Term Sheet — Tuesday, February 21

"HIGH REGARD"

Welcome back from the long weekend, those of you who had yesterday off. Lots to catch up on:

Pent-Up Distrust: When the hashtag #DeleteUber went viral last month, venture investors largely shrugged. The thinking went that Uber didn’t deserve the backlash it got for its poor handling of the immigration protests and related taxi driver strike. To be clear: Nobody thought Uber was a victim. Rather, investors blamed the #DeleteUber outrage on pent-up anger and distrust, something Uber has earned over the years with early opportunistic surge pricing incidents, reported privacy violations and threats to dig up dirt on journalists, a sexist ad campaign, fines for insufficient driver background checks and its handling of sexual assault charges, sparring with regulators, reported sabotage of competitors, complaints over the company’s treatment of its drivers, and of course, the “boob-er” comment. Now, anytime Uber stumbles, it does not get the benefit of the doubt.

Last month’s political stumble pales in comparison to the situation Uber encountered this weekend, when Susan Fowler Rigetti, a former engineer at the company, outlined her experience of sexual harassment and gender discrimination while working at Uber. Her description of inappropriate behavior, repeated sexism, and the HR department’s dismissal of her documented complaints paint a picture of an ugly, toxic work environment. And in the context of Uber’s past bad behavior, it’s no surprise the post went viral.

It puts CEO Travis Kalanick in a no-win position: He either knew about it, which makes him complicit in, at best, a total mishandling of the situation, or he didn’t, which makes him clueless. He chose the latter, responding that this is the “first time this has come to my attention.” He announced Covington & Burling lawyers Tammy Albarrán and former Attorney General Eric Holder would conduct an investigation. Holder recently helped Airbnb handle racial discrimination on its platform; last year he sent letters to local and state officials asking them not to require fingerprint background checks for Uber drivers.

The tech world will be watching to see if Uber merely apologizes and waits for this to blow over – as it did after the Emil Michael scandal – or if the investigation results in action. As Amy Tsai, an engineer at Yelp, noted on Twitter, inclusion isn’t about hiring more women – it’s about firing sexist employees, no matter how “high-performing” they are.

In an email to staff, Kalanick revealed that 15.1% of Uber’s engineering, product management, and scientist employees are women. He hinted at a desire to hit reset on Uber’s culture: “What is driving me through all this is a determination that we take what's happened as an opportunity to heal wounds of the past and set a new standard for justice in the workplace.”

The Media and Private Equity: Texas Monthly is taking some heat for its decision to scale back the magazine’s political coverage and amp up lifestyle coverage because, according to its new editor, “Texans don’t care about politics.” (There’s also a Twitter back-and-forth about whether the quote was out of context.)

It’s relevant to Term Sheet readers because the company is owned by Genesis Park, a Houston-based buyout firm created by Paul Hobby. Genesis bought the magazine from Emmis Communications in October 2016 for $25 million. Given the current tensions surrounding President Trump’s take on the media’s role in government, owners and buyers of media properties – be they vanity projects, investments intended to turn a profit, or otherwise, should beware the heightened sensitivity and scrutiny.

IPO: Mulesoft, a San Francisco enterprise software company, has filed to go public. If all goes as planned (meaning Snap goes public, and nobody swoops in and buys Mulesoft the night it’s supposed to price a la AppDynamics), this will mark the second public exit of 2017 for Lightspeed, which owns 17.1% of Mulesoft and 8.3% of Snap. Other MuleSoft investors: Hummer Winblad owns 15.8%, NEA owns 14.3%, Morganthanler Partners owns 7.5%, Sapphire Ventures owns 6.8% and Bay Partners owns 6.3%.

Mulesoft reported $187.7 million in revenue last year, a 77% increase over the year prior, and a net loss of $50.4 million. The company has 841 employees and counts integration software vendors such as IBM, Oracle, and TIBCO, as well as Apigee, which Google acquired, as its competitors. This item has been corrected with adjusted share percentages for Mulesoft's investors.

Conscious uncoupling: The last issue of Term Sheet didn’t have time for much analysis of Friday morning’s surprise mega-merger, wherein 3G Capital-backed Kraft Heinz bid $143 billion for Unilever. Alas. Unilever promptly and publicly rejected the bid for having no financial or strategic merit. Rather than raise its bid over the weekend, Kraft officially rescinded its offer.

The two companies put out a lovey-dovey joint release, noting they “hold each other in high regard.” Mergers are often talked about in romantic terms; in this case, Kraft got dumped before the first date and both parties are pretending the breakup is mutual. A couple of notes:

1. This deal was supposed to be the Anheuser-Busch-InBev-SABMiller of food. Remember: When 3G and Anheuser first tried to buy SAB Miller, they were rebuffed. But they were patient, kept pushing, and were rewarded for it. That’s why no one expected Kraft to back down this quickly. However, Unilever reportedly viewed Kraft’s unsolicited, public bid as hostile. Kraft’s other backer, Warren Buffett’s Berkshire Hathaway, is famously opposed to hostile takeovers.

