term sheet

By Dan Primack
June 10, 2016

Friday Feedback

The sun is shining, we’ve just announced more Fortune Brainstorm Tech participants and I’m heading over to watch E “graduate” from preschool (she began singing graduation songs at 5am, so preemptive apologies for any typos). In other words, it’s time for some Friday Feedback:

Most of your emails related to last Thursday’s column on Uber accepting a $3.5 billion investment from a Saudi sovereign wealth fund.

Cindy leads us off: “Really?! The Saudi government’s investment and active engagement with Uber is what tipped your scale of morality against the company? I’m compelled to highlight Uber’s unfair labor practices, monopolist behavior and the flagrant disregard for laws and regulations as well as call out your reference to its questionable benefits–namely reduced car ownership (hello aggressive and predatory subsidized leasing program for drivers). Uber has its logistical benefits for sure, but I’m not confident that this service is a net positive for society. I firmly believe the billions of dollars invested in Uber might have been better spent on public transportation infrastructure–after all, it is largely the public’s money that has been invested if you think about the LP base of its recent investors.”

Donna: “I could not agree more on your comments about Uber and the Saudis. When growth at all costs is the mantra, ethics become malleable and we lose sight of the major influence tech leaders can have to drive critical social and economic reform.  A huge missed opportunity to bring change.”

Scott: “Wow. How naïve. Are you going to divest of every company in which the Saudis have a significant investment? Good luck with that… Uber’s obligation to women, the world, and the universe is to deliver a great service. Full stop. It’s not to parse or change anyone’s politics. If anything, Uber helps to make driving irrelevant, which is a plus for Saudi women. Like you, I think the delay in going public for those unicorns that deserve their valuations is very misplaced and a great disservice to their employees and shareholders.  But if Uber found it convenient to raise $3.5B from the Saudis instead of the public markets, bully for them.  As a US citizen, I’ll take the recycling of petrodollars as inbound FDI any day of the week.”

Fahad: “I was a big fan of your articles and benefited a lot from you’re analysis and writings. I really wish you have continued focusing on business and deals and not criticizing other governments. The PIF is an investor and the country’s internal policies has nothing to do with this investment.”

Gavin: “Well done for speaking out Dan! Agree with every word.”

• Frank on the Dell valuation ruling: “Really scary stuff, the idea that a judge sitting in Delaware can basically, all by himself, override a well thought out and documented ‘Fairness Opinion’ from a major/reputable firm… Fairness opinions are very carefully arrived at by investment banking firms, and always err on the high-side, due to the almost unlimited upside and legal expenses (if you are wrong, or it is contested) versus the relatively small fees that you earn. The final decision is rendered after months of work, culminating in a 60-90 min presentation to a committee of that includes the firm’s most senior M&A bankers, group heads, general counsel and senior capital markets specialists (if a debt/equity component is included). That one guy, sitting in his Chambers in Delaware has a more accurate opinion than that committee is nuts on its face.”

• Anon: “We get it: You hate Trump. I can’t wait for him to become president, because he’s going to put you and all of your lefty mainstream media colleagues out of business!”

• Have a great weekend!


THE BIG DEAL

• Merck (NYSE: MRK) has agreed to acquire Afferent Pharmaceuticals, a San Mateo, Calif.-based developer of small molecule drugs for the treatment of neurogenic respiratory, urologic and pain disorders. The deal is valued at upwards of $1.25 billion, including a $500 million cash upfront payment. Afferent has raised around $111 million in VC funding, including a $55 million Series C round last year at a $280 million post-money valuation. Shareholders include Fidelity, Jennison Associates, New Leaf Ventures, Partner Fund Management, Redmile Group, Tekla Healthcare Investors and Tekla Life Science. Read more.


VENTURE CAPITAL DEALS

• Hireology, a Chicago-based provider of employee selection management, has raised $12 million in new VC funding. Baird Capital led the round, and was joined by return backers Bain Capital Ventures and Lightbank. www.hireology.com

• Forge, a San Francisco-based videogame capture solution, has raised $4.5 million in Series A funding led by True Ventures. Read more.

