July 15th, 2019

M&A wrap: AB InBev, Rent-A-Center, CVC, Summit Partners, Sterling, TA, FP


Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:

Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners (pictured)
Pavan Tripathi, Bregal Sagemount
Christine Wang, Francisco Partners

The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it’s well worth getting to know these emerging leaders. They represent the future of private equity.

For profiles and video interviews, see Meet Mergers & Acquisitions’ 2019 Rising Stars of Private Equity
For Q&As, see 10 Rising Stars of Private Equity tell their tales

DEAL NEWS
Anheuser-Busch InBev NV shares fell after the demise of a blockbuster initial public offering of the brewer’s Asian business, leaving the company in a bind. After reversing course on over plans to sell a stake in the unit to raise as much as $9.8 billion, the Budweiser owner needs to find a new way to reduce its $100 billion-plus debt pile and mollify shareholders, while reinvigorating a business that’s lost its fizz and keeping credit-rating agencies at bay. Read the full story by Bloomberg News: AB InBev seeks plan B after investors bail on Asian IPO.

Rent-A-Center Inc. (Nasdaq: RCII) is buying Merchants Preferred, a provider of virtual rent-to-own services, for $47.5 million. Advisors to Rent-A-Center include: Mann, Armistead & Epperson Ltd. and Winston & Strawn LLP. Advisors to the target include: Houlihan Lokey (NYSE: HLI) and Sullivan & Worcester.

CVC Capital Partners is buying Bosch’s packaging machinery business. Bosch began seeking buyers for the unit in 2018. Willkie Farr & Gallagher advised CVC.

EagleTree Capital has acquired a majority stake in fishing boat maker Invincible Boat Co. Advisors to the target include: VRA Partners and Holland and Knight. Jones Day represented EagleTree.

Hicks Equity Partners-backed Drilling Tools International has acquired Wellfence. The target offers data automation systems and credentialed wellsite access services for the oil and has sector.

For more deal news, see Weekly wrap: Cisco, Piper Jaffray, Transom.

For more on PE fundraising, see PE fundraising scorecard: Accel-KKR, Apax, New Heritage, Summit Partners.

PEOPLE MOVES
David Yates has joined private equity firm Siris as an executive partner. Yates most recently served as president of Mastercard Inc.’s (NYSE: MA) new payment platforms.

FEATURED CONTENT
Alex Rodriguez is best known as the New York Yankees star who hit 696 home runs over the course of his 22-year baseball career, but today he’s making a name for himself as an investor as the founder and CEO of A-Rod Corp. One recent example: While serving as a guest judge on CNBC’s Shark Tank, Rodriguez backed Ice Shaker, an insulated bottle maker founded by former National Football League fullback Chris Gronkowski. Rodriguez talked about his life off the field as a savvy investor since his 20’s as the keynote speaker at EisnerAmper’s 4th annual Alternative Investment Summit at the The Museum of Modern Art on June 19. Among the topics discussed in a conversation led by Charles Weinstein, CEO of EisnerAmper: Rodriguez’ childhood as the son of a single mom; his investment thesis, which shares much with other middle-market investors; how he’s helping singer/dancer/actress Jennifer Lopez (to whom he became engaged in March) transition her business initiatives from licensing her brands to owning them; and how one day he just might buy a baseball team. Read the full story: A-Rod talks Ice Shaker, NRG eSports, J. Lo & maybe buying a baseball team.

Gender-diverse PE investment committees outperformed all-male investment committees substantially, finds a recent study by Oliver Gottschalg, a professor at HEC Paris. The results are compelling: Gender-diverse PE investment committees outperformed all-male investment committees substantially, as measured by several metrics: 7 percent more alpha; .52x more total value to paid-in multiple; and 12 percent higher internal rate of return. Also impressive: the failure rate of gender-diverse investment committees was 8 percent lower. The findings provide concrete evidence showing the value of including women on deal teams and may help to convince skeptics. Women still hold just 9.4 percent of senior positions at PE firms globally, the report found, indicating the industry still has a long way to go before reaping the benefits of gender diversity. The low representation underscores the importance of projects that feature successful female dealmakers, such as Mergers & Acquisitions’ Most Influential Women in Mid-Market M&A. Networking groups, such as Exponent Women, play a crucial role in developing communities for women dealmakers. The New York group hosted its second annual Exponent Exchange on July 11 at Second in New York. The event last year brought together 200 women.

Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. After a record-breaking 2018, forecasts for 2019 remain bullish. Advisors point to a lot of cash that must be deployed by strategic buyers and private equity firms alike; a healthy U.S. economy; and low interest rates. Competition for high-quality targets has never been more intense, especially for technology providers, they report, which means sellers are commanding high prices. It all adds up to a seller’s market. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Fortive, TA Associates, the Riverside Co., Harris Williams, Monroe Capital, Goodwin and Luminate Capital Partners’ Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital’s Sarah Bradley, Kayne Anderson Capital Advisors’ Nishita Cummings and Pelham S2K Managers’ Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women. Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

EVENTS
SourceMedia, the publisher of American Banker, Bank Investment Consultant, Financial Planning and On Wall Street is hosting InIVest 2019 from July 16-17 at the New York Marriott Marquis. The event brings together more than 1,500 executives from the wealth management industry. SourceMedia also owns Mergers & Acquisitions.

The Women’s Connection Golf Clinic & Networking event takes place on July 17 at the Granite Links Golf Club in Quincy, Massachussets. The event is being hosted by ACG Boston.

ACG Seattle hosts the Northwest Middle Market Growth Conference at the Fairmont Olympic Hotel in Seattle on July 25.

ACG New York’s summer dealmaking conference takes place at Gurney’s Star Island Resort & Marina in Montauk, NY, July 31-Aug.1.

The Great Lakes ACG Capital Connection is being held at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.


Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market dealmaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.


For reprint and licensing requests for this article, click here.


July 15th, 2019

AB InBev seeks plan B after investors bail on Asian IPO


Photo credit: Bloomberg News

Anheuser-Busch InBev NV shares fell after the demise of a blockbuster initial public offering of the brewer’s Asian business, leaving the company in a bind.

After reversing course on Friday over plans to sell a stake in the unit to raise as much as $9.8 billion, the Budweiser owner needs to find a new way to reduce its $100 billion-plus debt pile and mollify shareholders, while reinvigorating a business that’s lost its fizz and keeping credit-rating agencies at bay. Standard & Poor’s has a negative outlook on AB InBev’s debt, which it ranks A-, the fourth-lowest investment grade.

“Any missteps in debt reduction due to reduced profitability could lead to further downgrades,” Bloomberg Intelligence analysts Hoai Ngo and Madeleine Hart wrote in a note.

After the planned Hong Kong sale was pulled, the shares fell as much as 2.8% in Brussels early on Monday. The company’s euro bonds also declined.

Read: AB InBev’s Asia Setback Delays Its Next Big Deal: Street Wrap

Here are a few options the company could pursue next.

AB InBev was built over three decades via acquisitions, followed by cost cuts, as scores of beer brands around the globe were brought under the same roof. By eliminating overlapping functions it has become the most profitable major brewer in the world, with operating margins more than double those of its nearest rival, Heineken NV.

The downside of further operational efficiencies is that AB InBev has been trying to show a friendlier face since the financial meltdown at Kraft Heinz Co., a company that shares board members with the brewer. Investors might wonder about the pace of growth if AB InBev takes a knife to marketing and other outlays in a bid to cut its debt, while refraining from acquisitions.

“What the cancellation of the IPO means is that probably it will take modestly longer for ABI to expand in the three countries it wants to grow in — the Philippines, Thailand and Vietnam,” said Nico von Stackelberg, an analyst at Liberum, though he added that “it’s only a matter of time before they get there.”

The company could sit tight for a while and then return at a later date and launch a new listing campaign.

The downside is that potential investors now have the upper hand, given that the company has tried once and failed to find enough buyers. That could make pricing tough the second time around.

The company may also explore selling a minority stake in the Asian business, Budweiser Brewing Company APAC Ltd., though there is no immediate plan for a deal, people familiar with the matter said.

AB InBev’s dealmaking culminated in the “megabrew” combination with SABMiller three years ago. To secure antitrust approval, the company had to sell a number of assets, including Peroni, Grolsch and Pilsner Urquell in Europe and its stake in MillerCoors in the U.S.

The company still owns more than 60 beers worldwide, ranging from household names like Budweiser, Corona and Stella Artois to local labels like Boxing Cat in China and Brahma in Brazil. As Japan’s Asahi Group Holdings Ltd. expands its presence in Europe and Heineken and Carlsberg A/S push further into Asia, more brands could change hands.

The downside is that AB InBev’s business is built on scale and back-office efficiencies. Paring back could undermine that model. And few beer brands fetch top dollar these days, limiting the appeal of any sales.

AB InBev could seek to reduce payouts to investors as it prioritizes the management of its debt load over maintaining its reputation as one of the most shareholder-friendly companies in the consumer-goods industry.

The brewer has the cash, and there’s a precedent, after AB InBev cut its dividend by half in October, earmarking the $4 billion saved to pay down its loans.

The downside is that last year’s move prompted an 11% plunge in the share price, destroying $18 billion in market value. It was intended to be a painful one-time exercise — not the first in a series.

Bloomberg News

July 15th, 2019

DealBook Briefing: China’s Economic Growth Is at Its Slowest Since 1992

Good Monday. Breaking: President Trump is said to be considering ousting Commerce Secretary Wilbur Ross, NBC News reports. (Want this by email Sign up here.)

The country’s economy grew at its slowest pace in nearly three decades, showing how the U.S.-China trade war and a global economic cool-down are taking their toll.

Growth in the second quarter was just 6.2 percent, according to Chinese officials. That’s the lowest it has been since modern record-keeping began in 1992, and at the bottom end of government forecasts. (It may also be worse: Economists widely doubt the truthfulness of Beijing’s numbers.)

It shows the limits of Beijing’s ability to juice its economy, some experts say. China had sought to spur growth by spending more on infrastructure projects and cutting taxes, which led to a surge of economic activity in April. Then things slowed after trade talks with the U.S. broke down in mid-May.

Blame trade — but not just with the U.S. Exports fell 1.3 percent in June from the same time a year ago, while imports slid 7.3 percent. Keith Bradsher of the NYT notes, “While the trade war has hurt American purchases from China, economic weakness in Europe and many Asian countries has caused overseas demand to weaken far more broadly.”

Expect Beijing to try more economic stimulus. Analysts say the government will probably lower interest rates and increase infrastructure spending (again), though it’s unclear whether that will help much in the long term.

