WELCOME TO THE PARTY BUS
Hello, Term Sheet readers! Lucinda here taking over for a few days. You might know me best for bemoaning the never-ending stream of June IPOs this year. Reach me at firstname.lastname@example.org with deals until Polina makes her return for Monday’s Term Sheet.
WE CAN’T STOP, WE WON’T STOP: Will the music ever end for scooter sharing?
Hot on the heels of a $150 million raise that pushed Bird into the unicorn club, a $335 million raise with Uber, Alphabet’s GV, IVP, Atomico, and Fidelity has pushed the valuation of Lime Bike, a scooter and bike sharing app, to $1.1 billion.
Uber will also make Lime scooters available through its app.
Seems like Uber is also sticking with the ask-for-forgiveness-later strategy, even with a new CEO. Chief Executive Dara Khosrowshahi acknowledged following the acquisition of fellow scooter and bike sharing firm, Jump Bike, that scooters are indeed in “in an odd spot” thanks to a lack of regulation, according to TechCrunch. Both San Francisco and Santa Monica are in the process of regulating electric scooters, with the former having banned such equipment until regulation passes.
Also of note: Uber is investing alongside Alphabet—whose self-driving car unit Waymo was previously in a legal battle with Uber over trade secrets. The two settled in February with Uber paying out the equivalent of about $245 million.
That comes as Uber goes head-to-head with Lyft in a war to become the one-stop shop for transportation. Lyft last week snapped up the country’s largest bike sharing firm Motivate for an estimated $250 million. No news yet on Lyft officially jumping into the scooter wars—though perhaps it’s just a matter of time.
The Information reported back in May that Lyft was in talks with San Francisco officials over a potential permit.
TOYS “R” US: What may be giving Toys “R” Us employees some wind in their sails: brand equity. Everyone knows Toys “R” Us, even if you’ve never stepped foot in one (namely, me). Reports of its bankruptcy have come with an equal dose of financial metrics and nostalgia over its giraffes-and-Hasbro-goods-stuffed halls. So it’s not a hard choice for Congress to get behind the firm’s employees at a time when there’s been a lot of angst over private equity firms buying companies and saddling them with debt.
KKR said it has reached out to Toys’ employees to express “our desire to help them,” after said workers demanded severance pay. That’s sparked speculation that perhaps Toys’ 33,000 employees may get at least some of what they’re asking for.
Still, will private equity firms be on the hook in the future for severance pay in other bankruptcies and liquidations? That’s a tough prediction to get behind, at least according to Eileen Appelbaum from the Center for Economic and Policy Research, a left-leaning think tank.
Appelbaum thinks it will continue to be on a case-by-case basis. While this is the first time she’s ever seen congress get involved in a PE vs. portfolio company employees battle, the latter group doesn’t have a legal claim on the private equity owners. Just the moral high ground.
She points to specifically the 2008 bankruptcy of department store Mervyn’s, in which its vendors also weren’t paid for goods. Eventually, Sun Capital, Cerberus, and Lubert Adler, alongside other banks, agreed to pay some $166 million to those providers in 2012, with the court ruling fraudulent conveyance. Still Appelbaum has yet to see similar results pop up since.
The lack of Toys “R” Us severance has also left a sour taste in the mouths of employees, especially after 17 top executives won $16 million in bonuses in December, even after filing for bankruptcy. And that’s no rare phenomenon.
VERIZON USES FACIAL RECOGNITION TO IDENTIFY CHARLOTTESVILLE MARCHER:
Following reports of the Northrop Grumman employee who apparently went marching in Charlottesville alongside white supremacists, I sought out Verizon for an update. A marcher was spotted wearing the company’s logo back in August.
Apparently, Verizon later used facial recognition and in-person interviews to confirm that nope, he’s not one of our people.
Here are some tidbits from a letter Verizon CEO Lowell McAdam sent to workers in September–about a month later:
“In August, I relayed my concern that someone wearing Verizon gear was marching with white supremacists in Charlottesville, Virginia, and that we were actively investigating the situation.
After an extensive, month-long investigation, which included the review of over 93,000 current and former employee ID photos, using manual and face recognition techniques as well as in-person interviews, we have concluded this individual is not an employee of Verizon. It was important to me to go to the lengths we did to investigate because when we wear the Verizon logo we represent the company, and there was nothing about that hate-filled demonstration that represented our values…
As I told you last month, at Verizon we don’t just embrace diversity, we champion it through our actions, not just our words. So as we move on from the Charlottesville episode, take this opportunity to appreciate each other, and redouble our efforts to learn from the great diversity of skills and experiences our colleagues and customers offer.”