• Lux, a San Francisco-based mobile shopping app for home décor, has raised $3.5 million in Series A funding from IDG Capital Partners and FREES Fund. www.getluxapp.com


PRIVATE EQUITY DEALS

• Clayton, Dubilier & Rice has agreed to acquire Tranzact, a Fort Lee, N.J.-based provider of direct-to-consumer sales and marketing solutions for U.S. insurance carriers, from shareholders like White Mountains Insurance Group Ltd. (NYSE: WTM). No financial terms were disclosed, although earlier news reports said that Tranzact generates around $50 million in annual EBITDA. Evercore managed the process. Read more.

• Huron Capital Partners has acquired Good Sportsman Marketing LLC, a Grand Prairie, Texas-based provider of branded hunting accessories. No financial terms were disclosed.
www.gsmoutdoors.com

• PSP Investments has acquired a “significant minority interest” in Allflex Group, a provider of animal intelligence and monitoring technologies for livestock and pets. Existing Allflex owner BC Partners will retain a control stake. www.allflexusa.com

• Squadron Capital has acquired Forum Plastics Inc., a Waterbury, Conn.-based maker of thermoformed medical plastic products. No financial terms were disclosed. www.forummolding.com

• Turnspire Capital Partners has acquired United Plastics Group Inc., a manufacturer of complex assembled components and finished products serving the datacenter, automotive, energy and industrial markets, from MedPlast Inc. No financial terms were disclosed. MedPlast backers include Baird Capital Partners. www.medplastgroup.com

• WorkForce Software, a Livonia, Mich.-based portfolio company of Insight Venture Partners, has acquired Workplace, a British provider of cloud-based employee scheduling software for the retail and hospitality markets. No financial terms were disclosed. www.workforcesoftware.com


IPOs

• ASR Nederland, a Dutch insurer controlled by Fortis, raised $1.2 billion in an Amsterdam IPO. Read more.

• Atkore International Group, a Harvey, Ill.-based maker of electrical circuitry raceway products for non-residential construction and renovation markets, raised $192 million in its IPO. The company priced 12 million shares at $16 per share (below $20-$22 range), for an initial market cap of approximately $999 million. It will trade on the NYSE under ticker symbol ATKR, while Credit Suisse, Deutsche Bank and J.P. Morgan served as lead underwriters. Atkore reports around $67.3 million of net income on $6.4 billion in revenue for the 12 months ending Dec. 25, 2015. It is owned by Clayton Dubilier & Ricewww.atkore.com

• China Online Education Group, a Beijing-based online education platform focused on English language proficiency, raised $45.6 million in its IPO. The company priced 2.4 million American depository shares at $19 per share (middle of $18-$20 range). It will trade on the NYSE under ticker symbol COE, while Morgan Stanley and Credit Suisse served as lead underwriters. The company reports a $50.5 million net loss on nearly $24 million in revenue for 2015. Shareholders include DCM (24.1% pre-IPO stake) and Sequoia Capital China (19.3%).


EXITS

• Riverstone Holdings has agreed to sell Wayne Fueling Systems, an Addison, Texas-based provider of fuel retailing equipment, to Dover Corp. (NYSE: DOV) for $780 million in cash. www.wayne.com

• Southfield Capital has sold BioPharm Communications, a New Hope, Penn.-based provider of marketing programs for the pharma and biotech industries, to Omnicom Health Group, a unit of Omnicom Group (NYSE: OMC). No financial terms were disclosed. www.biopharmcommunications.com


OTHER DEALS

• Science Exchange, a Cambridge, Mass.-based online marketplace for scientific research, has acquired OnDeckBiotech, a community and marketplace that connects biopharma companies with contract service providers. No financial terms were disclosed. Science Exchange has raised around $30 million in VC funding from firms like Maverick Capital, Union Square Ventures, OATV, Windham Venture Partners, Kindling Capital and Collaborative Fund. www.scienceexchange.com


FIRMS & FUNDS

• Next Frontier Capital, a Bozeman, Mont.-based VC firm, has closed its debut fund with around $21 million in capital commitments from LPs like Foundry Group and the University of Montana. www.nextfrontiercapital.com

• Silicon Valley Associates is targeting $250 million for its debut socially-responsible VC fund, according to a press release. It is led by former tech hedge fund manager Garrett Van Wagoner. www.svaventure.com

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IN MEMORIAM

Tom Perkins, the legendary venture capitalist who co-founded Kleiner Perkins Caufield & Byers, passed away last night at the age of 84 years-old. Read more.

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