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Term Sheet — Wednesday, November 25

Turkey Talk-Back

The sun is shining, the U.S. economy is growing (slightly) faster than previously thought and many of you are probably reading this in overcrowded airports. In other words, it’s time for some Thanksgiving Throwback…

I’ve gotten lot of email related to tax inversions, including responses to yesterday’s question about whether inversion supporters also believe corporate philanthropy is an abdication of “fiduciary duty.” Here is a sampling:

Paul: “I assume you go out of the way to maximize your taxes, but I believe you are unusual in that regard. Parenthetically, I am always amazed when people with, let’s call them relaxed sentiments about nationalism and borders, suddenly burst forth as full-fledged jingo’s on the subject of international tax planning, especially by corporations.”

Bill: “Donations and volunteering are building a brand which could hopefully increase sales while increasing employee morale and happiness. Usually happy employees are more productive overall and the lost time in volunteering is minimal in the big picture. Donations help build a company’s brand and likeability which will likely lead to better sales. CEOs have a duty to run the company efficiently and create a profit for the shareholders. Spending money and time on increasing a company’s brand and employee moral fits within that goal. Moving a company to save on taxes fits within the goal as well.”

M: “I don’t think companies have a national citizenship duty. In today’s globalized business environment, the place of incorporation of a company has very little bearing on how a company operates or is perceived. To take a hypothetical example: a company is founded based on research from an Australian university, does product development in Ukraine, manufactures in China, sells mostly in Europe, and has U.S. management. Where does it have the “duty” to be incorporated?”

Mike: “Very intelligent, reasonable people interested in maximizing value could arrive at very different conclusions on a course of action depending on if they have a 1 month, 1 year, 5 year, 10 year, 20 year, or 50 year time horizon for measuring a firm’s value. The 1 month or 1 year time horizon has no absolute judgment on being ‘right’ or ‘moral.’”

Liam: “I would say the difference between corporate philanthropy and inversions is materiality. Fiduciary duty would dictate that a company can’t give away $1bn, for example. You could argue about how much is too much, and there are secondary aspects such as whether there is some benefit to giving, but I think materiality is a framework.”

Lee: “It troubles me that new business leaders are taught that ‘fiduciary duty = high share price.’ Such an equation is both false on its face (i.e., share price is a convenient proxy for ‘value maximizing’ and not written into any statute or case law) and in its strategic implications (i.e. a board quite literally can’t pursue all value-enhancing activities, and rather is and must be judged on its process for identifying, prioritizing, and judging opportunities).”

Anon: I would challenge you to stop being such a hipocrite [sic]… and look internally at the history of the company you work for and the founders of the many businesses owned and sold along the way. How much wealth throughout the history of Time, Turner, Warner and the various other entities throughout the corporate history had been sheltered in questionable tax practices that were available under then current tax law. Your job at Fortune would never exist if not for senior management of businesses before you utilizing tax code opportunities. Put your efforts towards something more useful like lobbying to Congress to implement real tax code changes, not vilifying corporations using tools available to stay competitive globally.”

Sean: “I wonder if companies would still pursue tax inversions if they were then banned from U.S. political activities (PACs, campaign donations, etc.) as if they were citizens that gave up their citizenship. At some point there needs to be a price for NOT being a U.S. company to provide the proper incentive not to pursue such ridiculous schemes. Paying taxes should not be considered a burden, it should be considered the cost of doing business. Also, to those who claim it’s the ‘fiduciary responsibility’ of the company to do anything to save the company money, I wonder how often they revisit the topic of board member compensation, how actively they negotiate CEO pay or executive perks. If it really is the board’s fiduciary responsibility to save money whenever possible I suspect more board meetings would be held at McDonalds.”

• Publishing note: I’m off tomorrow, but will publish a (very short) edition on Friday.

• Have a great holiday. Go naps!


• Shire PLC (Nasdaq: SHPG) is preparing a new takeover offer for biotech company Baxalta (NYSE: BXLT), which in August rejected a $30.6 billion all-stock bid, according to Reuters. Read more.


• Wepiao, a China-based mobile ticketing platform founded by WeChat, has raised approximately $235 million in Series C funding. Beijing Cultural Assets Chinese Anci Films & Television Fund led the round, and was joined by CITICS Prosperity Fund, GGV Capital, Southern Capital, Noah Private Wealth Management and New Hope Group. Return backers include Tencent, Wanda and INLY.

•, the e-commerce startup led by former co-founder Marc Lore, confirmed that it has raised $350 million in new VC funding led by Fidelity Investments. It also has secured another $150 million in verbal commitments, all at a $1 billion pre-money valuation. Term Sheet had first reported on the deal earlier this month. Read more.

