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Markross121_ May 22, 2019 No Comments

Scots packaging firm Macfarlane expands in England

Glasgow-based packaging firm Macfarlane Group has expanded in England with a new acquisition.

Macfarlane, which is the UK’s biggest protective packaging distributor, bought Buckinghamshire-based Ecopac (UK) Ltd in a deal worth up to £3.9m.

Ecopac generated sales of £6m and pre-tax profits of £500,000 in the year ended 31 March 2018.

It focuses on customers based near its 60,000 sq ft facilities near Aylesbury.

Macfarlane said Ecopac was a profitable packaging business that would be earnings-enhancing in its first full year in the group.

Ecopac is the latest in a series of acquisitions by Macfarlane within the past two years.

In September 2017, it bought two Nottingham firms in a deal worth up to £16.75m. It later bought Leicester-based Tyler Packaging and Harrisons Packaging, based in Lancashire.

Macfarlane recently reported a ninth year of successive growth.

Sales were £217m in in 2018, up from £196m the year before. Pre-tax profits were at £11.2m – 20% ahead of 2017.

Cruise hits $19B valuation as corporate VCs rev up self-driving buzz

Autonomous car company Cruise announced Tuesday that it has secured a $1.15 billion equity investment from a group of investors including its parent company, GM, as well as T. Rowe Price, Honda and SoftBank’s Vision Fund. The deal brings Cruise’s valuation to $19 billion.

The Bay Area business plans to launch a commercial robotaxi service by the end of this year, and to hit that milestone, it is looking to double in size by hiring about 1,000 employees during the year, according to Reuters. “Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” Cruise CEO Dan Ammann said in a statement.

The company revealed that it has secured capital commitments of $7.25 billion in the past year. That includes $2.25 billion from SoftBank’s Vision Fund last year, with the fund planning to contribute $900 million in the first tranche and another $1.35 billion when Cruise’s autonomous vehicles are ready for commercial use. Honda also contributed, announcing a $2.75 billion investment in October. The Japanese automaker planned to make a direct equity investment of $750 million at the time and the remaining $2 billion coming over 12 years.

There was an explosion in corporate VC activity overall in 2018, and the trend continues this year. During 1Q, “autonomous driving companies raised $2.3 billion in deals including CVC investors with technology parent companies, such as Amazon and Intel Capital, as well as CVCs with automotive parent companies, such as Toyota AI Ventures and BMW i Ventures,” according to the latest PitchBook-NVCA Venture Monitor report. The autonomous-driving industry is expected to attract CVC investment in coming quarters due to high demand from automotive original equipment manufacturers for technology partnerships and additional investment opportunities in self-driving businesses.

Last year saw record-breaking traditional and corporate VC investments in companies developing autonomous cars in the US, as the total capital investment peaked at $3.8 billion across 68 deals. The second quarter of 2019 is well underway and autonomous businesses have secured $1.8 billion across 13 deals in the US.

Zipline is raising up to $120M to deliver medical supplies via drone

Drone-delivery startup Zipline is seeking to raise up to $120 million in Series D funding, PitchBook has learned. The funding could value the company at up to $1.34 billion, per a PitchBook estimate, up from the $620 million valuation it reached fourteen months ago.

Final terms and details of the financing have not been announced and are subject to change. When contacted, the company denied the report.

Founded in 2014, Zipline is a Bay Area-based business that operates small robotic airplanes to deliver blood and urgent medicines to clinics in Rwanda and Ghana, with plans to expand the deliveries to serve 1% of the global population by the end of this year.

Excluding the upcoming round, the company has brought in over $110 million in prior backing from a list of investors that includes GV, Andreessen Horowitz and Sequoia. Here’s a recap of Zipline’s previous funding rounds:

October 2012: $6.6 million Series A at a $20 million valuation
July 2014: $4.2 million Series A1 at a $35 million valuation
July 2015: $7.5 million Series A2 at a $75 million valuation
November 2016: $25 million Series B at a $200 million valuation
March 2018: $70 million Series C at a $620 million

Markross121_ May 9, 2019 No Comments

9 big things: Unicorn stocks are spiking after IPOs

Like so many of the VC-backed unicorns going public these days, vegan protein specialist Beyond Meat has never made a profit.

