On deals and dealmakers.
A smattering of news this morning…
Data deal: This morning Silver Lake announced it has sold Vantage Data Centers to a consortium of buyers (see details below). Term Sheet has learned the company deal value is more than $1 billion. Silver Lake acquired the land for the company’s first data center in 2010.
Equity Salvage: iHeart Media, the radio conglomerate that’s been owned by Bain Capital and Thomas H. Lee Partners for almost a decade, is using its term lenders to impose onerous terms on noteholders in a new debt exchange, according to a New York Times analysis. The “exit consents” are a roundabout way to strip covenants from old notes. The Times reports:
IHeart owns about 90 percent of the publicly traded Clear Channel Outdoor Holdings, the large billboard company. As explained in a Fitch rating note, a further incentive for the debt exchange offer provides that if debtholders participate in a sufficiently high level, they will receive 49 percent of iHeart’s stake in Clear Channel.
And the rest? That would be going to the existing shareholders. The reason for playing hardball with the noteholders becomes a bit clearer.
In a bankruptcy case, these shareholders would get to keep nothing until all creditors were paid in full. This new exchange offer is as much about equity salvage as debt restructuring.
Drain the Swamp: This morning Fortune published a lengthy article by Steven Brill titled “Trump, Palantir, and the Battle to Clean up a Huge Army Procurement Swamp.”
Despite Palantir’s D.C. connections and reputation as a secretive tool for government spy operations, the $20 billion data unicorn has struggled to win certain government contracts.
Why? “The power and persistence of those who like things the way they are has long been enough to outlast the outsiders,” Brill writes. It’s a story of systemic culture of bloat and corruption. (One fun fact: The Pentagon employs 207,000 procurement professionals, more than the number of active duty marines.)
Now Palantir is suing, and that case is getting ugly. Brill outlines the many reasons why running the government is nothing like running a business. He concludes that Palantir is in the right:
I’ve read all the documents in this case—briefs, exhibits, depositions—and interviewed key figures on both sides. In years of writing about legal disputes, I cannot remember one that was this one-sided. And one that so vividly tells a tale of long-running, systemic dysfunction when it comes to how the government spends money.
Never say die: This morning the New Yorker published an article about Silicon Valley’s quest to live forever, featuring appearances from Sergey Brin, Ray Kurzweil, Thiel, Moby, Goldie Hawn, and a handful of interesting biotech startups. The story describes the way Bill Maris, former head of Google’s venture capital arm, helped start Calico, Alphabet’s longevity project. He had initially pitched it to John Doerr and Google’s founders as an independent company; Brin decided to bring the idea in-house. Maris (who has since left GV), defends Calico from accusations that it is a “vanity project”:
“This is not about Silicon Valley billionaires living forever off the blood of young people,” he said. “It’s about a ‘Star Trek’ future where no one dies of preventable diseases, where life is fair.”
Uber Issues: Look, it’s yet another accusation of inappropriate behavior at Uber.
On Friday I went on Cheddar (millennial CNBC!) to discuss whether Uber’s toxic culture will hurt the company’s performance. I argued that Uber is going to spend a lot of time, money and effort trying to fix its systemic cultural issues. It won’t end when the company’s investigators publish their report next month.
As evidenced by the company’s strong sales through the last few months, the effect of that resource drain won’t be felt right away. But I believe over time, the distraction, difficulty recruiting, and wariness of potential investors and potential partners to be associated with a toxic brand can take a toll.
In the meantime, the Uber-issue that will have the most acute effect on the company’s business is its lawsuit with Waymo. On Friday Johana Bhuiyan of Recode published a damning report on Uber’s self-driving car unit, citing insiders who say it is in the midst of a “mini Civil War” between the employees of Otto (the self-driving startup at the heart of the Waymo lawsuit) and those who joined Uber’s self-driving car program. It paints a picture of another ugly mess for CEO Travis Kalanick (and his future COO) to untangle.
THE LATEST FROM FORTUNE...
• Investors don’t expect Trump to deliver tax cuts.
• Why Airbnb’s China push could actually work.
• Koch Network is spending billions to stop the GOP healthcare bill.
• Fortune unveils its list of the World’s 50 Greatest Leaders.
• Microsoft’s plan to dominate connected cars.
• Apple responds to hacker’s threat to wipe hundreds of millions of iPhones.
• The bond market is losing faith in Trump.
• Tech employees are blind to the diversity problems at their own companies.
• The activist fund started by former colleagues of Yoshiaki Murakami has taken a stake in Toshiba.
In Dean Foods insider trading case, an “extraordinary admission of malfeasance.” Failure to lunch. Cyberheists are the new bank robberies. China’s investments in AI and autonomous startups is worrying the government
• Placester, a Boston toolkit for real estate professionals, raised $50 million in Series D funding. New Enterprise Associates led the round.
• Primus Power, a Hayward, Calif. stationary energy storage systems manufacturer, raised $32 million in funding. Investors include Success Dragon (SEHK:1182), Matador Capital, Anglo American Platinum, DBL Partners, I2BF, and the Russia Kazakhstan Nanotechnology Fund.
