| | | | | | | Presented By Fidelity | | | | Axios Pro Rata | | By Dan Primack · Jul 11, 2022 | | | | | | Top of the Morning |  | | | Photo illustration: Aïda Amer/Axios. Illustration: Gotham/Getty Images | | | | The Elon Musk vs. Twitter fracas has hurt almost everyone in its proximity, no matter how a Delaware judge may rule or if the two sides settle out of court. So let's rank 'em: The biggest loser: Musk, who's committed more unforced errors than a toddler playing tennis against a wall. - Best case scenario for the Tesla CEO is that all he's hurt is his reputation, and eliminated any chance he'll ever again be taken seriously when trying to buy a company not co-founded by his cousins.
- Middle ground is that he also shells out a ton of cash, possibly via a negotiated settlement. Well more than the $1 billion breakup fee, but well less than $44 billion.
- Worst case scenario is that a Delaware judge forces Musk to buy Twitter for $54.20 per share, even though he doesn't want it and might lose some of the associated financing (depending on how tight those contracts were written). And, as a kicker, the SEC also imposes penalties tied to his Twitter stock purchase disclosures.
2. Twitter employees, sitting in a prickly limbo over which they have no control. - Their top issue is uncertainty, over the company's direction and who will be making those decisions going forward. Imagine if your employer sued to install a new boss who has screamed that he doesn't want to be your boss.
- A lot of employees also might lose money, given that Musk was offering to pay much more than Twitter shares can get on the open market. Plus, some employees have full vesting provisions on stock options grants, tied to a change of control.
3. Twitter's board, which knew it was a bad idea to get into bed with Musk but did so anyway. It's morning-after regret, multiplied by 44 billion. - Remember, the board initially adopted defensive measures like a poison pill, but faced internal (Jack Dorsey) and external (Musk's Twitter army) pressures. Plus the threat of litigation from shareholders who wanted that $54.20 price. So it took the path of least resistance and caved.
4. Musk fanboys (and fangirls), many of whom mistook Chutes and Ladders for 3D chess. - When Twitter's board first acted dismissively, these folks howled. How dare Twitter not take Musk seriously or suggest that his efforts could harm the company? When reporters suggested that Musk acted too impulsively, particularly in eschewing normal due diligence, we were reminded that we didn't revolutionize the auto or space industries, and thus should be ignored.
- Now, with Musk's endorsement, they're peddling a theory that Musk only walked away to spark a lawsuit that will force Twitter to reveal additional "bot" data in court.
- First, this is highly unlikely to happen. Delaware Chancery Court would be opening up a huge loophole by allowing a buyer to go on a fishing expedition after signing a binding merger agreement. Future acquirers with cold feet would jump on in.
- Second, even if the court did allow it and new disclosures validated Musk's hunch about elevated spam levels and that the error was material, what would he have gained (except maybe getting out of the deal he voluntarily proposed)? Proving that a company in which he bought nearly a 10% stake should be worth less than he paid for it? Some long game to damage the platform via which he most likes to communicate? Chaos for memes sake?
But don't worry, there are some winners: Lawyers racking up billable hours. |     | | | | | | The BFD |  | | | Illustration: Annelise Capossela/Axios | | | | Dufry (Swiss: DUFN), the world's largest duty-free retailer, agreed to merge with Autogrill (Milan: AGL), a travel concessionaire controlled by the Benetton family. Why it's the BFD: This will be a test of scale and synergy, against the backdrop of a travel industry resurgence. Details: The Benettons will transfer their 50.3% Autogrill stake to Dufry, in exchange for stock, and then Dufry will launch a mandatory tender offer for remaining Autogrill shares at a €2.44 billion valuation. The tender, which will be offered in either cash or stock, is at a significant discount to where Autogrill shares closed on Friday. The bottom line: The combined company would have around 5,500 stores, including within 1,200 airports, and expects cost benefits in areas like rent, product purchasing and logistics. But it's unclear how much savings the company will find from the tie-up of airport and non-airport (i.e. highway) assets. | | | | | | | | Venture Capital Deals | | • Planetarium Labs, a South Korean web3 gaming startup, raised $32m in Series A funding. Animoca Brands led, and was joined by Krust Universe, WeMade and Samsung Next. http://axios.link/DFuQ • Deuna, a Mexican one-click checkout startup, raised $30m in Series A funding. Activant Capital led, and was joined by Valor Capital, Abstract Ventures, Acrew Capital and Upload Ventures. http://axios.link/mPl1 • Kadmos, a Berlin-based platform for international salary payments, raised €29m in Series A funding. Blossom Capital led, and was joined by Addition and Atlantic