But the past two days were highly, insanely, ludicrously profitable for the company’s backers, as stock in Beyond Meat shot up nearly 200% from its IPO price and investors swarmed in pursuit of a piece of that sweet, sweet meatless meat. That sort of spike is rare. But it also aligns with the post-IPO performance of the rest of 2019’s unicorn herd.

So far this year, when unicorns go public, they tend to get more valuable—and that’s one of nine things you need to know from the past week:

1. To infinity for Beyond

The first hints that something might be brewing emerged earlier in the week, when Beyond Meat elevated its original IPO price range. The company priced at $25 per share, at the top of its revised range. And then everything went crazy: Stock in Beyond Meat (NASDAQ: BYND) opened Thursday trading at $46 per share, closed at $65.75, and then inched up even higher on Friday, finishing the week at $66.79. That equates to a market cap of $3.8 billion, compared to a $1.5 billion IPO valuation and a $1.35 billion figure with its last round of VC.
There’s probably nobody happier about it all than the folks at Kleiner Perkins: The firm owned a 15.9% pre-IPO stake in Beyond Meat, holding shares now worth well over $500 million.

Recent weeks, of course, have been peppered with unicorn IPOs. For the most part, once these companies have gone public, they’ve been out of mind; the main exception might be Lyft, whose slipping stock price has caused cries of concern about Uber’s eventual fate. But for the rest of the cohort, the move to the public markets has been accompanied with steadily rising stock prices.

IT software provider PagerDuty went public on April 11 with an IPO price of $24 per share, valuing the company at $1.8 billion. Its stock shot up nearly 60% on its first day of trading, closing at $38.25 per share, and has continued to tick up in the weeks since. Shares in the company closed Friday at $46.52 per piece, for a market cap of $3.4 billion, compared to $1.3 billion with its last VC round.

Social media unicorn Pinterest debuted a week later, pricing its IPO at $19 per share—above its expected range—to establish a $10 billion valuation, notably less than its prior $12.3 billion VC-backed valuation. But Pinterest stock closed its first day trading up at $24.40 per share, and it closed Friday at $28.36, for a market cap of about $15 billion.

The prime example of the trend might be Zoom, which joined Pinterest in going public on April 18. After pricing above its anticipated range at $36 per share, the company’s stock zoomed (sorry) to $62 by the end of its first day, representing a valuation increase from $9.2 billion to nearly $16 billion in mere hours. Zoom’s stock closed Friday at $79.18, valuing the workplace video company at almost $20 billion.

The performance of these stocks and the rest of the unicorns on their way to the public markets will of course be worth monitoring in the weeks, months and years to come. The early results, though, must have some of the longtime investors in those unicorns asking: What took you so long?

2. A new Vision

There could be an unusual new entrant in the sprint to the public markets: SoftBank’s Vision Fund. The Japanese investor might conduct an IPO for the $100 billion vehicle sometime this year, per The Wall Street Journal, among additional plans to raise an equally enormous follow-up fund; the hope of chief executive Masayoshi Son is reportedly to turn the vehicle into a tech-focused (and unprofitable) analog to Berkshire Hathaway. One of SoftBank’s major portfolio companies could also soon go public, as WeWork announced this week that it confidentially filed for an IPO back in December.

3. Making it easy

That’s the goal of UiPath, a startup focused on automating workplace functions that raised $568 million this week at a $7.1 billion valuation, a huge step-up from a $3 billion valuation just six months ago. Making cross-border payments easy is what helped London’s Checkout.com bring in an enormous Series A this week, collecting $230 million at a reported $2 billion valuation. Other kinds of payments are the domain of Divvy, which banked $200 million at an $800 million valuation this week: The company makes software designed to replace expense reports.

4. Fight club

The Professional Fighters League pinned down a $30 million Series C this week to fund its unique mixed martial arts competition, with Elysian Park Ventures and Swan Ventures among the backers. And while Sumo Logic doesn’t have anything to do with actual sumo wrestling, PitchBook learned that the data analytics company is raising new cash at what would be a unicorn valuation.

