Skip to Content

Term Sheet — Tuesday, October 6

Random Ramblings

Tune into virtually any sporting event this month, and you’re certain to hear an advertisement for daily fantasy sports site DraftKings. Or for its rival FanDuel. Or, more likely, for both of them.

It’s time for these two companies — which have raised more than $700 million in combined private funding — to merge.

I’ve laid out the full argument on the website, in a piece co-written with my Fortune colleague Dan Roberts. We actually wrote it before a data scandal emerged late last night, related to how a DraftKings employee leveraged user data from his company to win $350,000 on FanDuel. Fortunately for us, it actually strengthened our case — namely because it highlights how incredibly similar the two companies are from both a front-end and back-end perspective.

This isn’t exactly Sirius-XM redux, but it’s not too far off. Two companies in a nascent industry spending small fortunes marketing against each other for new user acquisition, when bigger players lie elsewhere, waiting to pounce (either with their own products or via acquisition). Moreover, the existence of both means that media outlets and sports leagues are able to leverage DraftKings and FanDuel against each other, to drive down ad rates and sponsorship fees.

When we asked a DraftKings investor why it shouldn’t merge with FanDuel, he quipped: “Want me to make one up?”

Again, please read our full case for a “DraftDuel” merger by going here.

 

• New firm alert: Lavrock Ventures has launched as a Washington, D.C.-based investment firm focused on post-seed and Series A investments in tech startups (particular focus on B2B software, cybersecurity and government-tech).

Its managing partner is Jim Hunt, most recently a founding member of Blu Venture Investors and, before that, CEO of Ernst & Young Technologies. His fellow partners are Daniel Hanks (co-founder and former CEO of SnapDash) and Stephen Smoot (co-founder and CEO of Authentag).

• Debt disagreement: Several of you took issue with one of my points in yesterday’s piece on the prospects of a Whole Foods buyout. Specifically, the one about how the grocery chain’s lack of debt would make it more attractive to private equity. I’ll delve into this a bit tomorrow.

• #GetLiquid: Our San Francisco Liquidity Event is this Thursday night, with more than 800 of you expected to attend. We couldn’t do it without our sponsors, so a huge thanks to Andreessen Horowitz, PitchBook Data, TPG Growth, Gunderson Dettmer and Winmark Capital. We also pulled a couple dozen folks off the wait list yesterday (check your inbox), and hope to take a few more off today.

• Publishing note: I’ll be sending Term Sheet from 30,000 feet tomorrow morning. In other words, its timeliness is dependent on the in-flight WiFi, so I preemptively appreciate your patience.

THE BIG DEAL

• AmerisourceBergen (NYSE: ABC) has agreed to acquire PharMEDium Healthcare Holdings, a Lake Forrest, Ill.-based provider of outsourced compounded sterile preparations, for $2.575 billion in cash from Clayton Dubilier & Rice.

PharMEDium had recently filed for an IPO, reporting $9.3 million of net income on around $209.5 million of revenue for the first half of 2014. It had been acquired by Clayton Dubilier & Rice in early 2014 for around $900 million. www.pharmedium.com

VENTURE CAPITAL DEALS

• Code42, a Minneapolis-based provider of endpoint data protection and security for the enterprise, has raised $85 million in Series B funding. JMI Equity led the round, and was joined by New Enterprise and return backers Accel Partners and Split Rock Partners. www.code42.com

• EzCater, a Boston-based business catering platform, has raised $28 million in Series C funding led by Insight Venture Partners (including a $13 million first close from back in March), Fortune has learned. Read more.

• 90min, a UK-based fan-generated online football media platform, has raised $15 million in new VC funding. ProSiebenSat.1 Media led the round, and was joined by return backers Battery Ventures, Dawn Capital and Gemini Ventures. Read more.

• Newsela, a New York-based “publishing platform that promotes literacy by personalizing daily news,” has raised $15 million in Series B funding. Kleiner Perkins Caufield & Byers led the round, and was joined by Mark Zuckerberg, Priscilla Chan, the Women’s Venture Capital Fund and return backers Owl Ventures and the John S. and James L. Knight Foundation. www.newsela.com

• Robin Systems, a Milpitas, Calif.-based provider of data infrastructure and management services, has raised $15 million in new VC funding. USAA and DN Capital were joined by return backers like Hasso Plattner Ventures. Read more.