And to pile on debt. The country’s debt reached 247 percent of its $13 trillion economy by the end of March, up five percentage points from the end of 2018, according to Macquarie. Some Chinese bankers worry that they will be asked to extend more loans to businesses that will go bust as the economy continues to weaken.

More: U.S. manufacturers are continuing to move production of goods out of China. And a new report by McKinsey & Company shows that the world is becoming more exposed to China — while the country is becoming more economically reliant on its own consumers.

The Federal Trade Commission approved a roughly $5 billion fine against Facebook for mishandling users’ personal information, Cecilia Kang of the NYT reports. Plenty of people think it should have been more.

• The penalty is the result of an investigation into the way Facebook shared data with Cambridge Analytica.

• The settlement still needs final approval from the Justice Department, though such agreements are rarely rejected.

• If approved, it would be the biggest-ever federal fine against a tech company, eclipsing the $22 million imposed on Google in 2012.

• The penalty underscores rising frustration in Washington with Silicon Valley’s practices, and is one of the most aggressive regulatory actions by the Trump administration.

But Facebook’s shares rose on the news, to $205.27, in after-hours trading on Friday. That’s the stock’s highest price in the past 12 months, and shows that investors had been expecting worse. (One mind-boggling way to think about it: The punishment for Facebook’s biggest scandal yet increased Mark Zuckerberg’s net worth.) For context, the company generated $15 billion in revenue last quarter alone, and $22 billion in profit last year.

Some lawmakers now want a harsher punishment. “It is clear that fundamental structural reforms are required,” Senator Mark Warner, Democrat of Virginia, said in a statement. “With the F.T.C. either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it’s time for Congress to act.”

The financier spent 13 months in jail from 2008 and 2009, after securing a plea deal that helped him avoid charges of sexually abusing minors. When he emerged, high society embraced him, the NYT reports.

• Thanks to contacts like the publicist Peggy Siegal, he attended film screenings and secured high-profile guests for his dinner parties, including Prince Andrew of Britain and the journalists George Stephanopoulos and Katie Couric.

• His money was welcomed for philanthropic donations, including to Harvard.

• And he befriended socialites like Dr. Eva Andersson-Dubin, a champion of women’s health whose friendship renewed his credibility.

“The lenient agreement he reached with prosecutors — his plea involved one girl and the crime was prostitution, which made it look like the teenager was in part to blame — gave others a reason to dismiss his wrongdoing, decide he had already paid his penalty or not question what had happened,” the NYT reports.

But the scandal finally cost the labor secretary his job. Alexander Acosta announced his resignation on Friday, saying questions about the 2008 plea deal he brokered for Mr. Epstein as a federal prosecutor were a distraction.

Mr. Epstein’s network of recruiters are also under scrutiny in a new AP report that explains how they sought out poor young girls to work as “masseuses” for Mr. Epstein.

More: Hedge fund managers have been curious about how Mr. Epstein operated his business. And prosecutors accused the financier of trying to influence potential witnesses in late 2018 by paying them $350,000.

The Chinese tech giant is reportedly planning steep job cuts in its American operations even after President Trump granted it some relief from a U.S. blacklisting, Dan Strumpf of the WSJ reports.

The layoffs would be at Huawei’s U.S.-based R.&D. unit, Futurewei Technologies, Mr. Strumpf reports. It employs 850 people in states like Texas, California and Washington. Some employees have already been notified, and further cuts are expected to be announced soon.

The cuts come after the Trump administration blocked businesses from supplying U.S.-sourced products and services to Huawei, Mr. Strumpf writes. The move prevented Futurewei from communicating with Huawei offices in China, since Futurewei’s work in the U.S. would have qualified as American technology.

Limits on Huawei are expected to soften. Regulators could start approving licenses for companies to sell products to Huawei in as little as two weeks, Reuters reports, citing an unnamed source.

But Huawei officials are pessimistic about the Trump administration’s actions. The company’s chairman, Liang Hua, said at a news conference on Friday that it had yet to see any benefit from Mr. Trump’s lifting of the export ban and called for a complete reprieve.

The House Financial Services Committee is said to be studying a proposal to prevent large tech companies from functioning as financial institutions or issuing digital currencies, according to Reuters.

• “The draft legislation, ‘Keep Big Tech Out of Finance Act,’ describes a large technology firm as a company mainly offering an online platform service with at least $25 billion in annual revenue.”

• “A large platform utility may not establish, maintain or operate a digital asset that is intended to be widely used as a medium of exchange, unit of account, store of value or any other similar function,” the draft legislation states.

• Violation of the new rules would reportedly result in a fine of $1 million per day.

The bill is a clear response to Facebook, which recently announced plans to create a cryptocurrency called Libra.

It’s unlikely to pass, as many lawmakers, especially Republicans, would view the bill as a threat to U.S. innovation. But it’s a strong signal to Facebook and others that lawmakers plan to keep a tight rein on Silicon Valley regarding financial innovation.

As evidence accumulates that economic growth may be slowing more rapidly than the Fed expected, investors may want to reconsider whose side to be on in the fight between the central bank and a possible recession, Conrad De Aenlle of the NYT writes.

• “Stock investors seem to be fixed on the view that the central bank will bail them out while the economy is still healthy,” Mr. De Aenlle writes.

• The markets “have grown accustomed to the idea that it will fix everything,” said Tad Rivelle, the chief investment officer for fixed income at TCW. “That’s a dangerous, misplaced idea. Market forces always overwhelm anything central banks can do.”

• Mr. De Aenlle adds that “changes in Fed policy take up to a year to affect economic growth,” and it’s unclear whether the central bank could move fast enough to head off a recession.

• “It’s definitely time to be risk-off in U.S. assets,” said Rob Arnott, the chairman of the investment advisory service Research Affiliates. He added that the stock market was “expensive by just about any measure you look at, and “priced to give you terrible forward-looking returns.”

The billionaire investor thinks the feds should open an investigation into Google’s ties to China, Axios reports. Speaking at the new National Conservatism Conference yesterday, he said, according to Axios:

• “Number one, how many foreign intelligence agencies have infiltrated your Manhattan Project for A.I.?”

• “Number two, does Google’s senior management consider itself to have been thoroughly infiltrated by Chinese intelligence?”

• “Number three, is it because they consider themselves to be so thoroughly infiltrated that they have engaged in the seemingly treasonous decision to work with the Chinese military and not with the US military … because they are making the sort of bad, short-term rationalistic [decision] that if the technology doesn’t go out the front door, it gets stolen out the backdoor anyway?”

Those questions “need to be asked by the F.B.I., by the C.I.A.,” he said, adding: “I’m not sure quite how to put this, I would like them to be asked in a not excessively gentle manner.”

Google came under scrutiny last year over plans to work on a censored version of its search service for China. It’s unclear whether the situation is as severe as Mr. Thiel suggests.

GlaxoSmithKline is said to have appointed Jonathan Symonds, a former C.F.O. of Novartis, as chairman.

The British banking start-up Revolut reportedly plans to name Martin Gilbert, the former co-chief executive of Standard Life Aberdeen, as chairman.

Bank of America has named Neil Kell, a senior investment banker, as the head of its global tech, media and telecom equity capital markets business.

Jefferies has hired Jonathan Slone, the former C.E.O. of the Chinese brokerage CLSA, as the chairman of its Asia operations.

Deals

• Anheuser-Busch InBev called off an I.P.O. of its Asia Pacific business, citing weak market conditions. But poor reception from potential investors was also likely to blame. (Reuters, Bloomberg Opinion)

• Volkswagen formally agreed to invest $2.6 billion in Ford Motor’s self-driving car division, at a $7 billion valuation. (NYT)

• The drug maker Gilead Sciences agreed to invest $5.1 billion for a bigger stake in Galapagos, a Belgian biopharmaceutical start-up. (WSJ)

• The luxury retailer Barneys is said to be considering filing for bankruptcy protection. (Reuters)

Politics and policy

• Puerto Rico is finalizing a plan to exit bankruptcy protection, which could pit the island’s government against hedge-fund creditors. (NYT)

• President Trump drew accusations of racism after tweeting that four minority congresswomen should “go back” to the countries they came from — despite three having been born in the U.S. (NYT)

• The acting head of the I.M.F. has backed efforts by central banks to ease monetary policies. (FT)

Trade

• China said it would impose sanctions on American companies involved in a recently proposed sale of more than $2 billion in arms to Taiwan. (NYT)

• Officials from Britain and Iran are discussing how to ease tensions over a seized Iranian oil tanker suspected of carrying oil to Syria. (WSJ)

• Japan’s trade action against South Korea has taken a page from the Trump administration playbook. (NYT)

Tech

• A federal judge ruled that Amazon did not unduly influence the course of the Pentagon’s $10 billion cloud project. Now the Defense Department must choose between Amazon and Microsoft as its contractor of choice. (NYT)

• Here’s a look inside the huge databases of photographs that are powering facial recognition technology. Also, how the Florida D.M.V. sells personal data to marketing companies, and how Palantir’s software user manuals reveal the extent of information available to law enforcement. (NYT, ABC, Vice)

• Amazon’s Prime Day sale starts today. And the summer buying bonanza has become far bigger than Amazon, bringing sales and risks for other retailers. (NYT)

Best of the rest

• It looks increasingly likely that Boeing 737 Max jets will be grounded until next year. (WSJ)

• Consolidated Edison apologized for a five-hour blackout in Manhattan on Saturday evening. (NYT)

• President Recep Tayyip Erdogan of Turkey has vowed to lower interest rates in his country by the end of the year. (Bloomberg)

• How Netflix’s lobby has become the town hall of Hollywood. (NYT)

Thanks for reading! We’ll see you tomorrow.

We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

July 15th, 2019

Budweiser APAC IPO fail shows valuations face investor push-back

push-back@ Philip Blenkinsop

HONG KONG/NEW YORK/LONDON/BRUSSELS, July 15 (Reuters) – R eluctance to accept AB InBev’s high valuations doomed Budweiser APAC’s IPO of up to $9.8 billion – poised to be the world’s biggest this year – investors and bankers said, putting would-be floats on notice that careful pricing remains key to deal success.

Anheuser Busch InBev NV (AB InBev), the world’s largest brewer, dramatically shelved the initial public offering (IPO) of its Asian business on Friday, citing market conditions among other factors. After a week-long global roadshow, the shares had been due to price in New York on Thursday evening and to begin trading in Hong Kong later this week.

The deal was expected to raise $8.3 billion to $9.8 billion for AB InBev, helping the heavily indebted brewer reduce its leverage, and giving Budweiser APAC a market capitalisation of $54 billion to $64 billion.

Sources involved in the deal said investors were unwilling to accept AB InBev’s valuations for Budweiser APAC. Another source added that the reluctance led to weak orders from top-class U.S. “long only” fund managers – prized as long-term investors – who had been expected to place big orders.

