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Thoma Bravo Continues Frenetic Year With $3.7B Mortgage Deal

Thoma Bravo has wasted no time getting a jump on 2019.

The tech-focused buyout juggernaut completed its $950 million purchase of application security business Veracode from Broadcom on the first day of the year. Ten days later, Thoma Bravo finalized its acquisition of cybersecurity business Imperva for roughly $2.1 billion. And at the end of the month, the firm closed its 13th flagship fund on $12.6 billion, its biggest vehicle ever, topping a predecessor that brought in $7.6 billion in 2016 and joining an elite group of private equity firms that have raised $10 billion or more for buyout funds this decade.

Now, in its latest move, the Chicago-based investor has agreed to take mortgage software maker Ellie Mae private in a deal worth some $3.7 billion. Thoma Bravo will pay $99 per share in cash for the company, marking a 47% premium to its average closing share price over the 30 days ended February 1 and a roughly 21% premium to its Monday close. Based in Pleasanton, CA, Ellie Mae will now have a 35-day go-shop period to seek a better deal; otherwise, the buyout is expected to close in 2Q or 3Q.

Founded in 1997, Ellie Mae is the creator of a cloud-based platform used by banks, credit unions and mortgage companies to originate loans, with a client list that includes powerful US government-backed entities Fannie Mae and Freddie Mac. (Despite its similar name, Ellie Mae has no direct link to either company or to the government). Over the past eight years, the company has been on an incredible upward trajectory, driven by low interest rates and the recovery of the housing market. When Ellie Mae went public back in 2011, it raised a modest $45 million and established an initial market value south of $150 million—or about 25 times less than its valuation in the Thoma Bravo deal.

Thoma Bravo has had an impressive upward climb of its own, with its 35 completed private equity deals in 2018 representing a YoY increase of nearly 60%, according to the PitchBook Platform. And the Ellie Mae deal is right in line with Thoma Bravo’s usual preferences: Since the start of 2010, more than 80% of the firm’s PE deals have come in the IT sector.

Read More – www.pitchbook.com

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DoorDash Adds $500M to Food Delivery Duel With Postmates

Lately, food delivery startup DoorDash has had a voracious appetite for capital.

Six months after closing a $250 million Series E, the Bay Area company is in talks to raise around $500 million from Temasek Holdings at a valuation of more than $6 billion, per The Wall Street Journal, roughly 10 times what DoorDash was worth four years ago.

Backed by investors including CRV, Sequoia, Coatue Management and DST Global, DoorDash had a strong 2018 when it came to VC funding, pulling in more than $780 million and achieving unicorn status in March, following a $535 million round led by SoftBank’s Vision Fund. Its valuation rose to $4 billion last August, following another $250 million fundraise.

DoorDash was founded in 2013 by a group of Stanford University students, including current CEO Tony Xu. The company has quickly grabbed a sizable market share and delivers food from restaurants to customers in more than 1,000 cities across the US and Canada. In January, it became the first food delivery startup to operate in all 50 states, per TechCrunch.

By now, it’s well-established that the growing trend of pondering a visually attractive menu online and ordering restaurant food from the comfort of your home is not going to fizzle out anytime soon. The global market for online food delivery is expected to reach $112 billion by 2023, according to Research and Markets, and competition in the space can be fierce.

One of DoorDash’s key competitors, food delivery unicorn Postmates, has also been grabbing headlines in the past week. Founded in 2011, the San Francisco-based company has hauled in plenty of capital as well, raising more than $670 million in VC funding overall, including a $100 million round in January from new investor BlackRock and a group of existing backers that includes Tiger Global. That latest round valued Postmates at $1.85 billion.

Read More – www.pitchbook.com

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Merger growth drives Grant Thornton International to record £4.3bn revenues

Grant Thornton International reported record revenues of $5.45bn (£4.28bn), lifted by income expansion from international mergers, and strong growth in its tax and advisory arms.

The figure is up $450m on last year, representing an average growth of 9.4 per cent across the whole organisation – slightly behind the 10.7 per cent global growth at BDO, one of its chief mid-market rivals.