• Censio, a Boston-based software startup that uses “big data to make driving safer and more affordable”, has raised $10 million in Series A funding. General Catalyst Partners led the round, and was joined by Bain Capital Ventures and Lakestar. www.cens.io

• Neumob, a Sunnyvale, Calif.-based startup that “speeds up mobile apps,” has raised $8.5 million in Series A funding. Accel Partners led the round, and was joined by Shasta Ventures, Eniac Ventures and Lightbank. www.neumob.com

• Logz.io, an Israeli predictive log analytics cloud services company, has raised $8 million in new VC funding co-led by 83North and Giza Venture Capital. www.logz.io

• BuyerQuest Inc., a Cleveland-based provider of cloud-based enterprise procure-to-pay software, has raised $7 million in growth equity funding. Argentum led the round, and was joined by First Analysis. www.buyerquest.com

• Morphisec, an Israeli provider of cyber security prevention and detection tools, has raised $7 million in Series A funding. Backers include JVP, GE Ventures, Deutsche Telekom, Portage Advisors and OurCrowd. www.morphisec.com

• BioTrackTHC, a Fort Lauderdale, Fla.-based provider of a business intelligence platform for the cannabis industry, has raised $5 million from Greenfield Capital Partners. www.bioscriptrx.com

• OnCorps, a Cambridge, Mass.-based decision analytics platform, has raised $2.3 million in VC funding led by Andreessen Horowitz. www.oncorps.org

• Frame.io, a New York-based video production collaboration platform, has raised $2.2 million in seed funding led by Accel Partners. Read more.

• Symphony, a Palo Alto, Calif.-based messaging system for financial firms (i.e., Bloomberg terminal rival), has raised an undisclosed amount of funding from Google Inc. at a $650 million valuation, according to the WSJ. Read more.

PRIVATE EQUITY DEALS

• Nestlé (Swiss: NESN) confirmed a Reuters report that it is in talks to merge its international ice cream business with R&R Ice Cream, a portfolio company of PAI Partners and Graphite Capital. Reuters had suggested the transaction could be valued at around $3.4 billion. www.nestle.com

• Partners Group has acquired a majority stake in Pacific Bells and World Wide Wings, U.S. franchisees of Taco Bell and Buffalo Wild Wings brands with 139 restaurants in five states. No financial terms were disclosed. www.partnersgroup.com

• RAG Deutschland GmbH has been formed as a new European oil and gas E&P company, via a €300 million equity commitment from Petroleum Equity and Austrian energy company Rohöl-Aufsuchungs Aktiengesellschaft. www.rag-austria.at

IPOs

• PLX Pharma Inc., a Houston-based developer of an oral drug delivery system that is designed to increase safety and efficacy, has filed for a $20 million IPO. It plans to trade on the Nasdaq under ticker symbol PLXP, with Maxim Group serving as sole underwriter. Shareholders include Integra Venture (6.6% pre-IPO stake) and Aurus Bios Fondo de Inversion Privado (6.3%). www.plxpharma.com

• Xtera Communications Inc., an Allen, Texas-based provider of optical transport solutions, has filed for a $60 million IPO. It plans to trade on the Nasdaq under ticker symbol XCOM, with Needham & Co. listed as left lead underwriter. The company reports a $10 million net loss on around $43.6 million in revenue for the first nine months of 2015. It has raised over $100 million in VC funding, from firms like New Enterprise Associates (23.4% pre-IPO stake), The Wellcome Trust (15.5%), ARCH Venture Partners (13.1%), Sevin Rosen Funds (8.3%) and VantagePoint Capital Partners (6.2%). www.xtera.com

EXITS

• Randstad Holding NV (Amsterdam: RAND) has acquired RiseSmart, a San Jose, Calif.-based provider of career transition services, for $100 million. Sellers included Accel-KKR. www.risesmart.com

 RoundTable Healthcare Partners has agreed to sell Excelsior Medical Corp., a Neptune, N.J.-based maker of devices used to disinfect and protect access into a patient’s bloodstream, to ICU Medical Inc. (Nasdaq: ICUI). The deal is valued at $59.5 million. www.excelsiormedical.com

• Veeva Systems Inc. (NYSE: VEEV) has acquired Zinc Ahead, a UK-based provider of commercial content management solutions, for $130 million in cash. Sellers included Accel-KKR. www.veeva.com

OTHER DEALS

• SABMiller has rejected a $106 billion takeover offer from Anheuser-Busch InBev, according to Bloomberg. Read more.