“The Company and banks all counted on long-onlys to make big orders,” said one source involved in the deal, who was not authorized to speak publicly on the matter and so declined to be identified. “Many long-onlys got cold feet and didn’t show up on the last day as expected.”

Representatives for Budweiser APAC declined to comment. Brussels-based AB InBev did not immediately respond to a request for comment. Morgan Stanley and JPMorgan, the two lead banks on the deal, declined to comment.

Observers noted however that markets are currently buoyant. Last week the S&P 500 closed above 3,000 for the first time – up 20% this year – while in Hong Kong the blue-chip Hang Seng Index has gained 10% this year.

“This is likely a case of valuation push-back, not market conditions,” said Kathleen Smith, founding principal at Renaissance Capital, a U.S.-based research firm and manager of IPO-focused exchange-traded funds, who noted that returns from IPOs had generally been strong this year.

“If these returns were negative, that would be a sign that market conditions are an issue in getting IPOs done. For now I would say we have an operating IPO market with cautious investors – that’s a good balance: not too hot, not too cold,” she added.

With the notable exceptions of ride-hailing companies Uber Technologies Inc and Lyft Inc, which are trading below their issue prices, more than three-quarters of big IPOs in New York have produced gains for investors, according to data from Dealogic.

In Hong Kong, eight of the top 20 deals are trading higher including the city’s biggest this year, Hansoh Pharmaceutical Group Co Ltd which is up 68%.

INVESTOR DISCIPLINE

The failed float came just a day after Swiss Re AG pulled the $4.1 billion IPO in London of British life insurer ReAssure, citing weak demand from institutional investors.

“If investors are being disciplined on a deal, it often doesn’t bode well for the after-market performance,” said one London-based equity capital markets banker not involved in the Budweiser APAC deal. “It’s a really tricky market at the moment and you’ll notice that almost all the deals that priced at the bottom of the range this year have traded down.”

AB InBev’s pricing valued its Asian business at 16 to 18 times its expected enterprise value (EV) relative to its expected EBITDA – earnings before interest, tax, depreciation and amortization – in 2020, according to sources involved in the deal.

EV/EBITDA is used to help investors compare companies’ operating performance by stripping out the effects of different financing costs.

While ratios are also affected by a company’s location, Budweiser APAC’s range compared with a ratio of 11 for both parent AB InBev and for Japan’s Kirin Holdings Co Ltd, another Asia-centric beverage group, according to Refinitiv Eikon data. Chinese brewers are rated more highly, with Tsingtao Brewery Co Ltd trading at 14 times and China Resources Beer Holdings Co Ltd at 19 times EV/EBITDA.

Analysts at Bernstein last week described the company as a “high-quality asset,” but estimated the shares only offered 6% upside to IPO investors, even at the low end of its price range.

HONG KONG BLOW

The shelved Budweiser APAC deal is also a blow to Hong Kong Exchanges & Clearing Ltd, the city’s bourse operator, which is lagging behind its New York rivals in the annual battle to be the leading global listings venue.

Last month, logistics real estate developer ESR Cayman Ltd shelved a Hong Kong IPO of up to $1.24 billion – then the city’s largest this year. That too was due to weak investor interest because of its aggressive valuation, according to two sources involved.

The failed deal also comes as the exchange has been working to align its IPO rules more closely with its global rivals.

The city last year allowed biotech companies without revenue float in an overhaul that also for the first time accepted companies with weighted voting rights.

It is also seeking to shorten the five days currently needed between pricing and trading an IPO – in New York, the two happen within 24 hours – which has long been a source of concern for bankers and investors worried about market moves in the intervening period.

Also, unlike New York, where companies can raise or lower their guided price range for IPOs, in Hong Kong they can only lower the range by as much as 10% – and only with notice that was not given in the Budweiser APAC case.

Sources involved in the deal said AB InBev decided not to make use of that option.

(Reporting by Julie Zhu in HONG KONG, Joshua Franklin in NEW YORK, Abhinav Ramnarayan in LONDON and Philip Bleninsop in BRUSSELS; Additional reporting by Alun John in HONG KONG; Writing by Jennifer Hughes; Editing by Christopher Cushing)

July 14th, 2019

Fighting Big Tech Makes for Some Uncomfortable Bedfellows

It was not a given that Steve Hilton, the conservative Fox News host, and Tim Wu, a Columbia University law professor who worked in the Obama White House, would get along.

But when they met by chance at a cocktail party in Washington last year, they quickly landed on one surprisingly strong point of agreement: It was time to break up Big Tech.

“We thought the same way,” Mr. Hilton said.

Mr. Wu, who is also a contributing opinion writer for The New York Times, agreed. “There’s unusual constituencies arising,” he said. He later went on Mr. Hilton’s show, “The Next Revolution,” for a congenial interview.

The antitrust movement has been revived by a bipartisan loathing of Big Tech that extends beyond lawmakers to the furthest firmaments of the right and the left.

On one side is the progressive left, whose members have been appalled by Facebook’s handling of pro-Trump Russian disinformation campaigns and Silicon Valley’s consolidated power. On the other side is the Trumpist right, whose members see the power of social media companies to ban content as censorship and worry that the arteries of communication are controlled by young liberals.

The common cause has made for some strange new bedfellows. The left and the right now often have similar anti-tech talking points on cable news and at congressional hearings. Conservatives are showing up at largely liberal conferences, while liberals are going on conservative TV shows.

On Tuesday, that alignment will be evident at an antitrust hearing on Capitol Hill featuring executives from Facebook, Google, Amazon and Apple, as well as policy experts like Mr. Wu. The hearing, held by the House Judiciary subcommittee on antitrust, will examine “the impact of market power of online platforms on innovation and entrepreneurship.”

“To the bewilderment of many observers, the ascendant pressures for antitrust reforms are flowing from both wings of the political spectrum,” Daniel A. Crane, a law professor at the University of Michigan, wrote last year in a paper called “Antitrust’s Unconventional Politics.”

Now those who have found mutual understanding need to figure out if they can actually get along.

It is not easy. Often, it is awkward.

“I think we should be skeptical,” said Sabeel Rahman, the president of the progressive think tank Demos and an associate law professor at Brooklyn Law School. “What are the coalitions that we ought to embrace? Who’s the we?”

Mr. Rahman said that he was wary of these new conservative allies and that progressives in the movement needed to be cautious. Yes, they both want to take power out of the hands of large tech companies — but then the two sides have to agree on whose hands that power falls into.

“How do we operationalize this? Who’s doing the moderating? Are these new allies coming in good faith?” Mr. Rahman asked. “The devil’s in the details.”

The detail here is who exactly should be in charge of a company like Facebook, if it is not Mark Zuckerberg. The two sides may both want third-party ombudsmen of some sort, but agreement seems to fall apart beyond that.

“Most people getting involved haven’t really gamed out what this means,” said Katy Glenn Bass, the research director at the Knight First Amendment Institute, an advocacy group for free speech.

Regulation of online speech is not exclusively an antitrust concern, but today these threads are becoming interwoven. Critics argue that big tech companies need to be broken up or regulated because they are suppressing speech.

Ms. Bass, who is organizing a Knight Institute symposium in October on tech giants, monopoly power and public discourse, said she worried that popular enthusiasm for aggressive regulation of speech on the platforms could get out of hand. She worries that now arguments for moderating speech are coming from groups that once stood against government intervention.

“The idea that these platforms should be pretty tightly regulated on what speech they can host is not a traditional conservative argument,” Ms. Bass said. “This has all been a real whiplash.”

A case in point: On Thursday, The Washington Post published an essay by Charlie Kirk, the president of Turning Point USA, a group for young conservatives, proposing that digital platforms be regulated the way publishers are.

“Fighting back against private companies with governmental action is a politically and ideologically fraught idea for those of us on the right,” he wrote. But he went on to add, “There is now ample reason to believe the market’s normal corrective powers are being blocked by anti-competitive forces.”

Traditional conservatives said they were feeling the whiplash. James Pethokoukis, an analyst at the American Enterprise Institute, a pro-market think tank, was at a party this spring that included Republican donors in Washington when the conversation took a turn toward big tech companies.

“They were talking about breaking them up, turning them into utilities,” Mr. Pethokoukis said. “It’s a breathtaking change from even a year ago.”

He was shocked. To him these companies were American jewels and some of the best bulwarks against rising power abroad. He has since been writing against the movement with pieces like “The Astonishingly Weak Antitrust Case Against Facebook, Google, and Amazon.”

Tech bias has been a longtime concern for the right, and Stephen K. Bannon, President Trump’s former chief strategist, frequently mentioned it. Little came of it.

Now the movement is finding more mainstream allies. Mr. Kirk and others who have complained of an anti-conservative bias by Facebook, Google and Twitter attended a social media summit at the White House on Thursday. At the event, Mr. Trump accused the companies of exhibiting “terrible bias” and said he was calling representatives from all of them to the White House over the next month.

On Friday, Mr. Trump took the tech companies to task again, calling them “crooked” and
”dishonest” and adding that “something is going to be done.”

“In my circles right now,” Mr. Pethokoukis said, “if you say, ‘I don’t think we’re seeing systemic bias against conservatives,’ it’s like they wonder about your sanity.”

Matt Stoller, a former Democratic congressional staff member who is now at the antimonopoly think tank Open Markets Institute, which leans liberal, said he noticed the same thing.

“The white supremacists liked to appropriate this language around antimonopoly and free speech,” said Mr. Stoller, who has written a book on the antimonopoly movement, “Goliath.” “But now there are real networks on the right that are not white supremacist networks, and the people in them are genuinely concerned about the power of Big Tech.”

He said he was having to reassess his relationships with conservatives.

“I always knew we were aiming at different things,” he said. “Now, we have some of the same goals.”

And so they are building wary coalitions. Mr. Wu said he was working on a movement of state attorneys general to take the antitrust fight to individual courtrooms across the country. The most eager allies are Republicans, he said.

Mr. Hilton, a former British political adviser, built his Fox News show in 2017 around what he predicted would be an anti-elitist populism movement. The 2016 presidential election was just the start, he figured. But the rallying cries fizzled out, and party lines remained unchanged.

Today, he sees a bright spot: the shared antipathy for big tech companies.

“Three years on, it looks like the only remnant of that is this antitrust issue and, if we’re really specific about it, anti-Big Tech,” Mr. Hilton said.

On Mr. Hilton’s show, Mr. Wu argued for breaking up Facebook by forcing its two other popular apps — Instagram and WhatsApp — to be spun off.

But Mr. Wu worried about being seen as having a friendly chat on Fox News and felt uncomfortable sharing his appearance on the show with his mostly liberal followers.