Peter Bodin, chief executive of the professional services firm’s international network, headquartered in the UK, said: “Our success this year is the result of a deliberate strategic focus on our core mid-market client base, and our key strategic growth markets where we want to be successful.

“Being clear on where we need to develop our capabilities, and focusing on quality in those core markets, has underpinned this performance.”

Strong mergers and acquisitions activity underpinned much of Grant Thornton International’s growth, with the firm making 24 deals with 10 other companies. Mergers in Japan and South Africa drove revenue increases of 18.7 per cent and 54.7 per cent in Asia and Africa respectively. Average growth in Europe stood at 7.7 per cent.

The US remained its biggest market, generating $2.5bn in fee income, followed by $1.5bn in Europe.

“It’s great to see our firms from markets across the globe flourishing as we continue to build a sustainable next-generation professional services organisation,” said Bodin.

Across its service lines, tax grew by 14.8 per cent, and advisory by 10.4 per cent.

Full results for Grant Thornton’s UK operations have not yet been released. The firm is currently the UK’s fifth-largest auditor – behind global giants the Big Four – Deloitte, EY, KPMG and PwC – but is set to lose that title after the impending merger of sixth-place BDO UK with Moore Stephens.

 

Read More – www.cityam.com

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Mike Ashley in talks over rescue bid for struggling HMV

Mike Ashley is considering a rescue bid for HMV, the music and film retailer that collapsed into administration last month.

The Sports Direct boss is understood to have held talks with suppliers to the ailing business about a rescue deal, which could see him link the HMV brand to other parts of his high street empire including House of Fraser, Sports Direct or potentially Game Digital, in which Sports Direct owns a 25% stake.

A successful deal for HMV’s 125 stores would see Ashley grab another major slice of the high street following Sports Direct’s acquisition of the bike specialist Evans Cycles in October and department store chain House of Fraser in August, both of which were bought out of administration.

While Ashley takes a look at many potential retail deals, and Sports Direct holds stakes in multiple high street chains including the struggling French Connection and Debenhams, ‎sources told Sky News – which first reported Ashley’s interest in HMV – that he was serious about buying the music retailer.

Ashley has also made clear his interest in Debenhams, which is seeking to refinance its debts by the end of this month after a torrid 2018. Ashley has offered to bail the department store chain out with a £40m loan on terms that would give him the whip hand over the company, in which Sports Direct already owns a near 30% stake.

 

Read More – www.theguardian.com

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Snoop Dogg aims for another VC hit with Klarna deal

Snoop Dogg has always been someone with his mind on the money and the money on his mind. However, in his latest VC move, he’s swapping cold hard cash for online payments by becoming a shareholder in Swedish unicorn Klarna. Snoop, aka Calvin Broadus, will also front the company’s “Smoooth Dogg” advertising campaign.

Klarna, which offers payments services for around 100,000 merchants in 14 countries, is backed by investors including Sequoia Capital and Atomico. The fintech company raised $250 million from Permira in 2017 at a $2.5 billion valuation.

The deal adds another unicorn to the stable of the American rapper (pictured with Klarna CEO Sebastian Siemiatkowski), one that already boasts some impressive names.

Indeed, Snoop managed to score a couple of hits five years ago with investments into online aggregator Reddit and personal investment startup Robinhood. According to PitchBook data, Reddit boasted a valuation of some $1.8 billion after its 2017 Series C, while Robinhood chalked up a $5.6 billion valuation after its $363 million Series D last year.

Elsewhere, Snoop’s own venture firm, Casa Verde Capital, closed its debut fund on $45 million last year, targeting seed and Series A deals in the cannabis industry. The VC co-led a $50 million round with Tiger Global Management into cannabis regulatory startup Metrc in October.

Rappers venture into investing

Rap musicians and venture capital have been an increasingly common combination this past decade, with Snoop being one of many artists to have put their money where their mouth is—and for some, this has led to gargantuan exits. Take Amazon’s acquisitions of Ring and PillPack last year, for example, with both deals said to be in the region of $1 billion each. An early investor in both these startups was QueensBridge Venture Partners, the venture firm of Nasir Jones, aka rapper Nas. QueensBridge backed Ring during its 2014 $4.5 million Series A, with last year’s exit reportedly earning him a cool $40 million.

