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Station F: A symbol of France’s startup ambitions

Two years ago, the French people elected Emmanuel Macron as their 25th president. His pro-business policies and visions of transforming the slow-moving state into a European powerhouse of innovation helped make him the youngest leader of the nation. Sensing change in the air, Station F, which is said to be the world’s largest startup campus, launched in Paris to represent France’s tech renaissance.

Based in Paris’ 13th arrondissement, or district, Station F sits in an unused rail depot said to span the length of the Eiffel Tower. It is home to over 1,000 startups and offers incubator programs run by companies including Facebook, L’Oréal and Microsoft.

In addition to its working spaces, event areas and restaurant, Station F launched a co-living space in June. The space is the largest of its kind in Europe, according to the company, with the capacity to house 600 startup founders and employees. All of these elements combined have reportedly attracted a steady stream of tech juggernauts like Facebook COO Sheryl Sandberg and Twitter co-founder Jack Dorsey, as well as French dignitaries.

Perhaps a surprise to some, Station F is a private sector initiative rather than government-backed. It’s owned by Xavier Niel, the founder of telecommunications provider Illiad and international seed investor Kima Ventures. Having a high-profile backer is surely a huge benefit for Station F’s startups, especially when it comes to raising money. Several Station F businesses have secured millions of euros from investors.

Team Vitality reportedly landed a €20 million (around $22 million) investment from entrepreneur Tej Kohli in November; the esports company was developed under the tutelage of Naver, a South Korean search engine provider. In February, co-living space provider Colonies received €11 million in a round that included Idinvest Partners and Kima, per reports. And in April, cybersecurity company Alsid, which is part of aerospace giant Thales Group’s program, raised €13 million in a round led by Idinvest Partners.

 

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IWG may launch US IPO, extending co-working space growth frenzy

International Workplace Group is considering an IPO in New York for its US-based operations, according to Sky News. Such a spinoff could reportedly be worth up to £3 billion (about $3.67 billion), nearly equal to IWG’s £3.64 billion (about $4.45 billion) market cap as of August 26. The company did not immediately respond to PitchBook’s request for comment.

The news came less than two weeks after WeWork released its S-1 document August 14, revealing 1H 2019 losses of over $900 million while holding a footprint comparable to IWG’s. As a result, IWG’s consideration of an IPO is perhaps a direct response to WeWork’s advance, evidenced by IWG’s insistence of only considering underwriters that are not involved with WeWork’s IPO, again per Sky News.

IWG isn’t the only player in this space making moves after WeWork’s S-1 reveal.

On Thursday, New York-based Industrious reeled in $80 million from Brookfield Property Partners and fitness club provider Equinox, among others. CEO Jamie Hodari expects the company to be profitable within a “few months,” according to Reuters. On Wednesday, New York-based Knotel announced it had pulled in $400 million at an over $1 billion valuation in a round led by Wafra.

Lesser-known competitors, such as The Yard, Convene, BHIVE Workspace, Alley, and The Wing, also stand to possibly beef up their game as WeWork’s IPO plays out.

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Cloudflare’s IPO filing at a glance: rising revenue, falling losses and risky customers

A day after WeWork’s blockbuster IPO filing appeared, another big VC-backed name has advanced to the next step in 2019’s IPO frenzy.

Web services unicorn Cloudflare has publicly released its S-1, planning to trade on the NYSE under the symbol NET. The company did not disclose the number of shares that would be offered and set a placeholder target of raising $100 million. Goldman Sachs, Morgan Stanley and JP Morgan are the lead underwriters.

Founded in 2009, the San Francisco-based cybersecurity and internet services provider grew relatively quickly in its early days, followed by something of a plateau in the past few years. Cloudflare was valued at $6.3 million after a $2.25 million Series A in 2009, and its valuation began steadily rising from there, jumping to $80 million in 2011, $1 billion in 2012 and $1.8 billion in 2015 following a $182 million Series D. The company stayed off the fundraising radar for four years, before raising $150 million this past March amid rumors of the impending public debut.

Key figures

A key challenge for Cloudflare is that it operates in a relatively saturated field, in contrast to some of the other VC-backed unicorns in relatively new industries. Cloudflare counts Cisco, Zscaler, Akamai, Amazon and Microsoft as just some of its competitors, resulting in comparatively more modest YoY growth rates than those in WeWork’s prospectus, for example.