“I didn’t publicize it a great deal,” he said. “I took a selfie. But then I decided not to broadcast it.”

July 13th, 2019

Facebook Dodged a Bullet From the F.T.C. It Faces Many More.

Facebook said in a statement on Saturday that, “by updating the rules for the internet, we can preserve what’s best about it.” The company added, “We want to work with governments and policymakers to design the sort of smart regulation that fosters competition, encourages innovation and protects consumers.”

Facebook is the centerpiece of a broader reckoning facing the tech industry, with governments beginning to collaborate in their response. The European Commission has shared information with the F.T.C. and the Justice Department about its past investigations into Google. And this spring, Ireland’s top privacy regulator, who has been investigating Facebook and Google, met with officials in Washington.

In May, an annual meeting of antitrust regulators from around the world turned into a four-day strategy session focused on the tech industry. Joseph Simons, the head of the F.T.C., and Makan Delrahim, the assistant attorney general overseeing antitrust at the Justice Department, were among those who attended the event in Colombia.

“It’s good news that the U.S. agencies are diving into this discussion,” said Andreas Mundt, Germany’s top antitrust enforcer, who helped organize the meeting and in February issued one of the first antitrust rulings against Facebook. “It’s clear these are companies that are active worldwide and thus a worldwide approach is not a bad idea.”

Mr. Mundt and other regulators believe that actions against Facebook and its industry peers must go beyond fines. Instead, many authorities want to force structural changes to how the businesses operate — like their collection of data and sale of digital advertising.

After the F.T.C. decision, Facebook’s next sanctions are expected to come from Europe, where the authorities have traditionally been more assertive against the tech industry than American regulators.

Ireland’s data-protection office has 11 investigations underway against Facebook for violations of European privacy law, the General Data Protection Regulation, or G.D.P.R. (Ireland has jurisdiction over Facebook under the privacy law because the company’s European headquarters is in Dublin.) At least two verdicts against the company are likely in the coming months.

July 12th, 2019

Alex Navab, Prominent Wall Street Dealmaker, Is Dead at 53

Alex Navab, a prominent financier who was once considered a potential successor to the Wall Street titans Henry R. Kravis and George R. Roberts, died on July 7 while vacationing with his family in Greece. He was 53.

Mr. Navab died unexpectedly, according to a statement by his investment firm, Navab Capital Partners. It did not give the cause of death.

Over 24 years, Mr. Navab became a top executive in the private equity industry, where investment firms buy businesses with the aim of cutting costs or growing sales and then reselling them for profit. Worldwide, the industry now oversees some $2 trillion in capital.

Alexander Navab was born on Nov. 24, 1965, in Isfahan, in west-central Iran, to Dr. Ali and Katina (Armenakis) Navab. His father was a physician and his mother a native of Greece. The family fled to Greece after the Iranian revolution in 1979 and then moved to the United States.

Mr. Navab graduated from Columbia University in 1987 and worked at Goldman Sachs before attending Harvard Business School, from which he graduated in 1991. He worked at the investment bank James D. Wolfensohn Inc. before joining KKR in 1993.

By that point, KKR — then formally known as Kohlberg Kravis Roberts — was one of the best-known private equity firms around, having won the battle for R.J.R. Nabisco in 1988, a financial battle immortalized in the book “Barbarians at the Gate.” Today the firm handles roughly $200 billion in assets.

Mr. Navab oversaw numerous leveraged buyouts at KKR, particularly in the media industries, including the takeovers of the Nielsen Company, Yellow Pages and Borden. By 2008 he had become co-leader of the firm’s mainstay North American private equity business. He took sole leadership of the division six years later.

As head of North American buyouts, he helped the firm raise nearly $14 billion for its 12th North American private equity fund, one of the biggest of its kind. He also sat on the firm’s management committee. Executives across the industry believed he was in the running eventually to succeed Mr. Kravis and Mr. Roberts.

But Mr. Navab left KKR in 2017, shortly after it named two other executives co-presidents — most likely the successors to Mr. Kravis and Mr. Roberts.

He announced the creation of Navab Capital Partners in April and had begun recruiting executives from rivals like the Carlyle Group, Warburg Pincus and KKR itself.

Unlike other new firms, Mr. Navab’s immediately set its sights high: He was said to have established a fund-raising target of $3 billion for his first fund; it would have enabled Navab Capital Partners to strike large leveraged buyouts.

His death came as a jolt in the industry. “We are heartbroken,” Mr. Kravis and Mr. Roberts said in a statement.

Mr. Navab was active in philanthropy. He was a trustee at Columbia — to which he gave $6 million to fund internships for students — and a board member of NewYork-Presbyterian Hospital and the Robin Hood Foundation, which works to combat poverty in New York City.

Mr. Navab, who lived on Manhattan’s East Side, is survived by wife, Mary Kathryn Navab, as well as his parents and three young children.

July 12th, 2019

UPDATE 7-AB InBev pulls Budweiser listing, canceling year’s largest IPO

* Offers made below target range by some U.S. investors -sources

* Shares were being sold in indicative range of HK$40-HK$47 (Updates shares, adds analyst comment, additional detail)

HONG KONG/NEW YORK/BRUSSELS, July 12 (Reuters) – A nheuser-Busch InBev said on Friday it will not proceed with the planned listing in Hong Kong of its Asia Pacific unit, Budweiser Brewing Company APAC Ltd, in what would have been the world’s biggest initial public offering (IPO) of 2019.

AB InBev, the world’s largest brewer, was aiming to sell as much as $9.8 billion in Budweiser stock to seek relief from its heavy debt burden. AB InBev shares ended trading in New York down 3%, as investors saw that prospect slipping away.

The canceled IPO is also a setback to the Hong Kong stock exchange, which hoped Budweiser’s listing would help attract other high-profile international companies at a time of increased trade tensions between the United States and China.

UK-based data center operator Global Switch and consumer lender Home Credit Group are among the international companies that have been eying Hong Kong IPOs.

AB InBev said the decision was due to “several factors, including the prevailing market conditions,” despite the Hong Kong stock market being almost flat on Friday and trading close to its historic highs.

Sources close to the IPO said investors were unwilling to entertain AB InBev’s expectations for the Budweiser APAC business to trade at a valuation multiple above that of peers.

Budweiser APAC, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, was marketing its shares with an indicative range of HK$40-HK$47. While it received offers within that range from hedge funds and private wealth managers, some large long-only U.S. investors, which are often prioritized in an IPO, made offers below the HK$40 per share level, the sources said.

The indicative price range valued Budweiser at 15.5-18.2 times its enterprise value to its estimated 2020 cash flow, according to the sources. By comparison, AB InBev trades at 10.3 times its projected 12-month earnings, China-focused peer Tsingtao trades at 14.1 times, and Japan’s Kirin , another Asia-centric brewing giant, trades at 9.9 times, according to Refinitiv data.

Unlike U.S. bourses, the Hong Kong stock exchange also restricts companies’ ability to discount their IPOs. Limiting AB InBev’s options was its decision not to take advantage of a provision that would have given it leeway to lower Budweiser’s price range by 10%, as long as it flagged that as a risk in the IPO prospectus.

AB InBev had expected Budweiser’s IPO to eclipse Uber Technologies as the biggest IPO of the year. It ended up being the third-largest listing ever to be withdrawn, after Sociedad Estatal Loterias y Apuestas del Estado in 2011 and AIA Group in early 2010, according to Dealogic.

“It was the right thing to do. I’m glad they didn’t do this if the demand was soft,” Liberum analyst Nico von Stackelberg said of AB InBev’s decision.

AB InBev left the door open to revisit the IPO, saying it “will closely monitor market conditions.”

HIGHLY LEVERAGED PARENT

The canceled IPO is also a blow to the investment banks leading it, JPMorgan Chase & Co and Morgan Stanley . Morgan Stanley in the first six months of 2019 earned more fees from Asia Pacific IPOs than any other U.S. or European bank, according to Refinitiv league table data, while JPMorgan was ranked 31st.

Budweiser APAC was seeking to raise between $8.3 billion and $9.8 billion through the float, much of which was to go toward paying down debt at its highly leveraged parent.

AB InBev has been working to reduce a debt pile of more than $100 billion that it built up with the purchase of nearest rival SABMiller in late 2016.

AB InBev cut its dividend for 2018. It has said it will reduce its net debt-to-EBITDA ratio to below 4.0 by the end of 2020 from 4.6 at the end of last year, saying it is not dependent on the Asian flotation. It puts the optimal ratio at 2.

The company had positioned its Hong Kong listing as creating a champion in Asia-Pacific, where sales are growing as increasingly wealthy consumers turn to premium beer brands.

The IPO was set to precede Alibaba’s plans to raise as much as $20 billion through a Hong Kong listing.

Last month, logistics real estate developer ESR Cayman Ltd shelved its Hong Kong IPO of up to $1.24 billion “in light of the current market conditions.” (Reporting by Julie Zhu in Hong Kong, Joshua Franklin in New York and Philip Blenkinsop in BrusselsAdditional reporting by Jennifer Hughes in Hong Kong, Rachel Armstrong in London and Jessica DiNapoli in New York; editing by Louise Heavens, Susan Thomas, Leslie Adler and Cynthia Osterman)

July 12th, 2019

UPDATE 6-AB InBev Asia cancels world’s largest IPO of 2019

* Offers made below target range by some U.S. investors -sources

* Shares were being sold in indicative range of HK$40-HK$47 (Adds share price, company and market background)

HONG KONG/NEW YORK, July 12 (Reuters) – Anheuser-Busch InBev said on Friday it will not proceed with the planned listing in Hong Kong of its Asia Pacific unit, Budweiser Brewing Company APAC Ltd, in what would have been the world’s biggest initial public offering of 2019.

The IPO was considered a barometer for future large share sales. AB InBev, the world’s largest brewer, had aimed to sell as much as $9.8 billion in stock to raise raised much-needed funds for the company to cut its debt heavy burden.

The cancelled IPO is also a big setback to the Hong Kong stock exchange, which had hoped Budweiser’s listing would help attract other high-profile international companies.

AB InBev said the decision was due to “several factors, including the prevailing market conditions.” The company’s stock was down around 4% in after-market trading.

The cancellation, against the backdrop of a protracted U.S.-China trade war, sets a downbeat tone for large Hong Kong listings.

Budweiser APAC, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, had received offers for shares within its targeted range from hedge funds and private wealth managers, but some large long-only U.S. investors, which are often prioritized in an IPO, made offers below the HK$40 per share level, people familiar with the matter said.

The shares were being sold in an indicative range of HK$40-HK$47,

IPOs on Hong Kong exchanges are only able to price up to 10% below the target range without regulatory approval if the risk is flagged in the prospectus.

