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Term Sheet — Wednesday, May 27

May 27, 2015, 2:10 PM UTC

Random Ramblings

Charter Communications insists that this time will be different. It says that its $78 billion bid to acquire Time Warner Cablewon’t run into the same regulatory roadblocks that last month caused Comcast to kill its own deal for Time Warner Cable (despite 14 months of work and friends in high places). And Charter is putting its money where its mouth is by agreeing to include a $2 billion termination fee that would kick in were Charter to walk away from the deal.

To be sure, there are all sorts of valid reasons to believe the FCC and DoJ will sign off on Charter/TWC. For example, the combined company would be much smaller than was the proposed Comcast tie-up, and Charter doesn’t own any original content verticals.

But it’s worth cautioning that the $2 billion termination fee shouldn’t really play into anyone’s regulatory forecasts.

On the one hand, it is entirely possible that Charter agreed to the term because it sincerely believes that it will be allowed to buy Time Warner Cable. But that doesn’t mean it’s right. For example, AT&T attached a record $3 billion termination fee to its proposed 2011 merger with T-Mobile USA (plus around another $1 billion in spectrum rights), but that deal ultimately failed due to regulatory objects.

Most likely, the termination fee is in Charter’s bid because Time Warner Cable insisted it be there. Consider this a ‘once bitten, twice shy’ scenario. Remember, Comcast didn’t include a termination fee in its earlier bid, meaning that Time Warner Cable was left empty-handed when that lengthy process ended. If Charter hadn’t agreed to include the fee, then Time Warner Cable might have sidled up closer to France’s Altice or remained independent.

In short, termination fees provide some downside protection to merger targets. But they don’t necessarily mean that acquiring companies will reach the finish line.

 Speaking of Charter/TWC: Thomson Reuters reports that this would be the sixth-largest U.S. merger in history, and the largest cable industry merger of all time. Read more here.

 Big health: Today there are dozens of companies that help companies keep their workforces fit and happy, via a variety of incentive and tracking programs. But one of the first was launched 11 years ago by Richard Branson's Virgin Group, and recently opted to raise its first-ever round of outside funding.

The company is called Virgin Pulse, and raised $92 million in a deal led by Insight Venture Partners. Virgin Group also participated.

Yesterday I spent a bit of time at the Virgin Pulse office (yes, it has a gym), in large part because its 200 employees are headquartered near the home office (new policy: if you raise big funding and are based within 5 miles of my house, Term Sheet will cover you -- consider this in your office lease decisions).

Virgin Pulse CEO Chris Boyce says that the company has been cash-flow breakeven for the past four years, but opted for funding in order to dramatically expand the company's offerings -- including a module for financial well-being. He also acknowledges the raft of new competition, including such well-funded startups as Welltok (although he argues many of them are too insurer-focused, whereas he says Pulse is employer-focused).

Boyce declined to discuss revenue or valuation, but did say that Pulse has over 250 enterprise customers that employ around two million people. When asked if he views this as a pre-IPO round, he suggested that Pulse may make more sense as an eventual acquisition target for a large company in the human capital space.

 From the filings: Globespan Capital Partners this week filed an SEC document that says the VC firm is planning to raise upwards of $75 million for "Globespan Capital Partners Opportunity Fund VI." This comes around nine years after Globespan raised $380 million its fifth fund, and long after most of its partners have moved on.

Remaining managing director Andy Goldfarb declined to comment, but my understanding is that this new pool is to support existing Globespan portfolio companies, rather than to add new ones. According to its website, Globespan currently has 36 active portfolio companies, including Redfin, Coskata and Roku.

 Speaking of new funds: I'm hearing that Passion Capital, a London-based seed-stage firm, has closed its second fund. No word yet on fund size, but the firm's debut vehicle was £37.5 million ($60m at the time). For more background, here's a recent Fortune piece on Passion Capital co-founder Eileen Burbidge (who declined comment on the new fund, natch).

 Slow your snap: Snapchat CEO Evan Spiegel said yesterday during the Code Conference that "an IPO is really important... We need to IPO, we have a plan to do that.”

I've seen some pundits take this to mean that an S-1 is imminent, but it's hard to imagine that Snapchat goes public before it's had a few quarters with the monetization engine running at full blast. Particularly given that it's already raised far more capital than it needs via the private markets. Or, put another way, this is a late 2016 offering at the earliest.