2. Why would Unilever bother with the “high regard” shenanigans? Bloomberg Gadfly posits that Unilever might want to sell some of its slower-growth food businesses to Kraft in the future. Kraft is all food; Unilever is 60% personal care and home goods.

3. A big hurdle to this deal was union jobs. A Unilever union invoked the “Cadbury rule,” a reference to Kraft’s promise to save factories after it took over Cadbury in 2010. Surprise! It did not. Not helping matters: UK Prime Minister Theresa May has been critical of the Cadbury deal.

4. Dealmakers love their mega-mergers, but increasingly, they’re not getting done: Already $205.2 billion worth of deals have been withdrawn this year, according to Reuters. That figure was just $53.6 billion at this time last year. In total, $808 billion worth of deals were withdrawn or rejected in 2016, compared with $538 billion the year prior.

THE LATEST FROM FORTUNE...

• GM plans to deploy thousands of self-driving electric cars in 2018.

• Nintendo’s high-stakes bet on the Switch.

• VR sales are a wet blanket.

• The regulators are coming for Uber and Airbnb.

• Space startups are booming in the Mojave desert.

• Can America’s department stores survive?

• Including this one again on account of a broken link: A knockout in the biotech fight of the century.

• The Fortune Unfiltered podcast features SAP CEO Bill McDermott.

• The MPW Onstage podcast features Lori Goler, VP of People at Facebook.

…AND ELSEWHERE

A Supreme Court pick at odds with Trump. Smartphones lead to higher car insurance rates. Obamacare startups brace for what’s next. The man who broke Ticketmaster. Airbnb sued by apartment landlord. Watch Snap’s roadshow commercial. Snapchat Spectacles go for sale to the public, sans vending machine. When neo-nazis came for a small town. Teen suicide attempts fell as same-sex marriage became legal. The taxpayer cost of Trump’s lifestyle. Cuba is open but Americans aren’t going. An investigation into the possibly dubious cancer “moonshot” of Dr. Patrick Soon-Shiong. This sports column is way too long. “Live chilling” beats IRL hangs. Selfie ad sales. Kalsarikannit is the new Hygge. A magazine about memes.

VENTURE DEALS

• SoFi, a San Francisco-based provider of student loan refinancing services, is close to raising $500 million in a new funding round that values the company at $4 billion, according to Bloomberg. Read more.

• MobiTV, an Emeryville, Calif.-based provider of IP-based video delivery services, raised $21 million in funding from Oak Investment Partners and Ally Corporate Finance.

• True Balance, an Indian app that lets users check their mobile balances, raised Rs 100-crore ($15 million) in Series B funding, according to The Economic Times. SoftBank Ventures Korea and IMM Investment Group led the round, with participation from Mega Investment, Korea Development Bank, and Capstone Partners. Read more.

• Sun Basket, a San Francisco-based organic meal kit delivery service, raised $15 million in Series C funding. Sapphire Ventures led the round, and was joined by Baseline Ventures, PivotNorth Capital, Accolade Partners, Founders Circle Capital, Shea Ventures, Relevance Capital, Vulcan Capital, and Filter 14.

• POD Point, a London-based manufacturer of electric vehicle charging stations, raised £7.5 million ($9.3 million) in Series C funding, according to Tech City News. Draper Esprit led the round, and was joined by Barclays Capital and angel investors. Read more.

• TVSquared, a U.K.-based same-day TV attribution platform, raised $6.5 million in funding. West Coast Capital led the round, and was joined by the Scottish Investment Bank and Calum Smeaton.

• Utrip, a Seattle-based online platform for making travel plans, raised $4 million in Series A funding. Investors include Plug and Play, Tiempo Capital, Acorn Ventures, SWAN Venture Fund, and W&W Capital.

• Mobike, a Chinese bicycle rental app, raised an undisclosed amount of funding from Temasek and Hillhouse Capital, bringing its total funding for 2017 to $300 million. The company raised $215 million in funding from Tencent Holdings and Warburg Capital in January, followed by an undisclosed amount in funding from Foxconn. Read more.

• Dah Makan, a Malaysian food-delivery startup, raised $1.3 million in seed funding from NFQ Capital, East Ventures, Asia Venture Group, and Grupara, according to TechCrunch. Read more.

• Trillium Inc, a Japanese cybersecurity startup, raised an undisclosed amount in Series A funding from Global Brain, Mizuho Capital, and DBJ Capital.

• Tradico AG, a Liechtenstein-based online financial trader, raised €1 million ($1.1 million) in funding from angel investors including Henry Ritchotte and Hermann Hauser.