KNOCK ON WOOD: Here at Term Sheet, we don’t typically go into land acquisitions. But it’s a little hard to ignore when everybody and their mothers appear to be loading up on timber land. That comes with lumber prices flying sky-high. Indeed, the S&P 500 has had a spectacular 35% or so rally since President Donald Trump’s election. But wood would’ve been a better bet. The price of lumber settling in September is up 66% since Trump’s election, thanks to wildfires and trade disputes between the U.S. and Canada tightening supply.
CatchMark Timber Trust alongside British Columbia Investment Management Corp closed a $1.4 billion deal to acquire 1.1 million acres of Texas timberland Tuesday, while New Forests also invested in New Zealand Forestry plantations.
THINGS YOU FIND ON THE INTERNET: If you need a kick-it-back beach read, the MIT Technology Review has this blockchain science fiction love story that mixes in the most titillating acronyms Silicon Valley has to offer: Think AI, IoT, and AR.
THE LATEST FROM FORTUNE...
• YouTube Invests $25 Million to Promote ‘Authoritative’ News Ahead of U.S. Midterm Elections (by Chris Morris)
• This Irish Bill Could Create Huge Problems for U.S. Companies Like Apple (by Orde F. Kittrie)
• Wells Fargo, Bank of America, and 8 Other Companies We Love to Hate (by Polina Marinova)
• Ethereum-Based Blockchain Betting Platform Augur Just Launched. Here’s Why It’s Not Married to Ether (by Lucinda Shen)
• Toast, the Boston-based restaurant management platform, raised $115 million in Series D funding. T. Rowe Price Associates led the round and was joined by investors including Tiger Global Management. The deal values Toast at $1.4 billion.
• Virtudent, Newton, Mass.-based firm dental care, raised $8 million in series A funding. Boston-based .406 Ventures led the round and was joined by investors including SpringRock Ventures and existing investor the Sparta Group.
• Cell-Ed, a Palo Alto, Calif.-based mobile learning platform for low-skilled workers, raised $1.5 million in seed funding. Lumina Impact Ventures led the round and was joined by investors including Strada Education Innovation Fund, Partners Group Impact, and Twilio.org Impact Fund.
PRIVATE EQUITY DEALS
• Brynwood Partners acquired Pillsbury and other J.M. Smucker brands for $375 million including debt. Read more.
• L Catterton Asia and JD.com (NASDAQ: JD) invested $175 million in Secoo (NASDAQ: SECO), a Beijing-based e-commerce platform.
• An unidentified European private equity fund will acquire Bollé, Cébé, and Serengeti, Farmington, Va.-based Vista Outdoors’ eyewear brands, for $158 million.
• Symmetry Surgical, a portfolio company of RoundTable Healthcare Partners, acquired Bovie Medical’s electrosurgical business, a Clearwater, Fla.-based medical devices corporation, for $97 million.
• Aveanna Healthcare, a portfolio company of Bain Capital and J.H. Whitney, completed its acquisition of Premier Healthcare Services, a Pasadena, Calif.-based pediatric services provider with operation in Colorado and Texas. Financial terms weren’t disclosed.
• AdvancedMD, a portfolio company of Marlin Equity, acquired NueMD, a Marietta, Ga.-based SaaS model platform for managing health practices. Financial terms weren’t disclosed.
• Arable Capital Partners acquired Lodi Pump and Irrigation, a Bakersfield, Calif.-based irrigation systems maker. Financial terms weren’t disclosed.
• Ardian acquired a minority stake alongside Wise SGR in Corob SpA, a Modena, Italy-based provider of automation solutions for dosing and dispensing in the paint, coatings and ink industries. Financial terms weren’t disclosed.
• Bacharach, a portfolio company of FFL Partners, acquired Neutronics, an Exton, Pa.-based refrigerant and gas analyzer maker. Financial terms weren’t disclosed.
• Branford Castle Partners acquired a controlling stake in Titan Production Equipment, a Woodlands, Texas-based maker of oil and gas production equipment. Financial terms weren’t disclosed.
• Cadence Aerospace, a portfolio company of Arlington Capital Partners, acquired Perfekta, a Wichita, Kan.-based provider of hard metal and aluminum components, and complex machined forgings for the aerospace, defense, and space industries. Financial terms weren’t disclosed.
• Carolina Color, a portfolio company of Arsenal Capital Partners, acquired Chroma Corporation, a McHenry, Ill.-based maker of colors for bottles, electronics, and more. Financial terms weren’t disclosed.
• High Bluff Capital Partners acquired Taco Del Mar, a Lynnwood, Wash.-based Mexican fast food chain from Franchise Brands. Financial terms weren’t disclosed.
• Mobile Communications America, a portfolio company of WJ Partners, acquired Myrtle Beach Communications, a Spartanburg, S.C.-based provider of two-way radio communications, video surveillance and fleet upfitting. Financial terms weren’t disclosed.
• Better Capital PCC, U.K.-based private equity firm, failed to sell airplane parts firm Northern Aerospace Ltd to a Chinese buyer after regulators blocked the deal on national security concerns. Read more.