This was not sufficiently highlighted in the Budweiser filing so AB InBev held firm on the HK$40 price, meaning some U.S. investors trimmed the size of their orders, sources said.

HIGHLY LEVERAGED PARENT

The company’s executives and representatives from the deal’s co-sponsors, JPMorgan and Morgan Stanley, met in New York to discuss pricing after the books closed on Thursday.

People familiar with the issue said it was struggling to secure enough demand from long-term investors.

Typically investors put in orders for more shares than they actually expect to receive in an effort to ensure they get a good allocation. Deals where those investors end up with more than they expected often trade poorly to begin with.

All the sources who spoke to Reuters did so on condition of anonymity as they were not authorised to speak on the matter.

Budweiser APAC was seeking to raise between $8.3 billion and $9.8 billion through the float, much of which was to go toward paying down debt at its highly leveraged parent.

AB InBev has been working to reduce a debt pile of more than $100 billion that it built up with the purchase of nearest rival SABMiller in late 2016.

Trading had been set to begin on July 19.

AB InBev cut its dividend for 2018. It has said it will reduce its net debt-to-EBITDA ratio to below 4 by the end of 2020 from 4.6 at the end of last year, saying it is not dependent on the Asian flotation. It puts the optimal ratio is 2.

AB InBev stock, which has rallied 36% this year, is still down 11% over the last 12 months. It fell 1.5% on Friday.

The company had positioned its Hong Kong listing as creating a champion in Asia-Pacific, where sales are growing as increasingly wealthy consumers turn to premium beer brands. Even at the low end of the price range, the IPO would surpass the $8.1 billion New York float of Uber in May, the biggest so far this year, Refinitiv data shows.

The IPO was set to precede Alibaba’s plans to raise as much as $20 billion through a Hong Kong listing.

Last month, logistics real estate developer ESR Cayman Ltd shelved its Hong Kong IPO of up to $1.24 billion “in light of the current market conditions.” (Reporting by Julie Zhu in Hong Kong, Joshua Franklin and Jessica DiNapoli in New York Additional reporting by Jennifer Hughes in Hong Kong, Rachel Armstrong in London, Philip Blenkinsop in Brussels, Sathvik N Editing by Louise Heavens, Susan Thomas and Leslie Adler)

July 12th, 2019

Anheuser-Busch InBev Asia cancels world’s largest IPO of 2019

A customer shops in a supermarket in Princeton, Illinois.

Daniel Acker | Bloomberg | Getty Images

Anheuser-Busch InBev said on Friday it will not proceed with the initial public offering of its Asia Pacific unit, Budweiser Brewing Company APAC, on the Hong Kong Stock Exchange.

The company said the decision was due to “several factors, including the prevailing market conditions.”

It had been set to be world’s biggest listing of 2019. The company had been seeking to raise up to $9.8 billion.

The move, against the backdrop of a protracted U.S.-China trade war, set a downbeat tone for large Hong Kong listings, seen as a barometer for future large share sales, such as Alibaba’s Hong Kong listing.

Budweiser APAC, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, received offers for shares within its targeted range from hedge funds and private wealth managers but some large long-only U.S. investors, which are often prioritized in an IPO, offered below the HK$40 per share level, other people familiar with the matter said.

IPOs on Hong Kong exchanges are only able to price up to 10% below the target range without regulatory approval if the risk is flagged in its prospectus.

This was not sufficiently highlighted in the Budweiser filing so AB InBev held firm on the HK$40 price, meaning some U.S. investors trimmed the size of their orders, sources said.

The company’s executives and representatives from the deal’s co-sponsors, JPMorgan and Morgan Stanley, met in New York to discuss pricing after the books closed on Thursday.

People familiar with the issue said it was struggling to secure enough demand from long-term investors.

Typically investors put in orders for more shares than they actually expect to receive in an effort to ensure they get a good allocation. Deals where those investors end up with more than they really expected often trade poorly to begin with.

All the sources who spoke to Reuters did so on condition of anonymity as they were not authorized to speak on the matter.

Budweiser APAC was seeking to raise between $8.3 billion and $9.8 billion through the float, much of which will go towards paying down debt at its highly leveraged parent. Trading was set to begin on July 19.

AB InBev, the world’s largest brewer, has been working to reduce a debt pile of more than $100 billion that it built up with the purchase of nearest rival SABMiller in late 2016.

AB InBev has said it will reduce its net debt to EBITDA ratio to below 4 by the end of 2020 from 4.6 at the end of last year and that this is not dependent on the Asian flotation. It says the optimal ratio is 2.

AB InBev stock, which has rallied 36% this year, is still down 11% over the last 12 months. It fell 1.5% on Friday.

Biggest IPO this year

The company had positioned its Hong Kong listing as creating a champion in Asia-Pacific, where sales are growing as increasingly wealthy consumers turn to premium beer brands.

Even at the low end of the price range, the IPO would surpass the $8.1 billion New York float of Uber in May, the biggest so far this year, Refinitiv data shows.

The IPO was set to precede Alibaba’s plans to raise as much as $20 billion through a Hong Kong listing.

Last month, logistics real estate developer ESR Cayman shelved its up to $1.24 billion Hong Kong IPO “in light of the current market conditions”.

July 12th, 2019 July 12th, 2019

Ford and VW Agree to Share Costs of Self-Driving and Electric Cars

Ford Motor and Volkswagen said Friday that they would team up to develop self-driving cars and share electric-car components. The move broadens an existing alliance and shows how automakers are putting aside rivalries to manage the cost of new technologies.

The agreement calls for Volkswagen to purchase a stake in a Ford-backed start-up that is developing self-driving technologies, and for Ford to use electric-car components developed by Volkswagen.

As auto sales slump around the world, hard-pressed carmakers have little choice but to join forces to fend off Silicon Valley challengers and avoid obsolescence.

“There’s only going to be a few winners who create the platforms for the future,” said Ford’s chief executive, Jim Hackett. “We cannot be late.”

Underscoring the financial challenges facing the industry, Daimler, the maker of Mercedes-Benz cars, warned Friday that it would report a pretax loss for the second quarter of 2019.

But Volkswagen and Ford, which already cooperate on commercial vehicles and pickups, must show that they can avoid the power struggles among managers and engineers that have doomed many other alliances.

Volkswagen, which sold more cars than any other company last year, is known for its insular, hierarchical culture and has little experience cooperating with rivals. An alliance with Suzuki ended in 2015 with bitter feelings on both sides.

“Autonomous driving is a very, very expensive technology,” Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen in Germany, said in an email. “One has to invest today in order to make the first sales in 2030, maybe. Therefore it makes a lot of sense for Ford and VW to work together.”

Mr. Dudenhöffer questioned whether Mr. Hackett and Herbert Diess, the chief executive of Volkswagen, could make the compromises necessary for the alliance to succeed. Both are “alpha wolves,” Mr. Dudenhöffer said.

It may help that Ford and Volkswagen are dividing the labor to take advantage of each company’s strength. Ford is ahead of Volkswagen in autonomous driving, while Volkswagen is more advanced than Ford in electric cars.

Volkswagen has agreed to invest $2.6 billion in cash and other resources in Argo AI, a Ford-backed start-up that is working on sensors, software and other technologies to enable cars to drive themselves. Volkswagen will fold its autonomous vehicle project, which is based in Munich, into Argo, including 200 employees. The agreement values Argo at $7 billion.

In 2021 Ford aims to put Argo’s systems in driverless taxis and delivery vehicles in the United States. Volkswagen plans to use self-driving technology in its Moia ride-sharing service, a fleet of six-seat, battery-powered vans already operating with human drivers in Hamburg and expected to be introduced in other European cities.

In a separate agreement, Ford plans to build electric cars based on motors, batteries and other standardized components that Volkswagen has developed and is using in a model called the ID.3, due next year. Volkswagen has said the car will sell for less than 30,000 euros in Europe, or $34,000, making battery-powered transportation more accessible to middle-income buyers.

Mr. Diess said the company expected to sell 15 million electric vehicles in Europe over 10 years, starting in 2020. Ford plans to introduce a vehicle in Europe made from VW components in 2023, and to sell 600,000 electric cars over six years.

Ford said in April that it would invest $500 million in another start-up, Rivian, that is developing an electric pickup truck and sport utility vehicle. Ford also intends to use the underpinnings of Rivian’s vehicles to produce models of its own.

Automakers need to introduce electric vehicles to meet increasingly stringent emissions-reduction regulations in Europe and China. “We are still far away from meeting the 2021 target,” Mr. Diess said, referring to the European benchmark.

The need for companies to share the cost and risk of developing autonomous vehicles has become more urgent because car sales are slowing in all major markets, including China, the United States and Europe.

“The financial investment is immense, and yet we don’t know when they will be in the marketplace or how they will make money,” said Michelle Krebs, a senior analyst at Autotrader. “It’s not just the money. The talent pool for people developing these vehicles is small.”

Profits are falling across the industry. Daimler said Friday that it would report a pretax loss for the second quarter of €1.6 billion. A year earlier, Daimler reported a profit of €2.6 billion.

The company, based in Stuttgart, Germany, said the loss was caused by the need to set aside €1.6 billion related to investigations in the United States and other countries into whether Mercedes diesel cars were equipped with software to evade emissions standards. In addition, Daimler will set aside €1 billion to cover the cost of recalling cars with defective airbags made by Takata, a Japanese company.

Other big carmakers have already formed partnerships to develop cars that can drive themselves. Cruise, General Motors’ autonomous division, has received billions of dollars in financing from Honda and others. G.M. has put Cruise’s valuation at $19 billion.

Toyota has teamed up in autonomous vehicles with Uber, the ride-hailing service. The luxury carmakers Mercedes and BMW have pooled their self-driving efforts. Several large automotive suppliers are also working on autonomous technology.

They face competition from well-financed Silicon Valley companies. Waymo, which is owned by Google’s parent company, Alphabet, has been working in the field for a decade and operates a test fleet of 600 self-driving taxis in the Phoenix area that it hopes to expand.

Estimates vary on how quickly cars will be able to operate without any human intervention, from a year or two to decades. For now, most of the self-driving test vehicles operate on public roads with one or two safety drivers.

Founded in 2016, Argo has 500 employees and is operating test vehicles in Pittsburgh, where it is based, and Miami. Its chief executive, Bryan Salesky, was formerly part of the Google team working on self-driving cars. In 2017, Ford agreed to take an undisclosed stake in the company and invest $1 billion over five years.

Argo is trying to develop technology that, within a few years, would allow cars to drive themselves without human help, but only in a contained area where conditions are more predictable. Cars that can drive autonomously anywhere are “way in the future,” Mr. Salesky said.