Read More – www.pitchbook.com

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Apollo’s $15B mega-deal falls apart in final moments

It was on track to be one of the biggest leveraged buyouts since the financial crisis.

Instead, metals company Arconic has ended negotiations with Apollo Global Management over a deal the would’ve reportedly valued the business at more than $15 billion, including debt. The announcement comes after months of talks, with news emerging last week that the two sides were close to striking an agreement. Apollo reportedly offered $22.20 per share for Arconic, which manufactures aluminum and titanium products for the aerospace, energy and automotive markets.

The company’s stock (NYSE: ARNC) plummeted 16% to $17.09 per share Tuesday, dropping its market cap to about $8.3 billion.

Apollo originally beat out bids from private equity heavyweights including Blackstone and The Carlyle Group, but negotiations were complicated. The company was still dealing with fallout after cladding panels produced by its building products division caught fire in the Grenfell Tower blaze that killed 72 people and displaced more than 200 households in 2017. Arconic said in its press release that it will continue to pursue a sale of its building products business, despite facing class-action lawsuits from investors in the US, along with other potential liabilities.

In retrospect, it probably wasn’t the ideal time for Arconic to take on a huge debt burden. The Trump administration’s 10% tariffs on aluminum imports have dimmed the company’s economic outlook. Though the deal was eventually fully financed, getting a loan was hard to come by thanks to a record-long dry spell in the junk bond market, per The Wall Street Journal. Even when credit markets are stable, deals of that size aren’t very common. There have been just eight US buyouts of $15 billion or more since the financial crisis, per the PitchBook Platform.

It’s not all bad news for Apollo. The firm has reportedly reached advanced talks to purchase European packaging giant RPC for more than $3.8 billion, per The Wall Street Journal. If a deal is struck, that should ease some pressure on Leon Black’s buyout shop as it looks to deploy a record $24.6 billion buyout fund closed in 2017.

 

Read More – www.pitchbook.com

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Sainsbury’s says confidence in securing Asda has not changed

Sainsbury’s, Britain’s No. 2 supermarket chain, said its belief that the competition regulator would clear its 7.3 billion pound takeover of rival Asda had not diminished since the deal was announced in April.

“It (confidence) remains exactly the same…We remain confident in the case we are making to the CMA (Competition and Markets Authority),” Chief Executive Mike Coupe told reporters.

“In that respect nothing has changed,” he said.

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Norway’s DNO raises Faroe Petroleum bid to $816 million

Norwegian oil company DNO ASA raised its bid for Britain’s Faroe Petroleum to 641.7 million pounds ($816 million) on Tuesday, lifting its cash offer to 160 pence per share from 152 pence.

Shares in Faroe, which rejected DNO’s 610 million pound hostile bid in November as inadequate and “opportunistic”, have since ranged between 140 pence and 160.8 pence.

DNO’s Chairman Bijan Mossavar-Rahmani said in a statement that while the company “does not overpay for assets”, it was in the interest of most parties to raise its offer.

The deal will be funded from cash resources and the closing date for the final offer has been set for Jan. 23, DNO said.

DNO, which has been building up a stake in Faroe since April, said its combined ownership and bid acceptances on Jan. 4 stood at 43.8 percent. It requires 50 percent of Faroe’s shareholders to back its takeover bid.

 

Faroe had no immediate comment after DNO raised its offer.

Paul Mumford of Cavendish Asset Management, who according to Refinitiv Eikon data holds 1.4 percent of Faroe and who has said DNO’s previous offer was too low, said on Tuesday that the revised offer – which he also referred to as “low-ball” – looked likely to succeed.

“For minority shareholders this may be the nail in the coffin. They are unlikely to want to stick around with DNO holding a controlling stake in the business,” he said.

Sears reaches a deal to stay alive

Analyst Teodor Sveen-Nilsen of broker Sparebank 1 Markets in Oslo said he expected the increased offer to be successful.

