Big Tech M&A
Last year, the U.S. tech titans slowed their pace of acquisitions, but three companies bucked that trend: Google, Intel, and Salesforce. Of the three, Salesforce had the highest acceleration of deals. Last year the $53 billion software company did 120% more acquisitions than it did in 2015, according to CB Insights. I recently spoke with John Somorjai, the EVP of corporate development and Salesforce Ventures.
Here are a few takeaways from our conversation, which I’ll post in full on Fortune.com later today:
• Salesforce has been aggressively snapping up AI talent, including MetaMind and Krux Digital, the latter a $700 million deal. The key word here is talent (and to some extent, products), says Somorjai: “I have yet to see a large AI-centric business for enterprise cloud.”
• The company isn’t looking to move into more back-office technologies like cloud financials or enterprise resource planning (ERP). There are too many deals it could do related to its existing CRM-focused business, he says.
• Coop-etition is inevitable. Of Salesforce’s 200+ investments, it has acquired nine. Others, like Box, have grown into partners, and others still have grown into competitors.
• Valuations have “moderated” in the last year: “In 2015, a lot of the high growth companies were going at 12x to 14x multiples of revenue. Now it’s more like 8x to 10x. And then if you go down a level, to the companies not in hypergrowth mode but still growing at 30% to 40% a year, the multiples there are comparable to public market,” he says.
• Somorjai believes social media marketing and mobile analytics startups are overhyped: “Those are great examples where so many VCs are investing in companies of similar capabilities. And the valuations are very rich and a lot of money is being thrown at companies not creating sustainable business models,” he says.
Verihoo (Yahizon?): Yahoo reports its earnings after the market closes today. It’s company’s the first earnings report since it revealed its massive hacking, which now threatens to ruin its very complicated agreed-upon sale to Verizon. Convenient timing that this morning we learn the SEC is now investigating Yahoo for waiting to disclose the hacking, adding further headaches for its potential buyer.
In the past, CEO Marissa Mayer has kicked off earnings calls by saying she’s not going to answer questions on Yahoo’s sale process. The current situation could certainly use some reassurance, or explanation, from her, especially since Verizon executives have been chatty in the press about their qualms on the deal in recent weeks. But instead, the company is choosing to minimize noise around the deal – it isn’t even holding an earnings call.
Note: This article has been corrected to say that Box is a partner of Salesforce, not a competitor.
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• Tricentis, a Vienna, Austria-based developer of software testing tools, raised $165 million in Series B financing from Insight Venture Partners.
• Nuna, a San Francisco developer of a data platform for Medicaid, has raised more than $90 million in funding, led by Kleiner Perkins Caufield & Byers and John Doerr.
• UR Work, a Chinese co-working startup, has raised 400 million yuan ($58 million) in Series B funding, bringing its valuation above $1 billion, according to China Daily. Read more.
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• TrustPilot, a multi-language online review community based in Copenhagen, has raised $6.9 million from Draper Esprit.
• Mainstreaming, an Italian video delivery startup, has raised €4 million ($4.2 million) in Series A venture capital funding from United Ventures.
• Mobike, a Chinese bicycle rental app, raised an undisclosed amount of funding from Foxconn. The investment comes shortly after the company raised $215 million in funding from Tencent Holdings and Warburg Capital. Read more at Fortune.
HEALTH + LIFE SCIENCES DEALS
• Edeniq, a Visalia, Calif.-based cellulosic and biorefining technology company, has raised $7 million in capital from existing investors, including Flint Hills Resources, Angeleno Group, I2BF Global Ventures, and Cyrus Capital, along with new investor Trinity Capital Investment.
• Adarza BioSystems Inc., a Henrietta, N.Y.-based developer of a biological assay platform for measuring clinical and point-of-care samples, has raised $17 million in its Series C funding from RiverVest Venture Partners.
PRIVATE EQUITY DEALS
• Precision Castparts Corporation, a piping components company owned by Berkshire Hathaway, will acquire Wilhelm Schulz, a German piping component company, according to Bloomberg. Read more.
• Warburg Pincus portfolio company Accriva Diagnostics, has agreed to acquire Werfen, a privately held medical diagnostics firm headquartered in Barcelona, Spain, and its subsidiary Instrumentation Laboratory, based in Bedford, MA. In the transaction, Werfen and its subsidiary have acquired all shares of Accriva.
• Warburg Pincus has hired Goldman Sachs to sell Safetykleen Europe, a provider of used oil collection, recycling and parts cleaning services, Reuters reported. Warburg Pincus acquired the company 2008 for 565 million pounds ($695.57 million) and could ask as much as 640 million pounds including debt for the asset. Read more.
• Funko, an Everett, Wash.-based maker of pop culture products backed by ACON Investments, has acquired the assets of Underground Toys Unlimited, a creator, manufacturer and distributor of licensed products based in London.
• Grupo Espaçolaser, a Brazil-based provider of laser hair removal services, has raised growth capital from L Catterton. Terms of the transaction were not disclosed.
• Bitcoin Investment Trust, a vehicle created by SecondMarket co-founder Barry Silbert, has filed to raise $500 million in an IPO on NYSE Arca.
• ING Life Korea, an insurer backed by MBK Partners, has hired Morgan Stanley and Samsung Securities for an IPO. It plans to raise at least $1 billion, according to Reuters. Read more.
• FinTech Acquisition Corp. a blank-check company backed by The Bancorp, priced its IPO at $10 per share, raising $153 million on Nasdaq Capital Market under the symbol FNTEU.
• PAI Partners has entered exclusive negotiations to sell Cerba HealthCare, a European clinical pathology business, to Partners Group and the Public Sector Pensions Investment Board.
• Outfit7, Cyprus-based the maker of the Talking Tom mobile app, has sold to United Luck Consortium for $1 billion. The company’s apps have been downloaded more than 5.6 billion times. Read more at Fortune.
• Sprint (NYSE:S) has agreed to acquire 33% of Tidal. Read more at Fortune.
• AMC Theatres (NYSE:AMC) has agreed to acquire Stockholm-based Nordic Cinema Group Holding, a theater operator, from European private equity firm Bridgepoint and Swedish media group Bonnier Holding in an all-cash transaction valued at SEK 8,250 million ($929 million).
• Francisco Partners has sold Source Photonics, a West Hills, Calif.-based provider of optical components and modules to a consortium led by Redview Capital and Asia-IO. TR Capital, Axiom Asia and Aberdeen Asset Management participated. Francisco Partners acquired the asset in 2010 as a carve-out from MRV Communications.
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• Down, the San Francisco startup known for making the controversial app “Bang With Friends,” has agreed to sell to Paktor, a Singapore social networking company. Down was backed by Tim Draper and Great Oaks Venture Capital.
FIRMS + FUNDS
• China has created a 100 billion yuan ($14.55 billion) fund to invest in internet technology. Read more at Fortune.
• Angeles Equity Partners, a Los Angeles investment firm founded by Timothy Meyer and Jordan Katz, has raised $360 million for its first fund.
• Northlane Capital Partners, a Bethesda, Md.-based private equity firm, has completed its spinout from American Capital in connection with American Capital’s sale to Ares Capital Corporation (Nasdaq: ARCC).
• Amit Singal, former Senior Vice President of Search and 176th employee at Google, has joined Uber SVP of Engineering, according to TechCrunch. Read more.
• Joshua Pang has joined Blackstone Group as a principal. He was previously a principal at BC Partners.
• Hugo Barra, VP of the global division for Chinese device maker Xiaomi, will leave the company and return to the U.S. Read more at Fortune.