Random Ramblings
Today's big deal is that the FTC has sued to stop Staples from buying rival office superstore Office Depot, in a cash-and-stock deal that originally was valued at $6.3 billion (it was down to around $5.4 billion yesterday, based on depreciation of Staples stock). Staples and Office Depot already have said that they will contest the FTC in court. Some quick notes on this:
History: This is the second time that federal regulators have opposed Staples trying to buy Office Depot. The first was in 1996, in a $3.36 billion deal that the FTC blocked because it would have created a duopoly between Staples and Office Max. What's interesting here is that Office Max was later acquired by Office Depot, in a deal that the FTC approved because of increased competition from online retailers like Amazon and Walmart. Staples clearly thought such thinking would apply to its subsequent deal for Office Depot, but it was mistaken.
Why different? The FTC certainly will need to eat a bit of crow vis-a-vis the Office Max situation, but tried to side-step it by making its new opposition about consumables (pens, paper, etc.) sold to large corporations -- rather than to consumers (which is what the 1996 block was primarily about). Also a bit surprised that there was no mention of items like office furniture, which is an area where Amazon doesn't really play.
Not just here: Canadian regulators also are expected to fight the merger in court, and Europe has yet to weigh in. Clearly the foreign issue is smaller than the U.S. one -- international revenue comprised less than 20% of all Staples revenue in 2013 -- but it's just another big bump in the road.
If blocked: Staples is required to pay a $250 million termination fee to Office Depot, if the deal is terminated due to regulatory pressures.
Trend-line: This move came on the same day that GE terminated the sale of its home appliances unit to Electrolux due to regulatory pressure, and three days after similar reasons were given for the failure of Bumble Bee to merge with the maker of Chicken of the Sea. Moreover, 2015 also saw much larger regulatory opposition to Comcast's $45 billion bid for Time Warner Cable and the $3.5 billion merger of Sysco with U.S. Foods. I've heard some suggestion that the increased action at FTC is caused, in part, by the August resignation of Republican-nominated commissioner Josh Wright (who has not yet been replaced), although the Staples/Office Depot vote was a unanimous 4-0. More likely, it's simply a reflection of increased M&A volume in what already has been a record year for deal-making.
• Thought theft: Yesterday I heard an interesting question from a limited partner in venture capital funds. Here it is, paraphrased: There is general consensus that the speed of disruptive tech innovation has increased, which is one way to explain the rise of so many unicorn companies. At the same time, however, these same companies are remaining private longer, thus increasing the likelihood that they too will be disrupted before generating peak (or near-peak) liquidity for either their investors or their employees. In ignoring this inherent contradiction, they are breaching their fiduciary duty to investors and their implicit compact with employees.
Obviously each company is a unique snowflake, but... Your reaction?
• Art of the D'oh: I have mostly avoided Trump talk in this space, and am not breaching that etiquette today for the purpose of decrying yesterday's bigotry. Instead, it's because he made two claims about business that would be laughable were he not a presidential front-runner whose primary claim to the office is his Wharton pedigree and business prowess.
First, Trump tweeted that Jeff Bezos uses his ownership of the Washington Post (which has been critical of Trump), "for purposes of keeping taxes down at his no profit company, Amazon." For starters, Amazon doesn't own the Washington Post. Bezos owns it through a personal holding company. So the tax thing makes no sense. Moreover, Amazon actually has turned a profit for the past two quarters.
Second, while discussing terrorism in a speech, Trump said: “We’re losing a lot of people because of the Internet. We have to see Bill Gates and a lot of different people that really understand what’s happening. We have to talk to them about, maybe in certain areas, closing that Internet up in some way.”
This is pretty close to "series of tubes" territory, leaving aside the fact that Microsoft (which Gates no longer even runs) could shut down tomorrow and cause barely a blip when it comes to the free flow of online information.
Wharton weeps.
THE BIG DEAL
• The U.S. Federal Trade Commission has sued to block Staples Inc.'s’ $6.3 billion agreement to acquire rival Office Depot, arguing that it would significantly reduce nationwide competition for consumable office supplies sold to large business customers. Read more at Fortune.
