On deals and dealmakers.

By Erin Griffith
January 30, 2017

THE WEEKEND

The tech industry has found its backbone, making increasingly bold statements and donations in reaction to President Trump’s order to deny entry to refugees and citizens of predominantly Muslim countries over the weekend. It culminated with Google and its employees donating $4 million the American Civil Liberties Union, the Immigrant Legal Resource Center, the International Rescue Committee and the United Nation’s refugee agency (UNHCR). Alphabet co-founder Sergey Brin was even seen protesting at SFO over the weekend.

As some commentators have pointed out, the tech industry offered little vocal opposition over issues like Trump’s border wall or his threats to freedom of the press. But immigration is the industry’s pet political topic. Work visas may be next. Casey Newton at the Verge has ranked the responses from strongest to weakest, noting, “Your obligation is to oppose this ban for business reasons. Your opportunity is to oppose this ban for moral reasons.”

Elsewhere in the corporate world, the CEOs of Nike, Allergan and Starbucks spoke out against the order. Others, including Jamie Dimon and Jeff Immelt, spoke only in terms of how this affected their businesses. CEOs from the manufacturing industry, Wall Street, and Trump advisor Stephen Schwarzman remained quiet.

M&A: When First Round Capital asked startup founders which company they most wanted to acquire their startup, they chose Alphabet more than any other company. Eleven percent of those surveyed voted for Alphabet, 5% chose Facebook, 4% chose Amazon and 4% chose Salesforce.

I recently spoke with Don Harrison, who heads up M&A at the most significant part of Alphabet – the Google part. We discussed his priorities, what Alphabet’s “new austerity” means for M&A, and whether AI startups are selling snake oil. A few takeaways:

• Google’s M&A priorities are the same as the company’s overall priorities: AI, Cloud, hardware and Google Assistant, AR, and VR.

• Alphabet has been an active acquirer for the past two years but we haven’t seen any major, splashy M&A deals. Harrison says the big swings tend to be “lumpy” and that 2014 was a “big year” for the company in terms of deals. “My team is still suffering from 2014,” he says.

• Harrison does not believe that the “new austerity” at Google, driven by the Alphabet re-organization and CFO Ruth Porat’s financial discipline, means an end to aggressive deals like the acquisition of YouTube:

“Looking at Sundar’s strategy on the Google side of things, I’ve only seen it grow in the areas we’re focused on and thinking about addressing. Looking at the strategy of the company, I think we’ve succeeded over the last year since we transitioned to Alphabet to be more disciplined about the bets we’re supporting. But our willingness to buy a DoubleClick, or a DeepMind, et cetera, I’ve only seen excitement about bringing those kinds of opportunities forward. We’ll be just as aggressive as we were in 2006 when we decided to buy YouTube.“

• Harrison said he is still excited by the smart home thesis behind Nest and Dropcam. When asked, given the reports of internal issues at the companies, if he would structure the deals differently now, Harrison spoke in general about the three things that make deals successful at Google. They are: (1) Making sure the key leaders at the company share a vision with the founder, (2) Making sure the strategy drives the M&A, as opposed to the M&A driving the strategy, and (3) Making sure [Google has] good support mechanisms for these companies after they come in.

• I asked about a trend that I find both amusing and a tiny bit concerning: According to some VC’s, AI and machine learning PhD students from Stanford and MIT are apparently banding together and calling themselves companies without much of an idea or product, but as a way to sell themselves in high-priced talent acquisitions. Has he seen that happening?

“These companies are very early stage and the techniques they’re using are not proven yet. The business models have still to come – so these are very early stage. And so I know you’re being humorous, but the universities are driving the talent.

“When we do our diligence, we think about whether what they’re producing is worth the investment. And we now have really good people at the company focused on this, so our ability to sniff out in diligence a promising idea or approach versus companies that aren’t bringing a lot of value to the table is pretty good. But because we do investment after investment in this space and have assembled a pretty good team, these founders are excited to come work with us.”

The full Q&A will be up on Fortune.com later today.


THE LATEST FROM FORTUNE...

• The global backlash to the immigration ban.

• The end of the honeymoon between Trump and Silicon Valley.

• Hotel smart locks hacked.

…AND ELSEWHERE

The battle of the raging b****. Scaramucci’s mystery investors. The former Clinton aide rewriting Silicon Valley’s political playbook. Old-fashioned jet tracking sniffs out a big M&A deal. Visualizing Trump’s 1,500 business connections. The rule of law. The ACLU’s $24.1 million in donations.


VENTURE DEALS

Altiostar Networks, a Tewksbury, Mass.-based developer of equipment designed to extend mobile network operators’ LTE networks, raised $27 million in funding, according to an SEC filing. Investors weren’t named, but previous backers include Excelestar Ventures and Cisco Systems.

The Bouqs, a Marina Del Rey, Calif.-based online flower retailer, raised $24 million in Series C funding, according to TechCrunch. Partech Ventures led the round, and was joined by NextEquity Partners, Reimagined Ventures, Azure Capital Partners, KEC Ventures, Quest Venture Partners, and Robert Herjavec.

Budbee, a Stockholm-based delivery service, raised €3 million ($3.2 million) in funding, according to Tech.eu. Investors include H&M CEO Karl-Johan Persson, Sebastian Siemiatkowski, and Paul Fischbein. Read more.