Labs. http://axios.link/9HLh • Myne, a Berlin-based startup for shared investments in holiday homes, raised €23.5m from Ramin Niroumand's FinTech Fund, embedded/capital, HomeToGo founder Nils Regge's family office, TruVenturo, Scope Hanson, Rivus Capital and CoastCap. www.myne-homes.de 🚑 Moving Analytics, an LA-based virtual at-home intervention program for cardiac patients, raised $20m in Series A funding. Wellington Access Ventures and Seae Ventures co-led, and were joined by Philips Ventures. http://axios.link/PFJ5 • Asset Class, a provider of private capital investment management software, raised $11.6m in Series A funding. Canapi Ventures led, and was joined byLive Oak Ventures, Plexus Capital and Total Technology Ventures. www.assetclass.com • Sortera Alloys, a Fort Wayne, Ind.-based industrial scrap metal sorting and recycling company, raised $10m. Assembly Ventures led, and was joined by Breakthrough Energy Ventures and Novelis. www.sorteraalloys.com | | | | | | | | A message from Fidelity | | You drive growth — Fidelity drives your equity comp to match | | |  | | | | Fidelity Stock Plan Services provides equity compensation and management solutions for your company's journey to IPO and beyond. They keep your equity comp in sync with you, all the way. Why it's important: They can help you keep your momentum going — to and through IPO. | | | | | | Private Equity Deals | | • 11:11 Systems, a Fairfield, N.J.-based portfolio company of Tiger Infrastructure Partners, bought Static1, a Boonton, N.J.-based provider of managed network and IT infrastructure development and services. www.1111systems.com ⚡ Budderfly, a Shelton, Conn.-based energy efficiency-as-a-service company, raised around $500m from Partners Group. http://axios.link/xN52 🚑 Court Square Capital Partners acquired a majority stake in LA-based West Coast Dental, as first reported by Axios Pro. http://axios.link/ESHQ • CPP Investments paid US$334m for a 19.3% stake in D1, a Colombian discount food retailer. http://axios.link/2hTp • InfraRed Capital Partners invested $150m in LiveOak Fiber, a Brunswick, Ga.-based regional broadband service provider. www.liveoakfiber.com • MidOcean Partners bought Pragmatic Institute, a Phoenix-based product management training company, from Renovus Capital Partners. www.pragmaticinstitute.com • OMERS agreed to buy British utility services firm Network Plus, with Bloomberg reporting the deal was valued at around £600m. Sellers include Livingbridge. http://axios.link/4dNn • Ronin Equity Partners acquired and merged three companies to form a single maker of outdoor power equipment and utility trailers with over $60m in annual revenue: DK2 (Canada), SnowBear (Canada) and Currahee Trailers (Georgia). Co-investors include Stephens Capital Partners, Northwood Ventures and Knott Partners. | | | | | | | | Public Offerings | | • Five companies may go public on U.S. exchanges this week, but the largest offering (Nano Labs) is targeting only a $20m raise. http://axios.link/GeRZ | | | | | | | | Liquidity Events | | • PAI Partners is considering options for Albea Group, a French beauty and personal care packaging company with $1.2b in 2021 revenue, per Bloomberg. This could result in either a sale or company split. http://axios.link/Cpo3 | | | | | | | | More M&A | | • BNI, a state-owned Indonesian bank, may seek to sell part of its life insurance unit at around a $1b valuation, per Bloomberg. http://axios.link/JFBv • GoHenry, a British pre-paid debit card startup focused on kids and teens, bought Pixpay, a French banking app for teens. GoHenry backers include Edison Partners, Gaia Capital Partners, Citi Ventures and Muse Capital, while Pixpay raised funding from such firms as Bpifrance and GFC. http://axios.link/KCQ7 • SCB X (fka Siam Commercial Bank) of Thailand is considering a sale of its asset management unit, which could fetch between $1b and $1.5b, per Bloomberg. http://axios.link/BVhW | | | | | | | | Fundraising | | • Valar Ventures of New York raised $665m for its eighth fund, per an SEC filing. www.valar.com | | | | | | | | It's Personnel | | • Richard Elder joined Carlyle as head of global portfolio solutions. He previously was chief transformation officer at Carlyle portfolio company Nouryon. www.carlyle.com • Simon Thelwall-Jones joined U.K.-based Deepbridge Capital as a venture partner. He previously was with MSIF and Development Bank of Wales. www.deepbridgecapital.com • Alex Zilberman stepped down as Natixis' co-head of structured credit and credit trading to join Blue Owl, per Bloomberg. http://axios.link/mBAK | | | | | | | | Final Numbers |  Data: Yahoo Finance; Chart: Axios Visuals Twitter shares sank at the open today, following Musk's late Friday announcement that he'll seek to end his deal to buy the company. - Soaring this morning, on the other hand, are shares of Digital World Acquisition Corp., the SPAC that's agreed to merge with former President Trump's Truth Social. Up more than 22% at last check.
- This is despite last week's revelations about who is, and who isn't, still in Truth Social's C-suite or on its board of directors.
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