 

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Despite signs of a potential recession, deal maker sentiment remains optimistic

Recent news about the yield inversion will probably have an effect on investor psyche. Inversions have historically predated recessions by as many as 24 months—one lag in particular (2005-2007) also included a significant rise in the S&P. In four of the last five recessions, the lag between inversion and the start of a recession has lasted at least a year.

It’s a bit different with market corrections, which in two of five cases have begun in three months or less. Another tidbit came earlier this year from Bain & Co.’s Hugh MacArthur, who noted “only three periods historically [where] private multiples generally exceed the public average: during the ‘Barbarians at the Gate’ era of the mid-1980s, during the exuberant runup to the 2008 global financial crisis, and now.”

The sky has been falling for a long time among prognosticators, and the “tea leaves” in the featured chart don’t give us much of a schedule to work with. At PitchBook, we’ve been trying to gauge investor sentiment through our PE Deal Multiples Survey. In our last survey, we asked respondents for their reasons for canceling or renegotiating their most recent transactions. Here are their responses:

Those answers painted an optimistic picture among dealmakers, with only 7% citing negative changes in market fundamentals. The two most-cited responses reflect a strong market—41% said they found adverse information during due diligence and 24% said another buyer swooped in with a better offer.

Even not-that-bad information found during diligence is legitimate grounds to rethink purchase prices. There isn’t a lot of room for error with today’s multiples, and we’ve heard plenty of anecdotes of deals taking upward of 12 months to close. Furthermore, there are lots of buyers trying to put their money to work, so overcautious dealmakers will lose out to higher bidders. Those two reasons accounted for 65% of our results.

We’re curious about your thoughts as dealmakers, and our newest survey is now live. All deal data is kept confidential and isn’t published on our database. Participants receive the full aggregated report and are entered into a $300 Amazon gift card drawing—and everyone gets a candid look of current market sentiment, which may shift in the next month, or year, or two years.

 

Read More – www.pitchbook.com

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CBS, Viacom enter streaming wars with $30B combination

In the latest example of major consolidation in the media industry, CBS and Viacom have officially agreed to conduct a long-awaited merger, creating a new company called ViacomCBS with a combined market cap of around $30 billion. The deal will merge CBS’s broadcast offerings and the Showtime network with MTV, Comedy Central, the Paramount film studio and other Viacom brands, adding a broad collection of new content to CBS All Access, the network’s existing streaming service.

As consumer tastes have evolved and in-home streaming has emerged as perhaps the dominant entertainment form of our time, many of the industry’s biggest players have turned to M&A to augment their offerings. It’s been a little more than a year since AT&T acquired Time Warner for $85 billion, adding brands like HBO and Turner to its stable. And earlier this year, Disney beat out Comcast to purchase a raft of TV and film assets from 21st Century Fox for approximately $71 billion, making major content additions ahead of the planned launch of its Disney+ streaming service. Disney also took control of Hulu earlier this year, valuing the streaming pioneer at $15 billion.

The newly formed ViacomCBS, though, will be considerably smaller than some of its streaming competition. AT&T and Disney both have market caps of over $240 billion, making them more than 8x the size of ViacomCBS. Netflix carries a market cap of more than $135 billion, even after its stock has slid in recent weeks in the wake of disappointing 2Q results.

The combination of Viacom and CBS has long been rumored, due largely to the very close ties between the two New York-based companies. They were in fact the same company until 2006, when media tycoon Sumner Redstone split them into two entities. Redstone and his National Amusements holding business have maintained control over both Viacom and CBS in the years since, with his daughter Shari Redstone assuming more power in recent years as her father has reportedly battled health issues.

Current Viacom president and CEO Bob Bakish will assume those same roles at the new ViacomCBS, while Joe Ianniello, the acting head of CBS, will remain in charge of CBS-branded assets. Ianniello has been the interim CEO at CBS since longtime leader Leslie Moonves stepped down last September following several allegations of sexual harassment.

 

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The ‘Millennial Walt Disney’ and her Museum of Ice Cream raise $40M

The way Maryellis Bunn tells it, it all began because she was a bored millennial in New York with nothing to do. All the real museums were dry, stodgy, stuck in the 20th century. Bunn decided that a new generation, one that increasingly wants to spend its money on documentable experiences rather than things, needed a new kind of cultural space.