For Ford and Argo, Volkswagen adds heft to the effort, said Mike Ramsey, a Gartner analyst. “Volkswagen is the world’s largest automaker by sales volume and has a huge global footprint,” he said. “The potential market for Argo technology is much bigger than with Ford alone.”

July 12th, 2019

M&A wrap: Transom Capital, GTCR, Palladium, Volkswagen, Ford, Hillenbrand, Colgate


Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:

Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group (pictured)
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount
Christine Wang, Francisco Partners

The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it’s well worth getting to know these emerging leaders. They represent the future of private equity.

For profiles and video interviews, see Meet Mergers & Acquisitions’ 2019 Rising Stars of Private Equity
For Q&As, see 10 Rising Stars of Private Equity tell their tales

DEAL NEWS
Volkswagen AG and Ford Motor Co. (NYSE: F) will cooperate on electric and self-driving car technology, sharing costs on a global scale to take a major step forward in the industry’s disruptive transformation. VW will invest $2.6 billion in Ford’s autonomous-car partner Argo AI in a deal that values the operation at more than $7 billion. Unprecedented shifts facing the auto industry are forcing players to consider new partnerships and potential consolidation. Read the full story by Bloomberg News: Volkswagen invests in Ford’s self-driving car partner.

Hillenbrand Inc. (NYSE: HI) is buying Milacron Holdings Corp. (NYSE: MCRN) for about $2 billion. The target manufactures, distributes, and services engineered and customized systems for the plastics technology sector. Advisors to Hillenbrand include: J.P. Morgan Securities (NYSE: JPM) and Skadden, Arps, Slate, Meagher & Flom LLP. Advisors to Milacron include: Barclays and Ropes & Gray.

Colgate-Palmolive Co. (NYSE: CL) is acquiring Laboratoires Filorga Cosmétiques for $1.69 billion. The deal is part of Colgate’s strategy to focus on the oral, personal care and pet nutrition sectors. Filorga is a anti-aging skincare brand. Advisors to Colgate include: Citi, Wachtell, Lipton, Rosen & Katz and CMS Francis Lefebvre Avocats. Advisors to the target include: Goldman Sachs (NYSE: GS), Bredin Prat and BNP Paribas.

KPS Capital Partners-backed metal parts supplier Autokiniton Global Group is buying auto parts maker Tower International Inc. for $900 million. Advisors to Tower include: J.P. Morgan Securities LLC (NYSE: JPM), Houlihan Lokey Capital and Lowenstein Sandler LLP. Advisors to ACG include: Goldman Sachs (NYSE: GS), Bank of America Merrill Lynch and Paul, Weiss, Rifkind, Wharton & Garrison LLP.

SalesPage Technologies has acquired Advisor Atlas, a data provider to asset managers.

For more deal news, see Weekly wrap: Cisco, Piper Jaffray, Transom.

FUNDRAISING NEWS
Middle-market PE firm Palladium Equity Partners has raised its fifth fund at $1.56 billion. The fund has made three investments in: spice supplier Spice World; material company Kymera International; and Hispanic food products distributor Quirch Foods. Simpson Thacher advised Palladium.

For more on PE fundraising, see PE fundraising scorecard: Accel-KKR, Apax, New Heritage, Summit Partners.

FEATURED CONTENT
Alex Rodriguez is best known as the New York Yankees star who hit 696 home runs over the course of his 22-year baseball career, but today he’s making a name for himself as an investor as the founder and CEO of A-Rod Corp. One recent example: While serving as a guest judge on CNBC’s Shark Tank, Rodriguez backed Ice Shaker, an insulated bottle maker founded by former National Football League fullback Chris Gronkowski. Rodriguez talked about his life off the field as a savvy investor since his 20’s as the keynote speaker at EisnerAmper’s 4th annual Alternative Investment Summit at the The Museum of Modern Art on June 19. Among the topics discussed in a conversation led by Charles Weinstein, CEO of EisnerAmper: Rodriguez’ childhood as the son of a single mom; his investment thesis, which shares much with other middle-market investors; how he’s helping singer/dancer/actress Jennifer Lopez (to whom he became engaged in March) transition her business initiatives from licensing her brands to owning them; and how one day he just might buy a baseball team. Read the full story: A-Rod talks Ice Shaker, NRG eSports, J. Lo & maybe buying a baseball team.

Gender-diverse PE investment committees outperformed all-male investment committees substantially, finds a recent study by Oliver Gottschalg, a professor at HEC Paris. The results are compelling: Gender-diverse PE investment committees outperformed all-male investment committees substantially, as measured by several metrics: 7 percent more alpha; .52x more total value to paid-in multiple; and 12 percent higher internal rate of return. Also impressive: the failure rate of gender-diverse investment committees was 8 percent lower. The findings provide concrete evidence showing the value of including women on deal teams and may help to convince skeptics. Women still hold just 9.4 percent of senior positions at PE firms globally, the report found, indicating the industry still has a long way to go before reaping the benefits of gender diversity. The low representation underscores the importance of projects that feature successful female dealmakers, such as Mergers & Acquisitions’ Most Influential Women in Mid-Market M&A. Networking groups, such as Exponent Women, play a crucial role in developing communities for women dealmakers. The New York group hosted its second annual Exponent Exchange on July 11 at Second in New York. The event last year brought together 200 women.

Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. After a record-breaking 2018, forecasts for 2019 remain bullish. Advisors point to a lot of cash that must be deployed by strategic buyers and private equity firms alike; a healthy U.S. economy; and low interest rates. Competition for high-quality targets has never been more intense, especially for technology providers, they report, which means sellers are commanding high prices. It all adds up to a seller’s market. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Fortive, TA Associates, the Riverside Co., Harris Williams, Monroe Capital, Goodwin and Luminate Capital Partners’ Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital’s Sarah Bradley, Kayne Anderson Capital Advisors’ Nishita Cummings and Pelham S2K Managers’ Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women. Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

EVENTS
InIVest 2019 is being held from July 16-17 at the New York Marriott Marquis. The event brings together more than 1,500 executives from the wealth management industry.

The Women’s Connection Golf Clinic & Networking event takes place on July 17 at the Granite Links Golf Club in Quincy, Massachussets. The event is being hosted by ACG Boston.

ACG Seattle hosts the Northwest Middle Market Growth Conference at the Fairmont Olympic Hotel in Seattle on July 25.

ACG New York’s summer dealmaking conference takes place at Gurney’s Star Island Resort & Marina in Montauk, NY, July 31-Aug.1.

The Great Lakes ACG Capital Connection is being held at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.


Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market dealmaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.


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July 12th, 2019

Volkswagen invests in Ford’s self-driving car partner


Photo credit: Bloomberg News

Volkswagen AG and Ford Motor Co. will cooperate on electric and self-driving car technology, sharing costs on a global scale to take a major step forward in the industry’s disruptive transformation.

VW will invest $2.6 billion in Ford’s autonomous-car partner Argo AI in a deal that values the operation at more than $7 billion, the two manufacturers said in a joint statement in New York. This includes $1 billion in funding and VW contributing its Audi $1.6 billion Autonomous Intelligent Driving unit.

“While Ford and Volkswagen remain independent and fiercely competitive in the marketplace, teaming up and working with Argo AI on this important technology allows us to deliver unmatched capability, scale and geographic reach,” Ford Chief Executive Officer Jim Hackett said.

Unprecedented shifts facing the auto industry are forcing players to consider new partnerships and potential consolidation. VW, the world’s top automaker, offers the industry’s most ambitious roll-out of electric models, while Ford, also in the top 10, is developing advanced self-driving technology with Argo.

For VW, the Argo investment offers an opportunity to potentially catch up with Alphabet Inc.’s Waymo, and General Motors Co.’s Cruise unit. Road tests and accumulating huge amounts of data are critical for the further development of self-driving cars, and few apart from Waymo are equipped to do it alone.

“It took a while to get this deal done, but it’s because we actually sorted out a lot of the hard problems,” Bryan Salesky, Argo AI’s co-founder and CEO, said in an interview. “We have a clear line of sight to production, vehicle supply and we have clear line of sight to where we want to go to market and how.”

Besides sharing costs for the development of self-driving cars, Ford will use VW’s electric-car underpinnings that form to backbone of the most aggressive rollout of electric cars in the industry with Volkswagen spending some 30 billion euros ($34 billion). Adding more vehicles to production lines would help gain scale and save costs, and offer Ford a platform to better comply with tougher rules on carbon-dioxide emissions in Europe.

Ford will build at least one mass-market battery car in Europe starting in 2023 and deliver more than 600,000 European vehicles based on VW’s platform, dubbed MEB, over six years. A second electric model for Europe is “under discussion,” it said.

Teaming up with its U.S. peer is one of the key initiatives of VW Chief Executive Officer Herbert Diess to overhaul the German industrial giant. Both sides reiterated on Friday the tie-up does not include entering equity ties between Ford and VW.

For Ford, a deal with VW fits with CEO Jim Hackett’s $11 billion overhaul of the company, which includes exiting the slow-selling sedan market in the U.S., shifting to focus on commercial vehicles in Europe and investing in electric-truck startup Rivian Automotive Inc. Geographically, the companies complement each other, with Ford strong in the U.S. and VW a leader in Europe and China.

“Our global alliance is beginning to demonstrate even greater promise , and we are continuing to look at other areas on which we might collaborate,” VW CEO Diess said.