VENTURE CAPITAL DEALS
• One Medical Group, a San Francisco-based provider of tech-enabled primary care solutions, has raised $65 million in growth equity funding. J.P. Morgan Asset Management led the round, on behalf of the PEG Digital Growth Fund II and the AARP Innovation Fund. Read more are Fortune.
• Younicos, a provider of energy storage and grid solutions, has raised $50 million in growth capital funding. An undisclosed “strategic investor” led the round, and was joined by First Solar Inc. and private equity firm Groupo ECOS. The company is based in Germany, and also has offices in Texas. www.younicos.com
• Aslan Pharmaceuticals, a Singapore-based developer of immunotherapies and targeted agents for Asia prevalent tumor types, has raised US$34 million in Series C funding led by Accuron Technologies Ltd., a wholly-owned subsidiary of Temasek Holdings. Other new investors included Tianda Pharmaceuticals Ltd. and Haitong International, while return backers were Morningside, Bioveda, Cenova and Sagamore Bioventures. www.aslanpharma.com
• Platfora, a Palo Alto, Calif.-based provider of big data management software, has raised $30 million in Series D funding. HSBC and Harmony Partners were joined by return backers Allegis Capital, Andreessen Horowitz, Battery Ventures, Citi Ventures, Cisco, Sutter Hill Ventures and Tenaya Capital. Read more at Fortune.
• NowThis, a New York-based video news company, has raised $16.2 million in Series D funding. Axel Springer led the round, and was joined by return backers Oak Investments, NBC News Group and Softbank Capital. Read more.
• Lemonade Inc., a New York-based P2P insurance company, has raised $13 million in new VC funding co-led by Aleph and Sequoia Capital. www.lemonade.com
• Swift Navigation, a San Francisco-based developer of “centimeter-accurate GPS technology,” has raised $11 million in Series A funding led by Eclipse Ventures. www.swiftnav.com
• Gousto, a London-based recipe box delivery services, has raised £9 million in new VC funding from BGF Ventures (£3m) and return backers MMC Ventures, Unilever Ventures and the Angel Co-Fund. www.gousto.co.uk
• Everwise, a San Francisco-based talent development platform for connecting professionals with mentors, has raised $8 million in Series A funding from Canvas Ventures, Sequoia Capital and Webb Investment Network. www.geteverwise.com
• SocialFlow, a New York-based provider of social marketing optimization technology, has raised $7.5 million in Series C funding. Backers include Cayuga Venture Partners, Fairhaven Capital, Rand Capital and SoftBank Capital. www.socialflow.com
• GoNoodle, a Nashville, Tenn.-based provider of online movement videos and games, has raised $5 million in equity funding from pediatric health provider Children’s Health. www.gonoodle.com
• Rippleshot, a Chicago-based fraud analytics startup, has raised $1.2 million in bridge funding. KGC Capital led the round, and was joined by UMB Bank, Wintrust and SixThirty.
www.rippleshot.com
PRIVATE EQUITY DEALS
• The Carlyle Group has acquired Array, a Toronto-based provider of retail merchandising displays and store fixtures to the cosmetics industry, from TorQuest Partners. No financial terms were disclosed. www.arraymarketing.com
• GFI Energy Group has acquired Contract Land Staff LLC, a Sugar Land, Texas-based provider of right of way, land management services and land records management, from Hammond, Kennedy, Whitney & Co. No financial terms were disclosed. www.contractlandstaff.com
• Gryphon Investors has sponsored a recapitalization of Jensen Hughes, a Baltimore-based provider of “specialty engineering consulting for the built environment,” from Huron Capital Partners. No financial terms were disclosed, except that Jensen Hughes generates around $180 million in annual revenue. www.jensenhughes.com
• Hellman & Friedman has agreed to acquire a controlling stake in TeamSystem, an Italian management software company. Prior TeamSystem backer HgCapital will retain a minority equity stake, while Bain Capital will exit entirely. No financial terms were disclosed. ww.teamsystem.com
• H.I.G. Capital has acquired Constructive Media, a Vancouver-based platform of digital media products serving the casual gaming and digital education markets. No financial terms were disclosed. Sellers include Yaletown Venture Partners. www.constructive-media.com
• On Location Experiences, an experiential hospitality business jointly owned by RedBird Capital Partners, Bruin Sports Capital and the National Football League, has secured an undisclosed amount of new equity funding from singer Jon Bon Jovi. In related news, On Location Experiences also has acquired Runaway Tours, the VIP hospitality business for music acts that had been created by Bon Jovi. www.runawaytours.com
• Simpson Performance Products Inc., a New Braunfel, Texas-based portfolio company of Bruckmann, Rosser, Sherrill & Co., has acquired Stilo, an Italian auto racing helmet manufacturer. No financial terms were disclosed. www.simpsonraceproducts.com
IPOs
• No IPO news this morning.