 Birthday Wishes: Today is J's birthday, and I'm hoping you might be able to help me out a bit. As many of you know, her day job is a psychologist working with returning military members and veterans. But she's also a voracious reader who a recently launched a book review blog. So here's the thing: Her site is a small hobby, but today I'd like to give it a massive one-day traffic boost (no, this isn't my primary gift, but she'll love it). So, if you would, please take a quick moment and visit BIG thanks in advance.


 Hormel Foods Corp. has acquired Applegate, a Bridgewater, N.J.–based natural and organic meat company, for $775 million. Sellers include Swander Pace Capital and Applegate founder Stephen McDonnell. Read more.


 Tegile Systems, a Newark, Calif.-based provider of flash-driven storage arrays, has raised $70 million in new VC funding. Capricorn Investment Group, Cross Creek Advisors and Pine River Capital Management were joined by return backers August Capital, Meritech Capital Partners, Western Digital and SanDisk. The company has now raised a total of $117.5 million.

 DocuSign, a San Francisco-based electronic signature platform, has raised around $45 million in new Series F funding from Dell and Intel Capital. This brings the round total to more than $278 million, including an earlier close that included Brookside Capital, Generation Investment Management, ClearBridge Investments and return backers Wasatch Advisors, Iconiq Capital, Wellington Management Company and Sands Capital Ventures.

 Jobandtalent, a Spain-based job recruitment site, has raised $25 million in new Series A funding. The round total is now $39 million. Existing backer Pelayo Cortina Koplowitz led the round extention, and was joined by such firms as Qualitas Equity Partners, Kibo Ventures, Fundación José Manuel Entrecanales.

 Kantox, a Spain-based provider of an enterprise P2P trading platform for foreign currency exchange, has raised $11 million in Series B funding. Partech Ventures and IDinvest Partners co-led the round, and were joined by fellow return backer Cabiedes & Partners.

 Mapi Pharma Ltd., an Israel generic drugs developer, has raised $10 million in Series A funding led by Shavit Capital.

 Ubimo, an Israel-based developer of targeted digital marketing solutions that include data points like local weather, has raised $7.5 million in Series B funding. Pitango Venture Capital led the round, and was joined by OurCrowd and Yahoo Japan Capital. Read more.

 EverCompliant, an Israel-based provider of cyber risk intelligence and merchant fraud detection solutions, has raised $3.5 million in Series A funding. Backers include Carmel Ventures, Nyca Partners and Joey Low (Star Farm Ventures).

 Mapsense, a San Francisco-based provider of developer tools for analyzing geospatial data, has raised $2.5 million in seed funding. General Catalyst led the round, and was joined by Formation8, Redpoint Ventures, Gil Elbaz and Amplify LA.

 Taplytics, a San Francisco-based provider of enterprise mobile A/B testing solutions, has raised $2.4 million in seed funding. Backers include Y Combinator, Mark Pincus, Alexis Ohanian, Paul Buchheit and Aaron Harris.

 Omadi, a Provo, Utah-based provider of mobile technology and cloud-based CRM to service industries, has raised $700,000 in seed funding led by Peak Ventures.

 Flywheel, a Redwood City, Calif.-based taxi e-hail startup, has raised an undisclosed amount of new VC funding. Riverwood Capital led the round, and was joined by return backers TCW/Craton, Rockport Capital and Shasta Ventures. Read more.

 Rani Therapeutics, a San Jose, Calif.-based developer of a platform to convert injectable drugs into pills, has raised an undisclosed amount of Series C funding. Novartis was joined by return backers Google Ventures, InCube Ventures and VentureHealth. Rani also entered into a strategic collaboration with Novartis “to evaluate Rani's novel oral biotherapeutics drug delivery platform.”


 Aavid Corp., a Laconia, N.H.-based portfolio company of Audax Private Equity, has acquired Qfinsoft Technology Inc., a Canadian provider of software for the simulation of fluid flow, thermodynamics and combustion processes. No financial terms were disclosed.

 Bayside Capital, an affiliate of H.I.G. Capital, has invested an undisclosed amount to help launch Idea CCR, which will invest in Italian mid-sized enterprises in distressed situations. Idea VCCR says that it is “currently in discussions with a number of leading Italian banks which are expected to contribute to Idea CCR a portfolio of medium and long term corporate loans.”

 Reno Assisted Living (dba Summit Estates), a South Reno, Nev.-based senior living community, has raised $3.5 million in equity and mezzanine debt from Huntington Capital.

 Tooling Technology Holdings LLC, a Fort Loramie, Ohio-based portfolio company of GenNx360 Capital Partners, has acquired Majestic Industries Inc., a Macomb, Mich.-based manufacturer of progressive and transfer dies. No financial terms were disclosed.