• Yixia Tech, a Beijing-based maker of the Miao Pai video blogging app, has raised $200 million in Series D funding at a $1 billion valuation. Backers include Sequoia Capital, Weibo and YG Entertainment. Read more.

•, an Israeli provider of data management and storage solutions for big data, IoT and cloud apps, has raised $15 million in Series A funding. Magma Venture Partners led the round, and was joined by return backer JVP.

• PhishLabs, a Charleston, S.C.-based provider of cybersecurity services “that protect against the exploitation of people,” has raised $7 million in Series B funding from Fulcrum Equity Partners.

• Kabuku, a Tokyo-based 3D printing startup, has raised $6.1 million in Series A funding from Global Brain, Dentsu Digital Holdings, and Mitsui Sumitomo Insurance. Read more.

• Lenda, a San Francisco-based online mortgage refinancing platform, has raised $2 million in seed funding. Lakestar led the round, and was joined by return backers Rubicon Ventures and 500 Startups.


• Peak Rock Capital has acquired Berner Food & Beverage LLC, a Dakota, Ill.-based maker of dairy-based food products and beverages. No financial terms were disclosed.


• Square Inc. (NYSE: SQ) said that its IPO underwriters exercised their full option to purchase an additional 4.05 million shares at the IPO price of $9 per share. That increased the size of Square’s IPO from $243 million to $279 million. Read more.


• Abraaj Group has sold its equity stake in African insurer Saham Finances to both South Africa-based Sanlam Group and Morocco-based Saham Group. No financial terms were disclosed.

• Apple (Nasdaq: AAPL) has acquired Faceshift, a Zurich-based developer of motion capture software solution for facial expression recognition, according to TechCrunch. No financial terms were disclosed. Faceshift was seeded by Bessemer Venture Partners. Read more.

• Mirae Asset Global Management (South Korea) has acquired the Fairmont San Francisco Hotel for $450 million from an investor group that includes Oaktree Capital Management, Woodridge Capital Partners and Kingdom Holding Company.


• Azul Linhas Aereas Brasileiras, a Brazilian air carrier, has sold a 23.7% equity stake in China’s HNA Group for $450 million. Earlier this year, Azul Linhas raised $200 million via a share sale to Industrial and Commercial Bank of China. Read more.

• Baird has agreed to acquire Chautauqua Capital Management, a Boulder, Colo.-based investment manager. No financial terms were disclosed.

• Clique Media, the parent company of fashion content and commerce site Who What Wear, has acquired Wantering, a Canadian online fashion discovery engine. No financial terms were disclosed. Clique Media earlier this year raised $8 million in Series B funding from Amazon, Bertelsmann Digital Media Investments, Greycroft, Lerer Hippeau Ventures, Advancit Capital, Mesa Ventures, and Double M Partners.

• Microsemi Corp. (Nasdaq: MSCC) has agreed to acquire PMCSierra Inc. (Nasdaq: PMSCS), a Sunnyvale, Calif.-based chipmaker, for $2.5 billion in cash and stock. The agreement comes after Skyworks Solutions (Nasdaq: SWKS) canceled a $2 billion deal to buy PMC-Sierra. Read more.

• Velocity, a digital hospitality service backed by Spark Capital, has acquired Uncover, a London-based mobile reservations platform. No financial terms were disclosed.


• BlackRock Inc. (NYSE: BLK) is seeking to sell a portfolio of private equity fund positions that have a current value of around $200 million, according to Bloomberg. The LP stakes were originally acquired between 2000 and 2006, with initial commitment value of around $1 billion. Read more.

• Draper Oakwood has launched to invest in royalty finance rounds for growth-stage companies. The UK-based firm will be led by serial entrepreneur Aamer Sarfraz (United Guar and Rice Partners), while Tim Draper will serve as a senior advisor.

• Japan Post Bank Co., which manages more than $1.6 trillion (primarily in Japanese government bonds), is planning to open a private equity division. Read more.


• André Esteves, CEO and controlling shareholder of Brazilian investment bank BTG Pactual SA, was arrested on suspicion of obstructing an investigation into corruption at state-run oil company Petrobras. Read more.

• Ian Kleinfield, Prabir Adarkar and Chris Lapointe all left their investment banking jobs with Goldman Sachs, in order to join the corporate development group of Uber, as first reported by Reuters. Read more.

Kathleen Ligocki, a onetime operating partner with Kleiner Perkins, has been named CEO of Agility Fuel Systems, a Santa Ana, Calif.-based maker of natural gas fuel systems for heavy duty vehicles. She most recently was CEO of Harvest Power.

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