Bloomberg News

July 12th, 2019

Weekly wrap: Cisco, Piper Jaffray, Transom

Target Acquirer Value ($millions) Synopsis Acacia Communications Inc Cisco Systems Inc 3059.3 Cisco Systems Inc definitively agreed to merge with Acacia Communications Inc, a Maynard-based manufacturer of high-speed coherent interconnect products, for $70 in cash per share, or a total $3. 059 bil. Virgin Galactic LLC Social Capital Hedosophia Holdings Corp 1300.0 Social Capital Hedosophia Holdings Corp (SCH) definitively agreed to merge with Virgin Galactic LLC (VG), a Mojave-based provider of commercial space travel services, from Virgin Group Ltd, for a total $1.3 bil, in a stock swap reverse takeover transaction. The consideration was to consist of $300 million in cash and $1 billion in SCH common shares. Upon completion, SCH and VG shareholders were to own 49% stake and 51% interest in the merged entity, respectively. Additionally, SCH was to be renamed Virgin Galactic Holdings Inc. BioTek Instruments Inc Agilent Technologies Inc 1165.0 Agilent Technologies Inc definitively agreed to acquire BioTek Instruments Inc, a Winooski-based manufacturer of analytical laboratory instruments, for $1.165 bil. Adapthealth Holdings LLC DFB Healthcare Acquisitions Corp 510.1 DFB Healthcare Acquisitions Corp (DFB) agreed to acquire the entire share capital of Adapthealth Holdings LLC (AdaptHealth), a Phoenixville-based medical equipment and supplies merchant wholesaler, in exchange for 49 million DFB common shares valued at an estimated $510.09 million , in a stock swap reverse takeover transaction. The shares were valued based from DFB’s closing stock price of $10. 41 on 5 July 2019, the last full trading prior the announcement. Upon completion, DFB and AdaptHealth, were to own 41% and 59% respectively, and DFB will be renamed as AdaptHealth Holding Corp and remain listed on NASDAQ. Sandler O’Neill Partners LP Piper Jaffray Cos 485.0 Piper Jaffray Cos definitively agreed to merge with Sandler O’Neill Partners LP, a New York-based securities brokerage, for a total $485 million . The consideration was to consist of $350 million in cash and $135 million in restricted common shares. Isle Of Capri Casino Kansas City,Kansas City,Missouri Twin River Worldwide Holdings Inc 230.0 Twin River Worldwide Holdings Inc (Twin River) definitively agreed to acquire Isle Of Capri Casino Kansas City (Isle Kansas City) , a Kansas City-based casino operator, from Eldorado Resorts Inc. Concurrently, Twin River definitively agreed to acquire Lady Luck Casino VicksBurg. The two transactions had a combined value of $230 million . Aspen Surgical Products Inc Audax Group LP 170.0 Audax Group LP definitively agreed to acquire Aspen Surgical Products Inc, a Caledonia-based manufacturer of medical instruments, from Hill-Rom Holdings Inc, for a total $170 million , in a leveraged buyout transaction. Caliber Co Long Range Acquisition LLC 170.0 Long Range Acquisition LLC acquired the entire share capital of Caliber Co, a Westfield-based manufacturer of ammunition, from Vista Outdoor Inc, for a total $170 million . The consideration was consisted of $158 million in cash and $12 million in promissory notes. The Frederick,Brooklyn,New York Harbor Group International LLC 117.0 Harbor Group International LLC acquired The Frederick, a Brooklyn-based lessor of residential buildings and dwellings, from Heritage Equity Partners, for a total $117 million . Spitfire Pharma Inc Altimmune Inc 93.0 Altimmune Inc definitively agreed to merge with Spitfire Pharma Inc, a South San Francisco-based manufacturer of pharmaceutical preparation, for an estimated $93 million . The consideration was to consist of $5 million in common shares and up to $88 million in profit-related payments. Treehouse Foods Inc-Flagstone Foods Trail Mix Business Atlas Holdings LLC 90.0 Atlas Holdings LLC definitively agreed to acquire flagstone foods trail mix business of Treehouse Foods Inc, an Oak Brook-based manufacturer of canned fruits and vegetables, for an estimated $90 million , in a leveraged buyout transaction. Originally, in November 2018, TreeHouse was rumored to be seeking a buyer for its flagstone foods trail mix business. Artesyn Embedded Technologies Inc-Embedded Computing business SMART Global Holdings Inc 90.0 SMART Global Holdings Inc (SMART Global) acquired the Embedded Computing business of Artesyn Embedded Technologies Inc, a Boca Raton-based manufacturer of electronic components, ultimately owned by Platinum Equity LLC, for an estimated $90 million . The consideration was to consist of an estimated $80 million in cash and up to $10 million in profit-related payments. Concurrently, SMART Global acquired Inforce Computing Inc. Exton Apartment Complex,Exton,PA Morgan Properties Trust 82.0 Morgan Properties Trust acquired Exton Apartment Complex, an Exton-based lessor of residential buildings and dwellings, for a total $82 million . Virginia Sealing Products Inc-Assets & Trade Diploma PLC 80.0 Diploma PLC of the UK acquired assets & trade of Virginia Sealing Products Inc, a Prince George-based manufacturer of packing devices, for a total $80 million . The consideration consisted of $70 million in cash and up to $10 million in profit-related payments. Advantor Systems Corp Vectrus Systems Corp 44.0 Vectrus Systems Corp, a unit of Vectrus Inc, acquired Advantor Systems Corp, an Orlando-based provider of security technology solutions service, for $44 million . American Sinopan LLC Excel Earth Ltd 23.7 Excel Earth Ltd, a unit of Imperial Pacific International Holdings Ltd, agreed to acquire a 50% interest in American Sinopan LLC, intermediator, from First Sinopan International Ltd, for a total $23.653 million . Lake Point Business Center TerraCap Management LLC 17.6 TerraCap Management LLC acquired Lake Point Business Center, an Orlando-based lessor of nonresidential buildings, for a total $17. 625 million . SAVSU Technologies LLC BioLife Solutions Inc 17.3 BioLife Solutions Inc (BSI) was granted an option to acquire the remaining 56% interest, which it did not already own, in SAVSU Technologies LLC, an Albuquerque-based provider of computer systems design services, from Barson Corp, in exchange for 1.1 million common shares valued at $17.281 million . The shares were valued based on BSI’s closing stock price of $15.71 on 5 July 2019, the last full trading day prior to the announcement. First National Bank of Jackson Citizens Deposit Bank & Trust Inc,Vanceburg,Kentucky 14.8 Citizens Deposit Bank & Trust Inc,Vanceburg,Kentucky, a unit of Premier Financial Bancorp Inc, Huntington,West Virginia, definitively agreed to acquire First National Bank of Jackson, a Jackson-based commercial bank, from First National Holding Co of Jackson, for an estimated $14.8 million in cash. Inforce Computing Inc SMART Global Holdings Inc 12.0 SMART Global Holdings Inc (SMART Global) acquired Inforce Computing Inc, a Fremont-based provider of computer systems design services, for a total $12 million . Concurrently, SMART Global acquired the Embedded Computing business of Artesyn Embedded Technologies Inc. Zetta Medical Technologies LLC Agiliti Inc Agiliti Inc, a unit of VeriCenter Inc, acquired Zetta Medical Technologies LLC, a Lake Zurich-based medical equipment and supplies merchant wholesaler. Degginger Mcintosh & Associates Inc Alliant Insurance Services Inc Alliant Insurance Services Inc, a unit of Kohlberg Kravis Roberts & CoLP, acquired Degginger Mcintosh & Associates Inc, a Bellingham-based insurance agency. Terms were not disclosed. Pavonia Life Insurance Co Of Michigan Ares Insurance Solutions-Aspida Financial Ares Insurance Solutions- Aspida Financial, a unit of Ares Management Corp-Ares Insurance Solutions, acquired Pavonia Life Insurance Co Of Michigan, insurance agency, from Household Life Insurance Co Of Delaware, ultimately owned by Enstar Group Ltd. THLETE Inc Ares Outdoors LLC Ares Outdoors LLC acquired THLETE Inc, a Franklin-based sporting and recreational goods and supplies merchant wholesaler. Terms of the transaction were not disclosed. Stonehenge Insurance Solutions Inc Arthur J Gallagher & Co Arthur J Gallagher & Co acquired Stonehenge Insurance Solutions Inc, a Palm Beach Gardens-based provider of commercial insurance products and consulting services. Terms were not disclosed. RIS Insurance Services Inc AssuredPartners Inc AssuredPartners Inc, a unit of Apax Partners LP, acquired RIS Insurance Services Inc, an Anacortes-based insurance agency. Navigator Management Partners LLC Avaap USA LLC Avaap USA LLC acquired Navigator Management Partners LLC, a Columbus-based provider of management consulting services. Westlane Shopping Center Baceline Investments LLC Baceline Investments LLC acquired Westlane Shopping Center, an Indianapolis-based lessor of nonresidential buildings. Concurrently, Baceline Investments LLC acquired Cooper St Marketplace, lessor of nonresidential buildings and Tarrant Parkway, a Dallas-based lessor of nonresidential buildings. Cooper St Marketplace Baceline Investments LLC Baceline Investments LLC acquired Cooper St Marketplace, lessor of nonresidential buildings. Concurrently, Baceline Investments LLC acquired Westlane Shopping Center, an Indianapolis-based lessor of nonresidential buildings and Tarrant Parkway, a Dallas-based lessor of nonresidential buildings. Tarrant Parkway Baceline Investments LLC Baceline Investments LLC acquired Tarrant Parkway, a Dallas-based lessor of nonresidential buildings. Concurrently, Baceline Investments LLC acquired Westlane Shopping Center, an Indianapolis-based lessor of nonresidential buildings and Cooper St Marketplace, lessor of nonresidential buildings. People’s United Financial Inc-Branches(8) Bar Harbor Bank & Trust Co Bar Harbor Bank & Trust Co, a unit of Bar Harbor Bankshares, definitively agreed to acquire 8 branches of People’s United Financial Inc, a Bridgeport-based savings institution. Elanco Animal Health Inc Bayer AG Bayer AG of Germany was rumored to be planning to merge with Elanco Animal Health Inc, a Greenfield-based manufacturer of pharmaceutical preparation, from Eli Lilly & Co. The terms of the transaction were not disclosed, but according to sources close to the transaction, the value was estimated at $7.8 bil. Industrial Properties(3) Bixby Land Co Bixby Land Co acquired Industrial Properties(3), an Atlanta-based lessor of nonresidential buildings. Siege Technologies LLC Braes Capital LLC Braes Capital LLC acquired Siege Technologies LLC, a Rome-based provider of computer systems design services, from Nehemiah Security. Cleary Gull Inc Canadian Imperial Bank of Commerce,Toronto,Ontario Canadian Imperial Bank ofCommerce,Toronto,Ontario of Canada agreed to acquire Cleary Gull Inc, a million waukee-based investment bank. Terms were not disclosed. Wayin Inc Cheetah Digital Inc Cheetah Digital Inc acquired Wayin Inc, a Denver-based provider of custom computer programming services. Century 21 Adams Lawndale Commonwealth Real Estate Commonwealth Real Estate acquired Century 21 Adams Lawndale, a Belmont-based lessor of residential buildings and dwellings. Rose Orchard,San Jose,CA Drawbridge Realty Trust LLC Drawbridge Realty Trust LLC acquired Rose Orchard, a San Jose-based owner and operator of office buildings, from Shorenstein Realty Services LP. Terms were not disclosed. Convergent Energy Power Energy Capital Partners LLC Energy Capital Partners LLC acquired Convergent Energy Power, producer of crude petroleum and natural gas, in a leveraged buyout transaction. Globe Composite Solutions Ltd ESCO Technologies Inc ESCO Technologies Inc acquired Globe Composite Solutions Ltd, a Stoughton-based manufacturer of rubber products. Kmr Inc Finlink Inc Finlink Inc acquired Kmr Inc, software publisher, from Park Capital Investment Management. Todd Cable Construction LLC FirstLight Fiber Inc FirstLight Fiber Inc, a unit of Antin Infrastructure Partners SAS, acquired Todd Cable Construction LLC, a Newport-based power and communication line constructor. Terms were not disclosed. Sole Financial FleetCor Technologies Inc FleetCor Technologies Inc acquired Sole Financial, a Portland-based provider of payroll services. Rifiniti Inc FM:Systems Inc FM:Systems Inc acquired Rifiniti Inc, a Boston-based software publisher. Red Book Connect LLC Fourth Ltd Fourth Ltd of the UK, a unit of Insight Venture Partners LLC, acquired the entire share capital of Red Book Connect LLC, an Austin-based software publisher. Blackrock Inc-Community Wind South Greenbacker Renewable Energy Co LLC Greenbacker Renewable Energy Co LLC agreed to acquire an undisclosed majority ownership interest in community wind south of Blackrock Inc, a New York City-based investment bank. Ehrmann Commonwealth Dairy LLC Groupe Lactalis SA Groupe Lactalis SA of France, a unit of BSA SAS, acquired Ehrmann Commonwealth Dairy LLC, a Brattleboro-based manufacturer of dry dairy products, from Ehrmann Ag. Leaf Life Harvest Health & Recreation Inc Harvest Health & Recreation Inc acquired Leaf Life, a Casa Grande-based drug store operator. Peter A Ripper & Associates, Inc Healthcare Financial Resources Inc Healthcare Financial Resources Inc, a unit of Housatonic Equity Investors V LP, acquired Peter A Ripper & Associates, provider of financial transactions services. Airganics LLC Heavenly Rx Ltd Heavenly Rx Ltd of Canada, a unit of SOL Global Investments Corp, entered into a Letter of Intent {LoI} to acquire the entire share capital of Airganics LLC, yarn spinning million l operator. Kirkman Group Inc-Nutraceutical Business Hemptown Organics Corp Hemptown Organics Corp acquired the nutraceutical business of Kirkman Group Inc, a Lake Oswego-based manufacturer of medicinals and botanicals. SAFER Systems LLC Industrial Scientific Corp Industrial Scientific Corp, a unit of Fortive Corp, acquired SAFER Systems LLC, a Westlake Village-based reproducer of software. Psychiatric Medical Care LLC Integrated Telehealth Partners Integrated Telehealth Partners acquired Psychiatric Medical Care LLC, a Nashville-based health specialist’s office operator. Corepoint Health LLC Interoperability Bidco Inc Interoperability Bidco Inc planned to acquire the entire share capital of Corepoint Health LLC, a Frisco-based software publisher. Valence Surface Technologies Inc Investor Group An investor group, comprised of British Columbia Investment Management Corp and ATL Partners LLC acquired Valence Surface Technologies Inc, a The Woodlands-based manufacturer of aircraft parts and auxiliary equipment, from Trive Capital LLC. Matrix Composites Inc ITT Inc ITT Inc acquired Matrix Composites Inc, a Rockledge-based manufacturer of aerospace composite products, from Skaps Industries. Home Franchise Concepts LLC JM Family Enterprises Inc JM Family Enterprises Inc acquired Home Franchise Concepts LLC, an Irvine-based retailer of home improvement goods and related services, from Trilantic Capital Management LP. Kensington International Inc Keystone Partners Keystone Partners, a unit of Silver Oak Services Partners LLC, acquired Kensington International Inc, an Oak Brook-based provider of human resources and executive search consulting services. Terms were not disclosed. Greenberg Strategy Lieberman Research Worldwide Lieberman Research Worldwide, a unit of Tailwind Capital Partners LP, acquired Greenberg Strategy, an Emeryville-based provider of research and development services, in a leveraged buyout transaction. Clarus Commerce llc Marlin Equity Partners LLC Marlin Equity Partners LLC (Marlin Equity) acquired an undisclosed majority interest in Clarus Commerce LLC (Clarus), internet service provider, in a secondary buyout transaction. Originally, Clarus was acquired by Clarus Commerce LLC SPV, a special purpose vehicle formed by Falcon Investment Advisors LLC, Trivergance LLC and Landon Capital Partners LLC. Covia Holdings Corp-Lime Business,Calera,AL Mississippi Lime Co Mississippi Lime Co, a unit of HBM Holdings Co, definitively agreed to acquire lime business,Calera, AL of Covia Holdings Corp, a New Canaan-based industrial sand mine operator, ultimately owned by SCR Sibelco NV. Actuant Corp-Engineered Components & Systems Segment One Rock Capital Partners LLC One Rock Capital Partners LLC agreed to acquire engineered components & systems segment of Actuant Corp, a Menomonee Falls-based manufacturer of fluid power cylinders and actuators, in a leveraged buyout transaction. In January 2019, Actuant Corp, a Menomonee Falls-based manufacturer of fluid power cylinders and actuators, announced that it was seeking a buyer for its engineered components & systems segment. Advizr Inc Orion Advisor Services LLC Orion Advisor Services LLC acquired Advizr Inc, a New York-based provider of financial planning & wellness platform. Terms were not disclosed. LYMI Inc Permira Advisers LLP Permira Advisers LLP of the UK, a unit of Permira Advisers Holdings Ltd, planned to acquire an undisclosed majority interest in LYMI Inc, a Vernon-based women’s apparel cutting and sewing contractor, in a leveraged buyout transaction. Bolingbrook Dermatology Pinnacle Dermatology LLC Pinnacle Dermatology LLC acquired Bolingbrook Dermatology, a Bolingbrook-based physician’s office operator. Lasselle Place,Moreno Valley,California Praedium Group LLC Praedium Group LLC acquired Lasselle Place, a Moreno Valley-based lessor of residential buildings and dwellings. Valicor Environmental Services LLC Pritzker Private Capital Pritzker Private Capital definitive ly agreed to acquire Valicor Environmental Services LLC, a Monroe-based water supply system operator, in a leveraged buyout transaction. Meritra Health LLC Quad M Solutions Inc Quad M Solutions Inc signed a letter on intent {LoI} to acquire a 51% interest in Meritra Health LLC, a Westerville-based physician’s office operator. QxBranch Inc Rigetti & Co Inc Rigetti & Co Inc acquired QxBranch Inc, a Washington-based software publisher. York Risk Services Group Inc Sedgwick Claims Management Services Inc Sedgwick Claims Management Services Inc, a unit of The Carlyle Group LP, planned to acquire York Risk Services Group Inc, a Jersey City-based provider of claims adjusting services, from Onex Corp. Terms were not disclosed. Callon Petroleum Co-non core assets Sequitur Permian LLC Sequitur Permian LLC, a unit of Sequitur Energy Resources LLC, acquired non core assets of Callon Petroleum Co, a Natchez-based producer of crude petroleum and natural gas, ultimately owned by Callon Petroleum Co. Grupo Rotoplas Sab De Cv-Rotomoulding Factories(3) Tank Holding Corp Tank Holding Corp, a unit of Leonard Green & Partners LP, acquired 3 rotomoulding factories of Grupo Rotoplas Sab De Cv, an Alvaro Obregon-based manufacturer of commercial and service industry machinery. MJ Fitness Management LLC Taymax Fitness LLC Taymax Fitness LLC acquired MJ Fitness Management LLC, a Huntsville-based fitness and recreational sports center operator. Terms were not disclosed. Aspen Heights,Clemson,SC The Preiss Co The Preiss Co acquired Aspen Heights, a Clemson-based rooming and boarding houses operator. Beauty Quest Group Transom Capital Group LLC Transom Capital Group LLC acquired professional liquids division of Conair Corp (liquids division), a Stamford-based manufacturer of electric housewares, in a leveraged buyout transaction. On Completion, liquids division was renamed as Beauty Quest Group. Lady Luck Casino Vicksburg,Vicksburg,Mississippi Twin River Worldwide Holdings Inc Twin River Worldwide Holdings Inc (Twin River) definitively agreed to acquire Lady Luck Casino Vicksburg (Lucky Luck), a Vicksburg-based casino operator, from Eldorado Resorts Inc. Concurrently, Twin River, definitively agreed to acquire Isle of Capri Casino Kansas City. The two transactions had a combined value of $230 million . AM PAN Business Systems UBEO Inc UBEO Inc, a unit of Sentinel Capital Partners LLC, acquired AM PAN Business Systems, a Port Neches-based provider of computer and office machine repair and maintenance services. Terms were not disclosed. Kendall Green Energy Veolia Energy North America Holdings Inc Veolia Energy North America Holdings Inc, a unit of Veolia Environnement SA, acquired an undisclosed majority interest in Kendall Green Energy, a Cambridge-based electric power generation facility operator, from ISQ Global Infrastructure Fund LP, ultimately owned by I Squared Capital Advisors LLC. Riverwalk Apartments,Rockhill,SC West Shore LLC West Shore LLC acquired Riverwalk Apartments, a Rock Hill-based owner and operator of apartment community. Hendrick Acura,Overland Park,Kansas Wolfe Automotive Group LLC Wolfe Automotive Group LLC acquired Hendrick Acura, an Overland Park-based new car dealer. US M&A Deals Announced June 28 to July 11, 2019
July 12th, 2019