And thus was born the Museum of Ice Cream. What is it? It’s not a museum, and there’s sometimes only a tangential relationship to ice cream. One way to describe the Museum of Ice Cream is as an Instagram-friendly series of art installations designed as a surreal maze of interactive, hyper-visual exhibits—like a giant pool of sprinkles or a room with technicolor popsicles melting from the walls. Another is that it’s a confectionery millennial fever dream, like if you dropped acid before touring the Ben & Jerry’s factory.

Either way, since Bunn and co-founder Manish Vora launched the first Museum of Ice Cream in New York in 2016, the pop-up experiences have become a cultural phenomenon, selling out stints in Los Angeles, San Francisco and Miami in the blink of an eye and drawing visits from celebrities like Beyoncé and Kim Kardashian. And now, Bunn and Vora are capitalizing on that buzz in a serious way: On Wednesday, they launched a new parent company for the Museum of Ice Cream called Figure8, unveiling $40 million in Series A funding at a $200 million valuation. Elizabeth Street Ventures and Maywic Select Investments led the round, with OCV Partners also participating.

Figure8, it seems, will both build on the existing Museum of Ice Cream and expand the ideas behind the pop-up experience into other realms. It plans to open a new Museum of Ice Cream location each quarter, Vora said in a press release announcing the deal. But Figure8 was also created to help respond to what Vora described as “an overwhelming amount of requests from companies asking us to design branded experiums for them.” Corporations want to get in on a concept that’s entranced the prized under-25 demographic.

From the outset, expansion seems to have been in the cards. During a 2017 interview with New York magazine, Bunn (who’s now 27) toured the Museum of Ice Cream’s San Francisco location with reporter Anna Wiener. Afterward, when asked what her “ultimate dream” was, Bunn’s reply was illuminating: “I want to be the next Disney. I could take all of those different installations that we just went through, and I could build them out into city blocks. It would be my Heaven. Could you imagine?”

In its headline accompanying the story, New York described Bunn as “The Millennial Walt Disney.”

The runaway success of the Museum of Ice Cream—it claims more than 1.5 million visitors across its current and prior locations—has inspired a spate of imitators eager to get in on the experience game. In the Big Apple, you can visit the Rosé Mansion, which puts a wine-flavored twist on the idea. There’s also Candytopia, a Wonka-esque space filled with candy-inspired artwork and installations that’s currently touring the US. Its answer to the Museum of Ice Cream’s sprinkle pool is a pit full of marshmallows.

And now, with the creation of Figure8, it seems like more colorful pop-ups with eye-catching concepts designed to pile up the likes on social media may be on the way.

 

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The median PE buyout size in consumer products is heading for a decade high

Private equity’s track record in retail has come under some hefty scrutiny of late. And buyout shops are taking the hint. At just over 40 deals closed through 1H, PE firms are set to complete the fewest retail transactions since at least 2013.

Although the headlines are hard to ignore, it’s important to point out that financial sponsors have also helped brick-and-mortar operations in the middle market with the adoption and expansion of digital strategies. This development has been a boon to retailers. Increased investment in digital technologies has made operations more efficient, boosting sales and blending the customer experience online and off.

As a result, some PE firms are finding bright spots in the still-competitive US consumer market, with many omni-channel businesses not only maintaining margins in the face of secular stagnation, but also commanding higher valuations. This dynamic has contributed to the persistent strength of median deal values even as activity cools off.

 

Digital strategies can provide retailers with valuable metrics on essential data points like customer acquisition costs, which help improve performance. Moreover, marketing campaigns waged across channels have given middle-market retailers an outsized opportunity to track consumers from engagement through purchase in a manner reminiscent of larger rivals. An essential element here has been the swift adoption of direct-to-consumer distribution models by those with a conventional retail presence. Case in point? Cosmetics. And demographics are on their side.

 

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Bayer share price surges amid report it could settle Roundup weedkiller lawsuits for $8bn

Bayer’s share price rocketed by as much as 11 per cent today as a report emerged that the German giant had proposed to pay $8bn (£6.59bn) to settle 18,000 lawsuits relating to its Roundup weedkiller.

 

Bayer later trimmed gains back to 5.8 per cent on Germany’s Dax stock exchange to leave shares at €66.6 after Bloomberg’s article.

The pharma giant has seen shares fall by more than a third since a court decided last August that subsidiary Monsanto should have warned people about Roundup’s alleged cancer risks.