Uber eyes IPO price at midpoint or lower amid tumultuous week

It would have been bad enough for Uber if the company’s long-awaited IPO occurred during the same week that US-China trade tensions roiled the stock markets. Or if the offering came just a few days after rival Lyft posted eyebrow-raising losses in its first quarter as a public company. Or if Uber’s drivers planned a strike in the lead-up to the listing in protest of Uber’s pay practices.

Instead, all three things happened. And now, Uber is planning to price its IPO at or below its midpoint price of $47 per share, per reports, which would give the company a fully diluted valuation of $86 billion or less. That’s likely up from the $76 billion valuation Uber reportedly attained with its last round of private funding, but several billion shy of figures that have been thrown around in recent months.

It’s been a little less than two weeks since Uber announced an IPO price range of $44 to $50 per share, equating to a valuation range of about $80.5 billion to $91.5 billion. Earlier this week, Bloomberg reported that the listing was at least three times oversubscribed, enough to price at the upper end of its range if so desired—healthy demand, to be sure, but quite different from a Lyft IPO in late March that was reportedly 20 times oversubscribed.

The fate of Lyft in the intervening weeks is surely one reason Uber’s offering isn’t looking quite so gargantuan as once expected—although it will still be one of the largest VC-backed listings of all time. Since stock in Lyft closed its first day of trading at more than $78 per share March 29, the price of those shares has fallen more than 30%, dipping below $53 Wednesday to reach a new all-time low. The company now has a market cap of $15.1 billion, the same as the valuation that came with its final round of private VC funding last summer.

A single-day drop Wednesday of nearly 11% came a day after Lyft reported its financial results for the first time as a public company, including a net loss for 1Q of more than $1.1 billion. While the company chalked up some of those losses to IPO-related expenses, it’s also a reminder to investors that profitability is still very far away. Lyft lost $911 million for the whole of 2018, compared with a $1.8 billion loss for Uber.

Those losses are, of course, at odds with Lyft and Uber’s sky-high valuations and revenue figures, a quasi-contradiction that could be interpreted a number of ways. As an example, one can look to the ridehailing companies’ ongoing labor dispute with their drivers, which on Wednesday took the form of a boycott by Uber and Lyft drivers in cities across the US, the UK and Australia. Those drivers—who are, of course, regarded as contractors, not employees—see all that money flowing in and wonder why they, the people who actually allow Uber and Lyft’s apps to function, can’t get a little bit more of it. The companies, meanwhile, can point to the losses as a reason thriftiness is required.

That argument perhaps crumbles a bit when Uber’s two top executives reportedly took in more than $90 million in compensation last year. There’s certainly enough money to make sure some people become immensely wealthy. Labor just isn’t on that list.

And depending on the IPO price Uber ultimately settles on, by the end of the week, there might be a little bit less wealth to go around than everyone expected a few months ago.

Rentokil set to continue acquisition spree while organic growth continues

Pest control expert Rentokil Initial said this morning it is planning to continue an acquisition-heavy strategy and is likely to spend between £200m and £250m on takeovers this year.

The firm showed 4.9 per cent growth from takeovers in the first three months of the year, while organic revenue grew at four per cent.It signed eight deals in the quarter – four in pest control and four in its hygiene business sectors – adding combined revenues of around £29m.

“We are encouraged about our prospects for further mergers and acquisitions this year and our pipeline of value-enhancing opportunities is strong,” the company said in a statement to shareholders this morning.

Revenue in the firm’s pest control segment grew 12 per cent including acquisitions but subtracting disposals or closed businesses. Hygiene, meanwhile, rose 7.2 per cent, while the protect and enhance market stayed in line with the first quarter of 2018.

“We have had a good start to 2019 and I’m pleased with our performance in the first three months of this year. I am confident of another year of successful growth for the company, in line with market expectations,” said chief executive Andy Ransom.

Shares were up around 1.3 per cent this morning to 373p.

Last week Rentokil was told it might face an investigation from the Competition and Markets Authority (CMA) over its takeover of Mitie’s pest control arm late last year.

The firm has been given until 23 April to tell the CMA how it will ensure that competition is not severely reduced by the acquisition.

