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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.

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Tesla layoffs add to Elon Musk’s woes

Within the past two weeks, three different companies created by Elon Musk have parted ways with portions of their staff—although the cuts were much less severe at one of the billionaire’s offspring.

Last Friday, Musk announced in an email to workers at Tesla that the electric automaker would be laying off about 7% of its staff; the same day, Musk’s The Boring Company tunnel-building startup fired five employees for performance reasons, out of about 80 overall workers. Those moves came about a week after space exploration giant SpaceX revealed plans for about 600 layoffs, or 10% of its staff, per Reuters.

The reductions at Tesla come after a 30% employee increase during the past year, per an internal email sent by Musk and obtained by CNBC. Despite now having fewer workers, Musk also wrote that Tesla must increase both the production rate and quality of its Model 3s, saying there “isn’t any other way” to be “a viable company.” The personnel changes at The Boring Company were not part of any cost-cutting move, again according to Recode.

SpaceX recently reached a private valuation of more than $30 billion, making it one of the most valuable VC-backed companies in the US, while Tesla has been publicly traded since 2010. Musk, meanwhile, has reportedly poured more than $100 million of his own cash into The Boring Company.

Together, the three companies demonstrate the stunning depth of their founder’s ambitions, his commitment to achieving them, and the strange (sometimes juvenile, sometimes illegal) ways he will go about attempting to do so. You can probably count on one hand the number of other entrepreneurs who would devote such enormous resources to moonshots like space travel, electric cars and large-scale infrastructure. But it’s difficult to imagine Richard Branson, Jeff Bezos or one of those other billionaire few attempting to fund their goals by selling flamethrowers for the everyman, or becoming entangled in a very expensive brouhaha with the SEC because they were trying to make their pop-star girlfriend laugh at a marijuana joke.

In pure business terms, though, it perhaps makes sense that companies with such unique and far-reaching goals might be more prone than some of their peers to boom-and-bust cycles of hiring and firing. No other company has ever done what Tesla and SpaceX are trying to do, so both businesses are largely building their own road maps. That said: It’s highly unfortunate that some of the detours on those maps include people losing their jobs.

 

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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.

 

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Brexit: Theresa May’s deal is voted down in historic Commons defeat

Prime Minister Theresa May’s Brexit deal has been rejected by 230 votes – the largest defeat for a sitting government in history.

MPs voted by 432 votes to 202 to reject the deal, which sets out the terms of Britain’s exit from the EU on 29 March.

Labour leader Jeremy Corbyn has now tabled a vote of no confidence in the government, which could trigger a general election.

The confidence vote is expected to be held at about 1900 GMT on Wednesday.

The defeat is a huge blow for Mrs May, who has spent more than two years hammering out a deal with the EU.

The plan was aimed at bringing about an orderly departure from the EU on 29 March, and setting up a 21-month transition period to negotiate a free trade deal.

The vote was originally due to take place in December, but Mrs May delayed it to try and win the support of more MPs.

The UK is still on course to leave on 29 March but the defeat throws the manner of that departure – and the timing of it – into further doubt.

 

MPs who want either a further referendum, a softer version of the Brexit proposed by Mrs May, to stop Brexit altogether or to leave without a deal, will ramp up their efforts to get what they want, as a weakened PM offered to listen to their arguments.

 

Avoid the problems created by the Brexit debate – Click here for business Brexit Solutions

 

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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.

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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.”

 

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Eli Lilly buys cancer drug specialist Loxo Oncology for $8bn

Pharmaceuticals giant Eli Lilly has bought Loxo Oncology for $8bn (£6.27bn), marking the second multibillion dollar US drug merger since the start of the new year.

 

In a sign of the fast-growing market for cancer drugs, Eli Lilly said this afternoon that it has acquired Loxo as it looks to bolster its treatment portfolio.

Today’s purchase, which marks Lilly’s biggest takeover ever, means Loxo shareholders will get $235 per share in cash, according to a joint statement from the companies.

The deal comes just several days after New York-based Bristol-Myers Squibb struck one of the largest pharma deals in history after buying Celgene for roughly $74bn, with the merged company set to have nine products with more than $1bn in annual sales.

Such mergers have sparked expectations for another seismic year of healthcare mergers and acquisitions, coming weeks after FTSE 100 constituent GlaxosmithKleine also revealed its intentions to buy oncology-focused US firm Tesaro for the sum of $5.1bn.

 

Eli Lilly has been ramping up its focus around oncology for several years, with its cancer treatment Alimta becoming one of its top-selling products.

In May the drugmaker also revealed plans to buy Armo Biosciences for $1.6bn as part of its cancer drug portfolio ambitions.

Today’s deal is expected to close by the end of the first quarter.

Deutsche Bank is Lilly’s financial adviser and Weil, Gotshal & Manges LLP is its legal adviser. Goldman Sachs & Co LLC is the financial adviser, while Fenwick & West LLP is legal adviser to Loxo.

 

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Apollo nears Arconic mega-deal

In June 2017, a malfunctioning refrigerator sparked a fire at the Grenfell Tower apartment building in London. The blaze quickly engulfed the 24-story structure, ultimately resulting in 72 deaths and one of the largest residential disasters in recent British history.

Later government investigation attributed the rapid spread of the flames to the building’s poorly made cladding, a type of siding, which later tests showed was so combustible that it essentially turned the apartment into one giant, deadly tinderbox. The company that made that cladding was Arconic.

It perhaps wasn’t a surprise when, less than a year later, Arconic announced a strategic review, with reports indicating that it could sell the building products unit that made the aluminum panels involved in the Grenfell Tower disaster. Within months, prompted in part by continuing activist pressure from Elliott Management, talk turned to a wholesale takeover of the company.

It perhaps also wasn’t a surprise that several private equity firms showed interest—despite a number of looming lawsuits, criminal investigations and potential liabilities that could hamstring the business in the future.

Blackstone, The Carlyle Group and KKR were among the heavyweights to sniff around the building products unit, with Arconic describing the potential mega-deal as an effort to refocus its operations on building aluminum components for aerospace and auto companies rather than the construction market. But when the subject changed to a full buyout, Apollo Global Management emerged as the front-runner, with a potential price tag reported to be some $11 billion (or up to $20 billion including debt).

While Arconic’s direct involvement in a tragic, avoidable disaster that cost dozens of innocent lives is almost surely one factor behind the sale, another very obvious one is the presence of Elliott. The hedge fund won representation on Arconic’s board in early 2017 after a pitched battle and the ouster of former CEO Klaus Kleinfeld. The aluminum company’s stock price has continued to slide throughout 2018, which in Elliott’s mind seems to only cement the need for a complete leadership overhaul.

Apollo’s management thought a deal with Arconic could have been signed as soon as December, according to a New York Post report from the final day of 2018. But the buyout’s final hurdle is proving to be the continued tightening of global debt markets, raising doubt as to whether banks would be able to finance a deal as large as what Apollo and Arconic have in mind. Apollo is also believed to be considering a $40 billion move on the GE’s aviation leasing business, an even larger deal that will surely encounter similar concerns. A lack of available funding could very well endanger prospective Apollo deals worth $60 billion in total.

The role Arconic’s shoddy products played in the horrific events at Grenfell Tower make it painfully clear that major changes of some sort are needed at the company. Whether a private equity firm is the correct group to make those changes could be a matter for debate. But if the debt markets cooperate, then Leon Black and Apollo seem poised to be the ones navigating the transformations, lawsuits and reckonings that are almost surely ahead.

 

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