• Santander InnoVentures, Banco Santander SA’s (BME:SAN) venture arm, has invested an undisclosed amount in two fintech startups: Personetics Technologies, a White Plains, N.Y.-based provider of automated customer service, and Gridspace, a San Francisco-based developer of language translation technology. Read more at Fortune.

PRIVATE EQUITY DEALS

• Renters Warehouse, a Bloomington, Minn.-based property management company backed by the Northern Pacific Group, acquired Redneck Property, an Oklahoma property management company. Financial terms weren’t disclosed.

• MedPlast Inc, a Tempe, Ariz.-based provider of processing solutions for medical devices backed by JLL Partners and Water Street Healthcare Partners, agreed to acquire Vention Medical’s device manufacturing services business. Financial terms weren’t disclosed.

• Bain Capital acquired Craigcare, a Burwood, Australia-based provider of residential accommodation services for seniors. Financial terms weren’t disclosed, but media reports value the deal at between A$50 million ($38.3 million) and A$100 million ($76.6 million). Read more.

• Telefonica (BME:TEF) agreed to sell up to 40% of its stake in Telxius, its telecom subsidiary, to KKR (NYSE:KKR) for €1.3 billion ($1.4 billion), according to Reuters. The deal values Telxius at €3.7 billion ($3.9 billion), including debt. Read more.

• Lovell Minnick Partners invested an undisclosed amount in Trea Asset Management, a Spanish independent asset management firm.

• Francisco Partners has acquired myON, a Minneapolis-based digital literacy company for the K-12 education market, from Capstone and announced a growth investment in the company.

OTHER DEALS

• Verizon (NYSE:VZ) has reached a revised deal to acquire Yahoo's (Nasdaq:YHOO) core internet business for $350 million less than the original price, following revelations of multiple data breaches. Read more at Fortune.

• Restaurant Brands International (NYSE:QSR), which owns the fast-food franchises Burger King and Tim Hortons, has agreed to acquire Popeyes Louisiana Kitchen (Nasdaq:PLKI) for $1.8 billion. 3G Capital is a Restaurant Brands’ shareholder. Read more at Fortune.

• Ant Financial, a Chinese online payment platform, agreed to invest $200 million in Kakao Pay, the mobile payment subsidiary of South Korean messaging platform Kakao. Read more at Fortune.

• Kraft Heinz (Nasdaq:KHC) agreed to withdraw its $143 takeover bid for Unilever (LSE:ULVR). Kraft is owned by 3G. Read more at Fortune.

• Chinese real estate and media giant Dalian Wanda’s deal to acquire Dick Clark Productions, which runs the Golden Globe awards and Miss America pageants, from Eldridge Industries for $1 billion has reportedly fallen apart over regulatory issues. Read more at Fortune.

• B. Riley Financial (NASDAQ: RILY) agreed to acquire FBR & Co. (NASDAQ: FBRC), for $160.1 million.

IPOS

• MuleSoft, a San Francisco-based a SaaS integration platform, has filed to go public. The company, which claimed revenue of $187.7 million in 2016, plans to trade on the NYSE under the ticker symbol MULE. Goldman Sachs, J.P. Morgan, and BofA Merrill Lynch are the joint bookrunners on the deal. Read more at Fortune.

• Vantage Energy Acquisition, a Irving, Texas-based blank check company, has filed to raise up to $400 million in an initial public offering. It plans to trade on the Nasdaq under the ticker symbol VEACU. Citi is the bookrunner on the deal.

• Hamilton Lane, a Bala Cynwyd, Pa.-based alternative asset manager, has set its IPO terms. The company plans to sell 11.875 million shares, priced at between $15 and $17 each, and trade on the Nasdaq under the symbol HLNE. J.P. Morgan and Morgan Stanley are the joint bookrunners on the deal.

EXITS

• WayUp, a New York City-based online portal that helps students find jobs and internships, acquired San Francisco-based competitor Looksharp, according to TechCrunch. Financial terms weren’t disclosed. Looksharp raised $10.5 million in VC funding from investors including 500 Startups, Artis Ventures, and Kapor Capital. Read more.

• Meltwater, a San Francisco-based B2B data analytics company, acquired Wrapidity, a U.K.-based AI startup spun out of Oxford University, according to TechCrunch. Terms weren’t disclosed. Wrapitidy raised £200,000 ($248,000) in venture funding. Read more.

• Magic Leap acquired Zurich-based scanning technology company Dacuda’s 3D unit. Terms weren’t disclosed.

FIRMS + FUNDS

• Odyssey Private Equity, a Sydney-based private equity firm, raised A$275 million ($211 million) for its debut fund., according to Private Equity International. Read more (subscription required).

• Summa Equity, a Swedish private equity firm, raised SKr4.5 billion ($500 million) for its latest fund.