It said last week that the acquisition was small and in line with its strategy to buy “high quality pest control businesses in growth and emerging markets.”

Brewery openings stall as multinationals move in

A boom in new brewery sites has slowed down dramatically in the last 12 months as multinational firms muscle in on the growing demand for craft beer.

Growing competition from large businesses has hindered smaller brewers from setting up new outlets, causing the growth in openings to hit a five-year low.

The total number of breweries increased by just eight in 2018, marking a sharp slowdown from 390 openings in the previous year.

According to accountancy firm UHY Hacker Young, which produced the data, the craft beer market has become difficult for new entrants as “multinational brewers continue to buy and invest the more successful craft breweries.”

Among the high profile mergers and acquisitions involving multinational businesses in the craft beer sector is the Fullers deal for Dark Star, a craft beer business in West Sussex, and Heineken’s acquisition of stakes in Beavertown Brewery, Lagunitas and Brixton Brewery.”We’re not saying that the market is shrinking just the number of players is consolidating and sales growth is going to be harder to come buy,” said James Simmonds, partner at UHY Hacker Young.

He added: “Craft breweries need to ensure their business model is s sustainable and profitable at an earlier stage and not just rely on the idea they’ll constantly be able to grow their way out of trouble.”

The total number of UK breweries reached 2,274 at the end of 2018, rising from 1,352 five years ago.

Debenhams on the brink as it rejects £150m Mike Ashley rescue deal

Debenhams is on the brink of falling into the hands of its lenders in a move that will wipe out shareholders after the company and its financial backers rejected a £150m cash injection from Mike Ashley’s Sports Direct.

A pre-pack administration deal is expected to be announced on Tuesday morning that would affect Debenhams’ holding company only, meaning its 165 stores would continue to trade. However, shareholders’ stakes will be rendered worthless, including Sports Direct’s near 30% stake, which cost about £150m to build up.

The retailer’s banks and bondholders also want Debenhams to close about 50 stores via an insolvency process known as a company voluntary arrangement, which is likely to follow within weeks. Landlords will hold a vote on whether to approve the deal, expected to involve stores closing after Christmas and putting thousands of jobs at risk.

Sports Direct said Debenhams had turned down its offer of a £150m rescue package, in the form of a fully underwritten rights issue, in a deal it hoped would keep the company in the hands of shareholders. In a stock market announcement on Monday afternoon after that deal was rejected, Ashley’s retail group said it was still considering making a fully funded takeover bid instead, but no offer had emerged by a 5pm deadline.

With the deadline missed, the most likely outcome for the chain, which has 165 stores and employs 25,000 people, is that lenders will take control of Debenhams. They have lined up administrators to organise a pre-arranged deal under which Debenhams’ listed holding company will go into administration. The group’s operating companies, which run its stores, will then be sold to a new entity controlled by the lenders in return for reducing the group’s £640m debt pile.

Dr Pepper Snapple merges with Keurig Green Mountain

US soft drink maker Dr Pepper Snapple is to merge with coffee company Keurig Green Mountain to form Keurig Dr Pepper.

The new beverage giant will bring together well-known brands such as Dr Pepper, Orangina, Schweppes and Sunkist with Green Mountain Coffee Roasters.

Keurig Dr Pepper will have a combined annual revenue of $11bn (£7.8bn).

Under the terms of the agreement, Dr Pepper Snapple shareholders will retain 13% of the combined company.

Dr Pepper Snapple shareholders will also receive $103.75 per share in a special cash dividend.

The firms said that the merger would enable Keurig Dr Pepper to have “unrivalled distribution capability to reach virtually every point-of-sale in North America”.

Sushi chain Wasabi fishes for new funding

The Japanese food chain Wasabi is in talks to sell a stake for the first time in its 16-year history.

New funding will act as a vital growth engine for the sushi and bento seller’s parent company, which manages the outlets along with a handful of Kimchee outlets and an Asian-inspired bakery in Cambridge.

The investment comes amid questions over Wasabi’s finances. Companies House recently issued a notice to strike the company off the register after it missed last year’s deadline to file its accounts.

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