 DavidsTea Inc., a Canadian retailer of tea and tea-related products, has set its IPO terms to 5.1 million shares being offered at between $14 and $16 per share. It would have an initial market cap of around $347 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol DTEA, with Goldman Sachs and J.P. Morgan serving as lead underwriters. It reports $11.4 million of net income on $142 million in revenue for 2014, compared to a slight net loss on $108 million in revenue for 2013. Shareholders include Highland Consumer Partners (20.8% pre-IPO stake).

 Evolent Health, an Arlington, Va.-based provider of a population health managed services solution, has set its IPO terms to 10 million shares being offered at between $14 and $16 per share. It would have a fully-diluted market cap of $891 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol EVH, with J.P. Morgan and Goldman Sachs serving as co-lead underwriters. It reports a $52 million net loss on $101 million in revenue for 2014. Last year, Evolent Health raised $100 million in Series B funding from TPG Growth, The Advisory Board Co. and UPMC Health Plan.


 The Carlyle Group has hired Goldman Sachs to find a buyer for Spanish telecom operator Telecable, according to Reuters. Carlyle acquired an 85% stake in the company in 2011 for €400 million. Read more.

 Hewlett-Packard (NYSE: HPQ) has acquired ConteXtream, a Mountain View, Calif.-based provider of network virtualization solutions. No financial terms were disclosed. ConteXtream had raised VC funding from such firms as Norwest Venture Partners, Sofinnova Ventures, Gemini Israel, Comcast Ventures and Benhamou Global Ventures.

 Matchfire Co., a New York-based data platform firm, has acquired SimplySocial, a San Francisco-based social media management platform. No financial terms were disclosed. SimplySocial had been seeded by Strong Ventures.


 Oculus VR, a virtual reality hardware company owned by Facebook (Nasdaq: FB), has acquired Surreal Vision, a UK-based company that says it is “bringing super-human visual perception to the emerging fields of mixed reality and autonomous robotics.” No financial terms were disclosed.

 Reynolds American Inc. (NYSE: RAI) has received U.S. antitrust approval for its $25 billion acquisition of rival cigarette maker Lorillard Inc. (NYSE: LO). Read more.

 SFX Entertainment (Nasdaq: SFXE), a New York-based concert promotion and production company, has reached an agreement to be taken private by founder and CEO Robert Sillerman. The deal is for $5.25 per share in cash, which is less than half of the company’s 2013 IPO price. Sillerman currently holds a 37.5% stake in the company. Read more.


 Aberdeen Asset Management has agreed to acquire FLAG Capital Management, a Connecticut-based private equity and real assets fund-of-funds manager that also has offices in Boston and Hong Kong. No financial terms were disclosed. As of year-end 2014, FLAG managed around $6.3 billion of invested and committed capital.

 The Carlyle Group has closed its third European tech private equity fund with €656 million in capital commitments. The fund will focus on European tech companies with enterprise values of between €25 million and €100 million.

 EQT Partners has held a €350 million first close on its debut direct lending fund, which is targeting a total of €500 million, according to eFinancial News. Read more.

 Evercore (NYSE: EVR) has acquired of Kuna & Co., a German investment banking advisory boutique formed by former Lazard banker Walter Kuna (who will serve as a senior managing director of Evercore’s German advisory business). No financial terms were disclosed.

 Next Frontier Capital, a Montana-focused VC firm, has held a first close on its debut fund, which is targeting a total of $20 million. The firm is led by Will Price, a former managing director with Hummer Winblad Venture Partners who most recently served as CEO of Flite (where he will remain a director).


 Jim Baum, former CEO of Netezza (acquired by IBM), has joined OpenView Partners as a venture partner.

 Dan Cohn-Sfetcu has joined The Carlyle Group as a New York-based managing director focused on middle-market credit investments for the firm’s business development company Carlyle GMS Finance. He previously was a managing director with American Capital.

 Cameron Lester has joined Credit Suisse as global head of Internet banking. He is the co-founder of VC firm Azure Capital Partners and will succeed Imran Khan, who left Credit Suisse last year to join Snapchat. Read more.

 John Rosin has joined MidCap Financial as a managing director and national head of originations for the firms asset-based lending group. He previously was a managing director and head of originations with AloStar Bank.

 Taimur Shaikh and Joseph Velli have joined private equity firm ClearPoint Investment Partners as a principal and operating director, respectively. Shaikh previously was a vice president with Trident Capital, while Velli is the former chairman and CEO of Convergex Group.

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