• AirAsia Bhd (KSLE: AIRASIA) s “sounding out investors to take the company private in a management-led buyout,” according to Reuters. The company’s market cap has fallen 40% since June — to around $800 million — due to an analyst report that questioned the budget carrier’s accounting. Read more.

• Apple (Nasdaq: AAPL) confirmed that it has acquired Perceptio, a startup that uses artificial intelligence to identify images on smartphones. No financial terms were disclosed. Read more.

• ICU Medical Inc. (Nasdaq: ICUI) has agreed to sell the operating assets of SwabFlush and its pre-filled saline and heparin flush syringes to Medline Industries Inc. (Mundelein, Ill.) for $27 million. www.medline.com

• InFocus Corp., a Portland, Ore.-based provider of visual communication solutions for the enterprise, has acquired Jupiter Systems, a Hayward, Calif.-based provider of video wall and other enterprise collaboration solutions. No financial terms were disclosed. www.infocus.com

• Skyworks Solutions (Nasdaq: SWKS) has agreed to acquire rival chipmaker PMCSierra Inc. (Nasdaq: PMSCS) for around $2 billion in cash, or around $10.50 per PMC-Sierra share (37% premium to yesterday’s closing price). Read more.

• Suncor Energy (TSX: SU) has launched a C$6.6 billion hostile takeover bid for Canadian Oil Sands (TSX: COS). Read more.

• ZenithOptimedia, a unit of Publicis Groupe, has acquired FirstClick Consulting, an Australia-based performance marketing agency. No financial terms were disclosed. www.firstclickconsulting.com

• ZestFinance, a Los Angeles-based company that applies big data analysis and machine learning to credit scoring to help lenders evaluate prospective borrowers , has secured $150 million in debt funding from Fortress Investment Group. The company previously raised around $112 million in equity funding from firms like Lightspeed Venture Partners, Matrix Partners, Eastward Capital Partners, Kensington Capital, Upfront Ventures, Flybridge Capital Partners, Thiel Capital and Northgate Capital. Read more.

FIRMS & FUNDS

• Flag Capital (recently acquired by Aberdeen Asset Management) has closed its sixth private equity fund-of-funds with $295 million in capital commitments.

• Five Arrows Principal Investments, the private equity arm of Rothschild Merchant Banking, has closed its second European lower mid-market fund with €775 million in capital commitments. www.rothschild.com

• Warburg Pincus has secured $12 billion for its twelfth flagship private equity fund, according to Bloomberg. A final close is expected to occur in late November. Read more.

MOVING IN, UP, ON & OUT

• Susan Balloch has joined the Global Impact Investing Network as chief operating officer. She previously was a managing director with Golden Seeds. www.thegiin.org

• Bayside Capital, the distressed debt and special situations affiliate of H.I.G. Capital, has promoted Andrew Scotland to managing director. He had joined the firm’s London office in 2013 as a principal, after having spent six years as a managing director in the special situations group of RBC. www.bayside.com

• Graham Brown has joined Lerer Hippeau Ventures as a senior associate. He previously was with SoftBank Capital. www.lererhippeau.com

• Frank Gioia and has joined The TCW Group as a senior VP and head of investment control. He previously was compliance product manager for Charles River Development. TCW also has hired Dipo Ashiru, formerly of KKR, as a senior VP and associate general counsel. www.tcw.com

• Matthew Malloy has agreed to join Neuberger Berman as global head of insurance solutions. He previously was with J.P. Morgan Asset Management as a managing director and global head of institutional solutions and advisory. www.nb.com

• Hardi Meybaum, founder and former CEO of GrabCAD (acquired by Stratasys), has joined Matrix Partners as a Boston-area general partner. www.matrixpartners.com

Neil Sequeira is stepping down as a partner with VC firm General Catalyst, and plans to launch his own early-stage investment firm, according to the WSJ. Read more.

Share today’s Term Sheet:
http://fortune.com/newsletter/termsheet