• Kaloom, a Montréal-based software company, raised $10.7 million in Series A funding. Fonds de solidarité FTQ led the round, and was joined by Somel Investments, MBUZZ Investments, and Griffin Fund II.
• Peakon, a London-based people analytics company, raised €6.1 million ($6.6 million) in funding. EQT Ventures led the round, and was joined by IDInvest, Sunstone, and Tommy Ahlers.
• SB Drive, a Tokyo-based autonomous vehicle subsidiary of SoftBank and Advanced Smart Mobility, raised ¥510 million ($4.6 million) in funding. Yahoo! Japan led the round, and was joined by SoftBank.
• HundredRooms, a Spanish vacation rental metasearch engine, raised €4 million ($4.4 million) in Series A funding. SEAYA Ventures led the round.
• Arable Labs, a Princeton, N.J. IoT company for in-field crop monitoring, raised $4.25 million in Series A funding. Middleland Capital and S2G Ventures led the round, with participation from Chase Field, Spark Labs and Cantos VC.
• Big Squid, a Salt Lake City developer of predictive analytics software, raised $3 million in seed funding. Silverton Partners and Kickstart Seed Fund led the round.
• Snapcart, an Indonesian startup developer of a mobile app that offers cash back on daily purchases, raised $3 million in funding, according to TechCrunch. Vickers Venture Partners led the round, and was joined by Wavemaker Partners and SPH Media Fund. Read more.
HEALTH + LIFE SCIENCES DEALS
• Owlstone Medical, a Cambridge, England diagnostics company developing a breathalyzer, raised an undisclosed amount in funding from Aviva Ventures.
PRIVATE EQUITY DEALS
• Bain Capital Private Equity agreed to acquire Sealed Air Corporation’s (NYSE:SEE) Diversey Care division and food hygiene and cleaning business, for around $3.2 billion.
• Evo Payments International, an Atlanta-based payments processor backed by Madison Dearborn Partners, is considering a sale that could value the company at about $2 billion, according to Bloomberg. An IPO is also a possibility. Read more.
• MBK Partners, along with the company’s management, agreed to buy Tasaki & Co (TSE:7968) for ¥31.5 billion ($286 million), according to Reuters. Read more.
• Cinven agreed to acquire CHRYSO, a French specialty chemicals group for construction materials, from LBO France. Financial terms weren’t disclosed.
• Pricoa Capital Group invested in 118 Group, a U.K.-based business database owner.
• L Catterton invested in Tula, a New York skincare brand. Terms weren’t disclosed.
• Castle Harlan invested north of $40 million in Gold Star Foods, an Ontario, Calif. distributor of food and supplies to schools. Part of the investment was used to fund Gold Star’s acquisition of Colyar Technology Solutions, a Phoenix consulting firm.
• Dominion Diamond Corporation (TSX:DDC), which has a market cap of around C$1.4 billion ($1.06 billion), is exploring a sale.
• Time Inc. (NYSE:TIME), the publisher of Fortune, Time, Sports Illustrated, and People, is nearing a deal that would value the company at more than $20 a share, according to Bloomberg. Potential buyers include Meredith Corp. (NYSE:MDP) and an investor group that includes Pamplona Capital and Jahm Najafi. Read more.
• Emaar Malls, a Dubai-based operator of luxury retail centers, made an $800 million offer to acquire Souq.com, a Dubai-based online retailer, kicking off a potential p bidding war with Amazon (Nasdaq:AMZN). Read more.
• Schneider National, a Green Bay, Wis.-based trucking company, is seeking to raise $550 million in an IPO by selling 28.9 shares priced between $18 to $20 per share. The company plans to list on the NYSE under the symbol SNDR. Morgan Stanley, UBS Investment Bank, BofA Merrill Lynch, Citi, Credit Suisse, J.P. Morgan and Wells Fargo serve as joint bookrunners.
• Permira agreed to acquire Lyophilization Services of New England, a Bedford, N.H. contract manufacturer for the pharmaceutical and medical device markets, from Clairvest. Term Sheet has learned the deal value was $200 million.
• Praesidian Capital sold its stake in PromptCare Companies, a Clark, N.J.-based provider of home-based therapy services, for $23 million to an undisclosed buyer.
• Apax Partners agreed to sell its remaining stake in GardaWorld, a Montreal-based security and cash services provider, to company founder Stephan Crétier and Rhône Capital. Financial terms weren’t disclosed.
• Silver Lake sold Vantage Data Centers, a Santa Clara, Calif. data service company, to consortium of investors that includes Digital Bridge Holdings, Public Sector Pension Investment Board, and TIAA Investments.
FIRMS + FUNDS
• Genstar Capital, a San Francisco-based middle-market private equity firm, closed Genstar Capital Partners VIII with $3.1 billion in commitments and overage capacity of $650 million from limited partners.
• Michael Bannon joined Improbable, a developer of a system to build simulated words, as chief financial officer. Previously he was a principal at TPG Capital.