Bayer’s legal team has held talks in New York with lawyers representing claimants, with Bayer having offered to pay between $6bn and $8bn to settle claims, Bloomberg reported.

Claimants are hoping to over $10bn.

The parties are set to ask for a postponement of the next Roundup trial, due to start this month, the report added.

A US court ruling earlier this month saw a judge reduce the sum Bayer should pay out to one Roundup claimant from $80.3m to $25.3m.

 

Judge Vince Chhabria ruled the original sum was “constitutionally impermissible” as it was almost 15 times the compensatory damages award.

Read more – www.cityam.com

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Huawei unveils Harmony operating system as it weans itself off Google Android

Huawei has unveiled a new operating system for smartphones and other devices, as US trade restrictions threaten its access to American technologies such as Android.

The Chinese firm said its smartphones will continue to use Google’s Android operating system for the moment, but that Harmony could replaced Android “immediately” if necessary.

“Harmony OS is completely different from Android and iOS,” said Richard Yu, head of Huawei’s consumer business group.

The new operating system will be gradually rolled out across support devices such as smartwatches, speakers, and virtual reality gadgets.

 

Harmony is part of a wider drive by Huawei to fast-track the development of its own technologies and reduce reliance on US firms as the US-China trade war intensifies.

US companies are currently banned from doing business with Huawei, and it was announced yesterday that US government agencies have been barred from buying the company’s products.

The government is currently determining whether Huawei will be allowed to participate in the UK’s 5G network, which is in the process of being developed.

 

Read More – www.cityam.com

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Just Eat £9bn merger plan sends shares soaring

The prospect of a multibillion-pound bidding war for Just Eat sent shares in the FTSE 100-listed business surging by more than a fifth on Monday.

Just Eat agreed terms with its Dutch rival Takeaway.com in a deal that would create one of the world’s biggest online food delivery companies.

When announced, the £9bn combination valued Just Eat shares at 731p and the UK company’s share capital at £5bn.

Speculation about a rival bidder pushed Just Eat shares comfortably above the offer terms. The UK company’s shares closed up 22.7% at 780p.

Under the terms of the agreement, Just Eat shareholders would receive 0.09744 Takeaway.com shares for each Just Eat share and would own 52.2% of the combined group. It would be headquartered in Amsterdam and listed on the London Stock Exchange, with a “significant part of its operations” in the UK.

Analysts speculated there could be a counterbid, possibly from the Berlin-based Delivery Hero or the South African internet and media company Naspers.

There have been a flurry of deals in the fast-growing online food delivery market, with competition heating up from Uber Eats and Deliveroo. Just Eat bought the UK firm HungryHouse in January 2018, and in December Takeaway.com acquired Delivery Hero’s food delivery business in Germany.

Analysts at Jefferies thought the most likely counter-bidder would come from outside the industry, such as Japan’s SoftBank, Amazon or private equity.

A bid from Uber Eats or Deliveroo would raise competition issues, and these could also affect Amazon. After it became the lead investor in a $757m (£451m) financing round in Deliveroo in May, Amazon was ordered by the UK’s Competition and Markets Authority to halt any integration efforts pending an investigation into potential breaches of competition rules.

Combined, Just Eat and Takeaway.com had 360m orders worth €7.3bn in 2018 and strong positions in the UK, Germany, the Netherlands and Canada.

Under the plans, Takeaway.com’s boss, Jitse Groen, would become chief executive of the new company. It would be chaired by the Just Eat chairman, Mike Evans, while the Takeaway.com chairman, Adriaan Nühn, would be vice-chairman. The Just Eat chief financial officer, Paul Harrison, would take on the same role for the combined group, and its interim chief executive, Peter Duffy, would leave.

Groen has described the UK as one of the best three markets in Europe, along with the Netherlands and Poland. Takeaway.com was founded in 2000 and operates in 10 European countries as well as Israel and Vietnam, but it does not have a presence in the UK. The two companies have little geographical overlap apart from Switzerland.

Analysts at Barclays said: “Just Eat shareholders would be getting the best operator in the space to run the business – a notable shift from missed execution from management in the last few years.”

Just Eat has come under pressure from its activist shareholder Cat Rock Capital to merge with Takeaway.com, in which the US hedge fund also holds a stake.

 

Read More – www.theguardian.com