EXITS
• Archer Capital has agreed to sell Australian private hospital operator Healthe Care Australia for A$700 million to China’s Luye Medical. Read more.
• Arle Capital has agreed to sell Stork, a Dutch engineering and construction firm, to Fluor Corp. (NYSE: FLR) for around $755 million. Read more.
• Bumble Bee Foods, a canned tuna company owned by Lion Capital, has called off its proposed $1.51 billion purchase of Thai Union Group (owner of Chicken of the Sea, following U.S. Department of Justice concerns. Read more.
• Comfort Medical LLC, a Calimesa, Calif.-based provider of medical equipment and supplies, has acquired Medical Direct Club LLC, a Nashville, Tenn.-based direct-to-consumer provider of urological supplies. No financial terms were disclosed. Medical Direct Club had raised private equity funding from Heritage Group, The Nashville Capital Network, Crofton Capital, and Fulcrum Equity Partners. www.comfortmedical.com
• Impellam Group PLC (AIM: IPEL) has acquired Bartech Group Inc., a Southfield, Mich.-based provider of workforce solutions, from Sverica Capital Management. The deal is valued at approximately $130 million in cash and stock. www.bartechgroup.com
• Rise Interactive, a Chicago-based digital marketing and analytics agency, has acquired SimpleRelevance, a Chicago-based personalized marketing platform that leverages machine learning. No financial terms were disclosed. SimpleRelevance had been backed by Chicago Ventures, Garland Capital Group, Hyde Park Angels, Hyde Park Venture Partners, Pritzker Group and TechStars. www.riseinteractive.com
OTHER DEALS
• GrubHub (NYSE: GRUB) has acquired Delivered Dish, a Portland, Ore.-based restaurant delivery service. No financial terms were disclosed. www.ddish.com
• Carl Icahn has offered to acquire Pep Boys (NYSE: PBY), a Philadelphia-based provider of auto aftermarket products and services, for $15.50 per share. This comes shortly after Pep Boys agreed to be acquired for $15 per share in cash (total equity value of $835 million) by Bridgestone Corp. (Tokyo: 5108). Read more at Fortune.
FIRMS & FUNDS
• Lewis & Clark Ventures, a St. Louis-based venture capital firm, has secured a $25 million “multi-year” commitment from Express Scripts (Nasdaq: ESRX) to support investments in companies developing “smarter pharmacy solutions.” www.lewisandclarkventures.com
• Sofinnova Partners, a European VC firm focused on life sciences, has closed its eighth fund with €300 million in capital commitments. The firm previously had raised €240 million for its seventh fund in 2012. www.sofinnova.fr
• TSG Consumer Partners, a San Francisco-based private equity firm focused on the branded consumer sector, has closed its seventh fund with $2.5 billion in capital commitments. The firm had begun fundraising back in September, and previously raised $1.3 billion for its sixth fund in 2011. www.tsgconsumer.com
MOVING IN, UP, ON & OUT
• General Atlantic has promoted Jörn Nikolay, who leads the firm’s Munich office, to managing director. It also promoted Roni Elchahal, Andrew Ferrer, and Rajat Sood to principal. www.generalatlantic.com
• Bennet Grill has joined Gemspring Capital, a Westport, Conn.-based private equity firm focused on the lower middle markets, as a vice president. He previously was a director of business development and strategy at Ipreo. www.gemspring.com
• Scott Fitch has joined private equity firm Wynnchurch Capital as a Los Angeles-based managing director. He previously spent six years in the business development group of Platinum Equity. www.wynnchurch.com
Share today's Term Sheet:
http://fortune.com/newsletter/termsheet