Good morning, Term Sheet readers.
Things are getting interesting. Reuters reported yesterday that Saudi Arabia's Public Investment Fund (PIF) is in talks to invest in aspiring Tesla rival Lucid Motors Inc. Lucid Motors is a Newark, Calif.-based electric vehicle manufacturer that does not currently have any cars on the market.
PIF and Lucid Motors have drawn up a term sheet under which PIF could invest more than $1 billion and obtain majority ownership, according to the report. PIF’s first investment would be for $500 million, and subsequent cash infusions would come in two stages contingent on Lucid Motors hitting certain production milestones.
The timing of this news could not be more awkward as it follows Elon Musk’s announcement last week that PIF could help him take Tesla private. As we noted before— it appears that funding wasn’t actually secured. Rather, Musk explained he was led to believe that "no other decision makers were needed and that they were eager to proceed." What’s more is that the Saudi fund had not committed to provide any cash, according to multiple reports.
And of course, it is possible that the PIF invests in both companies as Saudi’s interest in electric vehicles has increased as it looks to diversify its oil-heavy economy. Regardless of what happens, Musk is under tremendous pressure to perform and follow through with his plans. But as outlined in this emotional NYT interview, his lack of sleep, the toll on his health, and the mounting stress paint a picture of a CEO struggling to keep his company (and his sanity) under control.
He said, “The worst is over from a Tesla operational standpoint, but from a personal pain standpoint, the worst is yet to come.”
BUBBLY ACQUISITION: PepsiCo has agreed to acquire countertop carbonated water machine maker SodaStream for $3.2 billion—the snacking and beverage giant’s latest move to add healthier products to its portfolio and push a more environmentally friendly agenda. The deal, for $144 per share in cash, is a 32% premium to the 30-day volume weighted average share price of SodaStream. SodaStream will be run as an independent division, and its current management team will remain intact. Read more at Fortune.
THE YEAR OF THE UNICORN: A record number of unicorns (venture-backed companies privately valued over $1 billion) have launched public offerings this year. According to Crunchbase, there have been 23 unicorn IPOs globally so far in 2018, well outpacing full-year totals for 2016 and 2017. And this year’s newly public unicorns are doing quite well — at least six are currently valued at more than $10 billion. Everything's bigger in 2018. Read more.
CHANGE THE WORLD: Fortune released its fourth annual Change the World list this morning, which highlights companies that are addressing social problems as part of their core business strategy. As Fortune’s Alan Murray said in CEO Daily, “This list isn’t about charity, or ‘corporate social responsibility,’ or some measure of corporate ‘goodness.’ Rather, it is a testament to the fundamental positive power of capitalism.”
The list features 57 companies, including Reliance Jio (No. 1), which is expanding global access to the Internet; Merck (No.2), which helped develop an Ebola vaccine; and Kroger (No. 6), which is fighting hunger by donating 325 million meals last year. Explore the full list here.
THE LATEST FROM FORTUNE...
• Deploying the Profit Motive to Beat Ebola (by Clifton Leaf)
• How Bank of America Fueled the Green Energy Boom (by Matthew Heimer)
• 6 Small Companies With a Big Social Impact (by Erika Fry, Matthew Heimer, & Aaron Pressman)
• How Shareholders Win When Companies Change the World (by Clifton Leaf)
Oaktree seeks $1.5 billion in cash to top bid for Claire's. Campbell taps Goldman to examine sales of business units to pay down debt. Blockchain is starting to show real promise amid the hype. Michael Cohen investigated for bank fraud over $20 million. Twitter CEO: 'I haven't done enough' to be transparent.
• Threads, a London-based luxury retailer that serves the millennial and Generation Z market, raised $20 million in Series A funding. Investors include C Ventures and Highland Europe.
• Rhumbix, a San Francisco-based mobile platform for smarter construction sites, raised $8 million in funding. Autodesk led the round.
• RDMD, a San Francisco-based healthcare technology company, raised $3 million in seed financing. Investors include Lux Capital and Village Global.
PRIVATE EQUITY DEALS
• Hammond, Kennedy, Whitney & Company Inc acquired Indigo Wild, a maker of bath, skin, home and cleaning products. Financial terms weren't disclosed.
• Guzman Energy, a Coral Gables, Florida and Denver-based provider of wholesale power, energy trading and hedging services, raised $130 million in funding from Vision Ridge Partners and ZOMA Capital.
• Western Digital Capital made an investment in Excelero, a San Jose, Calif.-based provider of software-defined block storage solutions, bringing the company’s total funding to $35 million.
• Accel-KKR made an investment in SugarCRM Inc, a Cupertino, Calif.-based provider of customer relationship management solutions. No financial terms were disclosed.
• Keter Group, a portfolio company of BC Partners, agreed to acquire Adams Manufacturing, a Portersville, Penn.-based maker of resin garden furniture. Financial terms weren't disclosed.
• TA Associates and Luminate Capital Partners invested in Financial Information Technologies, a provider of invoicing, electronic payment and analytics services to the beverage alcohol industry. Financial terms weren't disclosed.
• Qutoutiao, a Shanghai-based news and video aggregation app, filed to raise up to $300 million in an IPO of ADSs. It posted revenue of $78.1 million on loss of $14.3 million. Citi, Deutsche Bank, China Merchants Securities, and UBS are underwriters. It plans to list on the Nasdaq as “QTT.” Read more.
• Farfetch, a London-based fashion site, filed to raise up to $100 million in an IPO. It posted revenue of $386 million and loss of $112.3 million. Kadi Group, Index Ventures, and Advent Venture Partners back the firm. Goldman Sachs, J.P. Morgan, Allen & Company, and UBS are underwriters. It plans to list on the NYSE as “FTCH.” Read more.
• Zekelman Industries, Chicago, Ill.based steel pipe and tube manufacturer, filed to raise up to $100 million in an IPO. It posted sales of $2.6 billion and net income of $246.1 million in the 12 months ending June. Goldman Sachs and BofA Merrill Lynch are underwriters. It plans to list on both the NYSE and the Toronto Stock Exchange as “ZEK.” Read more.
• Principia Biopharma, a San Francisco-based maker of small molecule therapies in the area of oncology, filed to raise $86 million in an IPO. It posted revenue of $5.3 million in 2017 and loss of $28.7 million. Baker Bros (12.3% pre-offering), Morgenthaler Ventures (16.8%), and New Leaf Ventures (16.8%) back the firm. BofA Merrill Lynch, Leerink Partners and Wells Fargo Securities are underwriters. It plans to list on the Nasdaq as “PRNB.” Read more.
• Cava Group agreed to acquire Zoe’s Kitchen Inc (NYSE:ZOES), a fast-casual restaurant franchise, for $12.75 in cash or about $300 million. SWaN & Legend Venture Partners and Revolution Growth will also participate in the investment.
• Persistence Capital Partners sold Medisys Health Group Inc, a Canada-based provider of preventive healthcare services, to TELUS Corporation.
FIRMS + FUNDS
• 645 Ventures, a New York-based venture capital firm, raised $40 million for Fund II.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.