned acquisition of Change Healthcare is "completely backwards," and the acquirer intends to defend its case vigorously, an Optum official tells Axios' Sarah Pringle. Driving the news: More than a year after the $13 billion deal was proposed, regulators on Thursday concluded that the combination with the health care technology company is anti-competitive in nature, because Optum sits under UnitedHealth Group. "The department is speculating to what might happen without looking at the past," the Optum official says, calling two key theories in the complaint "deeply flawed." Zoom in: The two anti-competitive effects, per the complaint: United, via Change, would gain unfair access to a vast amount of its rival health insurers' competitively sensitive data. United would also keep for itself Change's collection of software and services, now available to various health care players — along with access to any future innovation. Specifically, Change's EDI clearinghouse and claims editing technology in United's hands "is likely to significantly lessen competition" with other payers and providers, the complaint says. What they're saying: The Optum official says the complaint ignores the fact that Optum, for more than a decade, has had access to third-party commercially sensitive information, similar to what it could be getting as a result of the transaction. "We have built a fiercely multi-payer platform at Optum successfully over the years because we've been able to safeguard data." Under Optum, Change would continue to benefit the entire market, the Optum official adds. "The whole thesis behind this transaction, and frankly the whole reason Optum exists, is to make the entire health care system more seamless and work better for everyone." Yes, but: Regulators suggest the deal would rid United of its only "major rival" for first-pass claims editing technology, giving United a monopoly share in the market. Axios reported in January that Change is working with Barclays on a sale process for ClaimsXten, its claims editing and payment integrity software business. The Optum official declined to comment on how the lawsuit impacts that divestiture process, or its current status, but says that it "was a fix for the one market overlap issue that the department identified." "Change has had some discussions with potential buyers, but has not entered into a purchase agreement," the complaint states, referring to ClaimsXten. What's next: Timing remains TBD, but Optum plans to fight, which means the parties will soon be heading to court. Originally published on Friday, Feb. 25.     2. Russia's Ukraine invasion and the fintech industry Illustration: Brendan Lynch/Axios   Russia's invasion of Ukraine and the geopolitical shockwaves it's creating are hitting nearly all corners of the global economy, including the nascent but fast-growing field of fintech, writes Axios' Lucinda Shen. "As almost all tech companies have some exposure to Ukraine/Russia…. every CEO is now a 'war-time' CEO," tweeted fintech investor Saar Gur. It's a topic close to the hearts of many executives and developers in the crypto and fintech ecosystem: Russian-Canadian Ethereum founder Vitalik Buterin called the invasion a "crime." It's also thrown fintechs involved in money transfers into the heart of the geopolitical crisis. Wise capped money transfers to Russia and Ukraine to about $224, citing recent developments making it "more difficult to operate our service." Brex confirmed it stopped cash and card transactions to or from Ukraine to comply with a U.S. executive order, but said it was working on a solution to lessen the impact on customers in the area. Revolut says it offered relocation support to Ukraine employees last week. One thing is clear: Moving money in and out of Ukraine and Russia has been made more difficult, in part due to new sanctions imposed on major Russian financial institutions and oligarchs. But it's not impossible, thanks in part to fintech developments and cryptocurrencies. Yes, centralized and highly regulated crypto companies will likely comply with sanctions. But how do you police more decentralized players? Some believe Russia's wealthiest could use crypto channels to blunt the impact of sanctions. The uncomfortable reality: Russia has been dealing with sanctions for many years, with its own set of banks and fintechs. Keep reading. Originally published on Friday, Feb. 25.     3. Scoop: LVMH flirts with Ralph Lauren merger Photo: Desiree Navarro/WireImage   Luxury giant LVMH has held exploratory discussions with Ralph Lauren over the past couple of years about a possible acquisition of the U.S. fashion brand, according to several sources familiar with the situation, writes Axios' Richard Collings. Why it matters: At any premium to its current enterprise value, which is just under $8 billion, it would be one of the largest apparel deals of all time and cement LVMH's presence in the U.S. market. Between the lines: Sources say the founder, chairman, and chief creative officer Ralph Lauren is weighing a succession plan for the business he launched in 1967. The intrigue: LVMH has been hesitant about making acquisitions of large U.S. brands given the different business approaches toward luxury between Europe and the U.S. Keep reading. Originally published on Tuesday, Feb. 22.     A message from EY Firms are no longer waiting for investors to come to them     While the amount of capital available to PE firms right now is unprecedented, this hardly means firms are waiting for investors. According to EY's 2022 Global Private Equity Survey, more than 40% of fund managers seek to raise funds through retail and wealth management channels. Read more.     4. Big money for small(ish) solar Illustration: Aïda Amer/Axios   Aspen Power Partners is launching with $120 million in funding to support its focus on smaller-scale solar developments, the company tells Axios' Alan Neuhauser. Why it matters: The announcement is the latest sign of surging investor interest in distributed and community solar, especially community. What they're saying: "Utility-scale solar and residential solar — from a business standpoint the returns have compressed along with the maturity," co-founder Jackson Lehr tells Axios. "So one of the things we like, from a business standpoint, for less mature segments, is that there's an opportunity to earn higher returns." The big picture: Supply chain disruptions and interconnection delays last year hamstrung new installations of community solar, as well as the commercial and industrial segments of distributed solar. Keep reading. Originally published on Thursday, Feb. 24.     5. Discovery readies WarnerMedia merger amid uncertainty over CNN Data: Company filings. Note: Paramount+ & Showtime was formerly CBS All Access + Showtime, Discovery includes discovery+ as well as other Discovery streaming services. Hulu only includes on-demand subscribers. Chart: Axios VIsuals As Discovery prepares to close its merger with WarnerMedia, its ultimate plans for CNN remain unclear, writes Axios' Tim Baysinger. Why it matters: It's a big area of the business to be left hazy. Even as he was praising CNN's coverage of Russia's invasion of Ukraine, Discovery CEO David Zaslav said the strategy for a CNN under Warner Bros. Discovery has yet to be formed. Details: CNN is preparing to launch its own streaming service, CNN+, in the spring. But there is skepticism as to whether or not people would pay for a standalone CNN service. By the numbers: Discovery now has 22 million streaming subscribers, the bulk of that going toward Discovery+. That is still far behind other more established streaming services. HBO Max has more than 73 million subscribers. Netflix and Disney+ have more than 100 million each, with Netflix topping 200 million. The big picture: Streaming is expensive and even those who show growth can get punished by a Wall Street crowd that is growing increasingly wary of streaming's long-term viability. What's next: The merger is expected to close in mid-April, a source familiar with the deal tells Axios. There are still a few more boxes to check, starting with the Discovery shareholder vote on March 11. The deal has already received regulatory approval in the U.S. and the European Union. Keep reading. Originally published on Thursday, Feb. 24.     🧮 Final Numbers Data: Google Finance. Chart: Axios Visuals Stocks of companies targeted by ESG activists have varied in their performance over the last 12 months, underscoring that the tactic is about moving a company's moral compass rather than its stock price, notes Axios' Richard Collings. Originally published on Tuesday, Feb. 22.     A message from EY Which six consumer categories PE should watch     In this episode of our EY NextWave Private Equity podcast, Lindsey Kiely and Bhakti Nagalla speak to our host, Winna Brown, and explore the consumer product categories, behaviors and trends investors should keep an eye on. Listen to our latest podcast here.   🙏 Thanks for reading! See you on Monday for Axios Pro Rata's weekday programming, and please ask your friends, colleagues, and deal news enthusiasts to sign up. Go deeper with Axios Pro: Deals, featuring hyper-relevant news and analysis across PE, VC and M&A.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. 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. 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