Spoke, a U.K.-based online menswear brand, raised $1.8 million in funding. Oxford Capital led the round, and was joined by Forward Partners, Seedcamp, and a number of angel investors.

UberCloud, a Los Altos, Calif.-based cloud simulation for engineers and scientists to discover, test, and buy computing on demand, raised $1.7 million in funding. Earlybird Venture Capital led the round.


HEALTH + LIFE SCIENCES DEALS

Biscayne Neurotherapeutics, a spin-out of Miami-based Biscayne Pharmaceuticals that is working to a develop anti-epileptic drug, raised $3 million in Series B funding, according to The Miami Herald. Quark Venture, GF Securities, and Mesa Verde Venture Partners led the round. Read more.

Ampersand Capital Partners and 1315 Capital agreed to acquire Genoptix’s commercial laboratory. Genoptix, a Carlsbad, Calif.-based provider of specialized oncology diagnostic services, is a subsidiary of Novartis AG (SWX:NOVN). Financial terms were not disclosed.


PRIVATE EQUITY DEALS

IBA Molecular, a French biopharmeutical company backed by CapVest Associates, completed its previously announced purchase of Mallinckrodt (NYSE:MNK) nuclear imaging business. An earlier statement from the company valued the deal at about $690 million.

JW Capital acquired Eco Flower, an Ogden, Utah-based sustainable floral bouquet company.

Northlane Capital Partners acquired PAR Excellence Systems, a Cincinnati-based provider of automated supply chain management systems and related support services to hospitals across the United States

Harvest Partners acquired a $62.5 million minority stake in GPM Investments, a  Richmond, Va.-based owner and operator of convenience store chains in the U.S.  Terms of the transaction were not disclosed.

•  HGGC invested in Davies Group, a London-based outsourced insurance service provider.

Thoma Bravo completed its previously announced purchase of a majority stake in Planview, an Austin, Texas-based provider of collaboration and resource management products, from Insight Venture Partners. Financial terms were disclosed. Insight will retain a minority stake in the company.

Pelican Energy Partners recapitalized and invested in Global Heat Transfer, an Edmonton-based company that manufactures and repair of radiators, oil coolers, gas coolers, and industrial cooling systems.


OTHER DEALS

Vodafone Group (LSE:VOD) is in talks to merge its Indian subsidiary with Idea Cellular (NSEI:IDEA), a Mumbai-based provider of GSM based mobile services, which could lead the company to make its India unit a separate business. Read more at Fortune.

Keysight Technologies (NYSE:KEYS) agreed to acquire Ixia (Nasdaq:XXIA) for about $1.6 billion in cash, according to Reuters. Keysight offer, at $19.65 per share, represents an approximately 8% premium to Ixia’s close on Friday. Read more.

McDonald’s (NYSE:MCD) agreed to sell its 435 restaurants in Denmark, Norway, Finland and Sweden to Terra Firma Capital Partners’s founder and chairman Guy Hands, according to Reuters. Read more.

• Tesco (LON: TSCO) announced it would take over Booker Group (LON: BOK), a UK food supplier, for £3.7 billion ($4.6 billion) on Friday, increasing its exposure to the fast growing catering sector.


IPOS

Snap Inc, the Venice, Calif.-based parent company of the social media app Snapchat, is expected to publicly file for an IPO this week, according to a report by Reuters.  The company, which has already confidentially filed to go public, could be valued somewhere between $20 billion and $25 billion. Read more at Fortune.

Mauser Group, an Amsterdam-based manufacturer of industrial packaging, set the terms for its IPO on the NYSE. The company plans offering 12.6 million shares at a price range of $20 to $22, giving it a market value of $1 billion at the midpoint of its range. Mauser Group is owned by Clayton Dubilier & Rice.


EXITS

Celgene Corporation (NasdaqGS:CELG) acquired Delinia, a Cambridge, Mass.-based biotechnology company developing therapeutics for autoimmune diseases, for $300 million, with an additional $475 million in performance-related incentives. Delinia raised $35 million in VC funding from Sofinnova Partners and Atlas Venture.

• Luxottica (NYSE: LUX) has agreed to acquire Oticas Carol, a Brazilian eyewear company, for €110 million ($117 million). Oticas Carol is owned by 3i Group, Neuberger Berman and Siguler Guff & Company.


FIRMS + FUNDS

Amplify, a Los Angeles-based accelerator and seed-stage VC firm, raised $10 million for its third fund, according to TechCrunch. Read more. [Update: A previous version of this article referenced the wrong firm. The firm is Amplify, a Los Angeles-based accelerator, not Amplify Partners, a Menlo Park, Calif.-based early-stage venture firm.]


PEOPLE

Douglas J. Zych has been promoted to head of capital markets at The Jordan Company. Zych joined The Jordan Company in 1995. Prior to that, he served as an investment banker in the mergers and acquisitions group of Merrill Lynch & Co.

Craig J. Farr has joined  The Carlyle Group (NASDAQ: CG) as a Senior Advisor consultant with the global credit group.  Farr was previously global head of capital markets and credit at KKR.

Ravdeep Chanana joined Gemspring Capital, a Westport, Conn.-based private equity firm, as Vice President.


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