DEALS OF THE DAY
Good morning, Term Sheet readers. Let’s get right to the deals you should know about this morning.
UBER – SOFTBANK: Uber’s dialing down the drama as its warring board members agreed to a deal that allows a multibillion-dollar investment by SoftBank Group to proceed. Here’s what this means if the deal goes through:
• The legal saga could come to an end: Benchmark agreed to immediately suspend (and later drop) its lawsuit against ex-CEO Travis Kalanick, which it filed in August in an effort to limit his power and force him off the board. In other words, this removes one of the roadblocks that was slowing negotiations with SoftBank. I guess everyone learns how to get along when there’s an investment of up to $10 billion on the line.
• Governance reform: Uber’s board approved governance reforms that are contingent on completion of the SoftBank deal, including the removal of super-voting rights that gave Kalanick and his allies outsized power, adding new independent directors, and increasing the size of the board to 17 people.
A fresh start for Uber: After a turbulent year of executive turnover, sexual harassment allegations, and multiple federal criminal probes, Uber could turn a new leaf in 2018. With a new CEO and a deal with SoftBank, 2018 could be “a full reset” for the embattled tech giant. “Uber had a remarkable first six or seven years, a bumpy past two years, and now the SoftBank deal allows for a full reset,” said Uber investor Bradley Tusk.
Note that this deal is not done, but it seems the various stakeholders have reached a potential compromise. In an email statement to Fortune, an Uber spokesperson said:
“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment. We believe this agreement is a strong vote of confidence in Uber’s long-term potential. Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”
HASBRO – MATTEL: Hasbro is eyeing rival toymaker Mattel for a potential takeover, according to The Wall Street Journal. Mattel’s market value is approximately $5 billion, which is less than half as much as Hasbro’s. Mattel has been struggling with losses and weak sales, which forced it to suspend its dividend and scale back new product launches. The company’s new CEO Margo Georgiadis warned it would miss its full-year revenue forecast.
The toy business is at a crossroads, and the pressure is palpable. More and more tech-centric startups are shaking up the industry and giving the toy giants a run for their money. Just last night, SmartGurlz, a developer of a coding robot for young girls, appeared on an episode of Shark Tank and landed a $200,000 investment from Daymond John. In less than six months, the company has reportedly brought in $250,000 in sales. SmartGurlz is the latest to join STEM-focused toy upstarts, including GoldieBlox, Wonder Workshop, and LittleBits.
As Fortune’s Michal Lev-Ram reported in a September feature on Mattel’s innovation efforts:
“Regardless of what they make, toy startups have an advantage that Mattel, Hasbro, and Lego lack: They can start supply chains and distribution models from scratch. That means they can “fail fast,” testing products with the rapidity of a tech company, and tap e-commerce and digital advertising instead of breaking into bricks and mortar and shelling out millions for TV ads. In all these ways, the startups are much farther down a road that Big Toy is still scouting out.”
If the Hasbro-Mattel deal goes through, it would unite the two largest U.S. toy makers. But don’t hold your breath. Hasbro approached Mattel at least twice before, first in 1996 and then again in late 2015. A deal did not materialize on either occasion. I’m personally more interested in the next iteration of the toy industry — what does Barbie 2.0 look like? What kinds of toys will millennial parents buy for their kids? Will a Hasbro-Mattel merger keep the giants at the top for the next 5 years or will they succumb to the pressures of the STEM-focused startups encroaching on their turf? Whatever happens, there’s not much time left to figure it out.
THE LATEST FROM FORTUNE...
• The head of bankrupt Bitcoin exchange could make hundreds of millions from failure (by David Z. Morris)
• Top women investors are answering the VC boys’ club with one of their own (by Claire Zillman)
• Why Mark Cuban could run for president — as a Republican (by Lucinda Shen)
• Commentary: We’re failing our female veterans (by Jacy Gomez)
Qualcomm rejects Broadcom’s bid. Lyft plans to launch in Canada in December. Employees of big French cleaning company win sexual harassment case. GE slashes quarterly dividend ahead of expected restructuring.
• Graphcore, a U.K.-based developer of machine intelligence processors, raised $50 million in Series C funding. Sequoia Capital led the round.
• ThreatQuotient, a Reston, Va.-based threat intelligence platform, raised $30 million in Series C funding. Adams Street Partners led the round, and was joined by investors including Cisco Investments, NTT DOCOMO Ventures, Inc, New Enterprise Associates, and Silicon Valley Bank.
• Roomi, a New York-based peer-to-peer marketplace for shared housing, raised $11 million in Series A funding. Atami Capital led the round.
• Trouva, a U.K.-based operator of an online network of independent boutiques, raised $10 million in Series A funding. BGF Ventures led the round, and was joined by Index Ventures and Octopus Ventures.
• Loft Orbital, a San Francisco-based company that leases space on satellites, raised $3.2 million in seed funding. Uncork Capital (formerly SoftTech VC) led the round, and was joined by investors including V1.VC, MDIVentures, Mercuria Investment Co., the Remote Sensing Technology Center of Japan, and Shobunsha.
• ScoreStream, a Del Mar, Calif,-based crowdsourcing platform for live local sports, raised funding of an undisclosed amount from Intel Capital.
PRIVATE EQUITY DEALS
• AbacusNext, which is backed by Providence Equity, acquired UK-based HotDocs, a U.K.-based provider of document automation software. Financial terms weren’t disclosed.
• Katena Products, which is backed by Audax Private Equity, acquired Rhein Medical Inc, a St. Petersburg, Fla.-based supplier of ophthalmic surgical instruments. Financial terms weren’t disclosed.
• Royal Dutch Shell (ENXTAM:RDSA) is selling part of its stake in Woodside Petroleum Ltd (ASX:WPL), an Australia-based independent oil and gas company, to equity investors for about $1.7 billion. Read more.
• Electronic Arts agreed to acquire Respawn Entertainment, a Beverly Hills, Calif.-based video game development studio, for up to $455 million in cash and stock.
• MAP Active, an Indonesian sporting goods retailer, is planning an IPO in the country of about $300 million, Bloomberg reports citing sources. CVC Capital backs the company. Read more.
• Tengram Capital Partners agreed to acquire RéVive, a Stafford, Texas-based luxury skincare brand, from Shiseido Americas Corporation. Financial terms weren’t disclosed.
• Blue Sea Capital acquired RESA Power LLC, a Houston, Texas-based provider of electrical life extension products and services, from Audax Private Equity. Financial terms weren’t disclosed.
• Quad-C Management, Inc. sold its stake in Vaco, a Brentwood, Ind.-based executive search, consulting, placement and strategic staffing firm, to Olympus Partners. Financial terms weren’t disclosed.
• Seventure Partners sold Cambrooke Therapeutics, an Ayer, Mass.-based provider of medical nutrition products for patients with serious chronic unmet medical needs, to Ajinomoto. Financial terms weren’t disclosed.
FIRMS + FUNDS
• LEM Capital LP, a Philadelphia-based real estate private equity firm, raised $300 million for its fourth fund.
• Nathan Benaich joined Point Nine Capital as a venture partner. Previously, Benaich was at Playfair Capital.