• AFG Holdings, a Houston-based oil and gas pressure drilling firm, now says it plans to raise $300 million in an IPO of 18.2 million shares priced between $15 to $18. The firm posted revenue of $421 million in 2017. The Carlyle Group and Eaton Vance back the firm. Goldman Sachs, Credit Suisse, and Simmons & Co. are underwriters. The firm plans to list on the NYSE as “AFGL.” Read more.
• Bloom Energy Corp., a Sunnyvale, Calif.-based power cell maker, plans to raise $252 million in an IPO of 18 million shares priced between $13 to $15. The firm posted revenue of $376 million in 2017. Alberta Investment Management Corp. (7.5% pre-offering), Advanced Equities Financial Corp. (6.6%), Kleiner Perkins Caufield and Byers (15.9%) , Kuwait Investment Authority (10.7%), and New Enterprise Associates (8.8%) back the firm. J.P. Morgan and Morgan Stanley are underwriters in the deal. It plans to list on the NYSE as “BE.” Read more.
• Rubius Therapeutics, a Cambridge, Mass.-based biotech creating therapies based on red blood cells, plans to raise $200 million in an offering of 9.53 million shares priced between of $20 to $22. It has yet to post a revenue. Flagship Pioneering (57.3%) backs the firm. J.P. Morgan, Morgan Stanley, Jefferies, and Leerink Partners are underwriters. It plans to list on the Nasdaq as “RUBY.” Read more.
• Tilray, a British Columbia-based cannabis supplier, said it plans to raise $135 million in an IPO of 9 million shares priced between $14 to $16. It posted revenue of $20.5 millionin 2017. Privateer Holdings back the firm. Cowen, Roth Capital Partners, and Northland Capital Markets back the firm. It plans to list on the Nasdaq as “TLRY.” Read more.
• Allakos, a San Carlos, Calif.-based allergy antibodies developer, said it plans to raise $96 million in an offering of 6 million shares priced between $15 to $17 (36% of the deal). It has yet to post a revenue. Alta Partners (33.6% pre-offering), RiverVest Venture (21.7%), and Roche Finance (13.8%) back the firm. Goldman Sachs and Jefferies are the joint bookrunners on the deal. It plans to list on the Nasdaq as “ALLK.” Read more.
• Crinetics Pharmaceuticals, a San Diego, Calif.-based pharmaceutical firm plans to raise $80 million in an offering of 5 million shares at a priced between $15 to $17. It posted grant revenues of $2 million in 2017. Vivo Capital (20% pre-offering), 5AM Ventures (19.7%), and Versant Ventures (19.7%) back the firm. J.P. Morgan, Leerink Partners, and Piper Jaffray are the joint bookrunners on the deal. It plans to list on the Nasdaq as “CRNX.” Read more.
• Constellation Pharmaceuticals, a Cambridge, Mass.-based epigenetics cancer therapies maker, said it plans to $80 million in an offering 5.3 million shares priced between $14 to $16. It has yet to post a revenue. Ponoi Capital (21.7% pre-offering), Third Rock Ventures (12.7%), and Venrock (11.1%) back the firm. J.P. Morgan, Jefferies and BMO Capital Markets are underwriters. It plans to list on the Nasdaq as “CNST.” Read more.
• Establishment Labs Holdings, a Costa Rica-based breast implant maker, plans to raise $50 million by offering 3.1 million shares priced between $15 to $17. The firm booked revenue of $34.7 million in 2017. Jefferies and Cowen are the joint bookrunners on the deal.Jefferies and Cowen are underwriters. It plans to list on the Nasdaq as “ESTA.” Read more.
• Cirque du Soleil, backed by TPG Capital, will acquire VStar Entertainment Group, a Minneapolis-based live entertainment and event promotions company, from AUA Private Equity Partners. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Denham Capital, a Houston-based PE firm, raised $558 million for its first mining fund.
• Scale Venture Partners, a Foster City, Calif.-based venture firm focuses on startups changing the future of work, raised $400 million to close its sixth fund.
• Unicorn Capital Partners a China-focused venture capital fund-of-funds manager, closed its second fund with a hard cap of $250 million.
• Health Enterprise Partners, a New York-based firm , closed its third fund at $188 million.
• Lightyear Capital named Allison Cole as head of fundraising and investor relations. Previously, Cole held the same role at CCMP Capital Advisors.
• Z Capital named Josh Kirschbaum as an operating partner. Previously, Kirschbaum was president and chief operating officer at Modere.
• Clavis Capital Partners, added Jimmy Watson as Senior Associate. Previously, Watson was a senior financial analyst at Demilec USA.
• Quilvest Private Equity named Alexis Meffre as executive chairman. Previously, Meffre was vice chairman. CEO Guy Zarzavatdjian also transitioned out of his role to focus on the private equity direct investments business.