“Considering the fact that peers have become cheaper over the past quarter…, we believe DNO now will end up with at least 50 percent of Faroe’s share capital,” he said in a note.

 

Read More – www.uk.reuters.com

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First impressions from CES: Crypto optimism, sleeptech and the internet of anything

Did you just say bitcoin?

It’s 2019, and there is still plenty of attention around crypto, even though the space has seen a significant decrease in total market capitalization during the past 12 months. The bullish consensus here at CES is that all new technologies have historically gone through a bubble phase before reaching wide-scale adoption— such as railroads, the internet and so forth—and that crypto will follow the same path.

“Crypto is alive and well”

—Matthew Roszak, co-founder and chairman of Bloq, at CES

Aside from sideline speculation, the technology still faces many challenges, like regulation, security, scalability and latency. With tempered expectations for crypto, companies like Devvio, which just announced its new blockchain protocol Devv, are developing solutions to help solve these blockchain technology issues. Regardless of the roller-coaster development within the crypto space, bitcoin is still a great accomplishment, in which a white paper released 10 years ago has achieved over a $70 billion valuation based on market capitalization.

The internet of ANYthing

At CES Unveiled, Wilkinson Baking Company showed off its fully automated breadmaking machine, The BreadBot. This machine takes in raw ingredients such as flour and yeast to produce direct-to-consumer fresh bread. The pitch here is that The BreadBot will be placed in grocery stores and can produce fresh bread on demand, without preservatives, in a much smaller footprint than a typical in-store bakery.

I need to get some sleep

If there has ever been a city that never reminds you to sleep, it’s Las Vegas. Coincidentally (or perhaps not?), I have been reminded to get some good sleep everywhere I walk here at CES. I recently read “Why We Sleep” by Matthew Walker, in which the author expressed concern that society’s general lack of sleep has become a major health epidemic.

Innovators here at CES have also caught on to the latest health trend of getting awesome sleep. From rocking beds to pillows that detect and stop snoring, there is no shortage of new and creative ways to improve overall sleep health. And it’s not only for adults as well: At CES, LA-based Miku launched a baby monitor designed to analyze a baby’s sleeping and breathing pattern to provide parents with a status of their baby’s sleep health. And PE-backed SleepScore Labs, which provides an app and other products to enable improved sleep, just announced a venture partnership with Dr. Oz, SleepScore Ventures. The venture aims to invest solely in companies and products focused on sleep improvement.

Read More – www.pitchbook.com

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UK M&A value soars by more than a quarter in 2018 as number of mega-deals increases

Deal activity reached a three year high in 2018, while M&A activity involving UK firms hit £359.9bn which is 28 per cent more than the value recorded in 2017, according to data from Refinitiv.

Activity spiked in the first half of the year, with eight deals valued at over £5bn announced in the first six months of 2018 and two revealed in the second half. The largest acquisition of the year was Comcast’s £37bn offer for Sky.

A total of 71 mergers and acquisitions involving a British company and valued at £1bn or more were announced last year, which is the highest number in 17 years.

“M&A activity involving UK companies increased 28 per cent last year. The growth, driven by flurry of mega deals during the first half of the year, saw deal activity reach a 3-year high and a level only exceeded once in the last decade,” said Lucille Jones, deals intelligence analyst at Refinitiv.

 

“The last six months of 2018 saw a marked slowdown in dealmaking from the pace seen at the start of the year. Whether political uncertainty dampens corporate confidence and affects deal making into 2019 remains to be seen.”

The UK was the third most targeted country by value after the US and China and UK firms were the fourth most acquisitive globally in 2018, after the US, China and Japan.

CMC Markets analyst David Madden said: “2018 saw some major deals, but now as global stock markets are off their highs, and there are some concerns about global growth, 2019 is likely to start off on a softer note.

“The landscape has changed greatly in the past 12 months as political uncertainty in Italy, strained trade relations between the US and China, Brexit, and the odd whisper about a possible recession in the US, have dampened the previously bullish sentiment.

“Many deals are paid for with debt, and companies might be cautious about loading up on debt for fear we are heading into economically cooler times.”

 

Read More – www.cityam.com