PE fundraising scorecard: Accel-KKR, Apax, New Heritage, Summit Partners

Name of Issuer Date of First Sale Total Offering Amount Blackstone Real Estate Partners Europe VI (iCapital), L.P. First Sale Yet to Occur Indefinite BlackRock Private Opportunities Fund IV (iCapital), L.P. First Sale Yet to Occur Indefinite GREC Long Street Partners LLC 6/27/2019 $17,600,000 Niagara Credit Income Fund AI, LP 8/15/2017 Indefinite Niagara Credit Income Fund AI (Tax-Exempt), LP First Sale Yet to Occur Indefinite Niagara Credit Income Fund QP, LP 8/15/2017 Indefinite Niagara Credit Income Fund QP (Tax-Exempt), LP 8/15/2017 Indefinite ASC INVESTORS II, LLC 6/27/2019 $655,580 Activant Ventures III Opportunities Fund 1, LP First Sale Yet to Occur Indefinite NHC III GCM Co-Investors, L.P. 6/26/2019 Indefinite New Heritage Capital Fund III SPV, L.P. 6/26/2019 Indefinite ZMC III, L.P. First Sale Yet to Occur $750,000,000 ZMC III PARALLEL, L.P. First Sale Yet to Occur $750,000,000 MHEG Fund 51, LP 6/7/2019 $200,000,000 C-III OZ Fund I LLC 6/28/2019 Indefinite Investment Collective III, LLC 6/27/2019 $75,000 RCP Fund XIV, LP 6/28/2019 $400,000,000 RCP Fund XIV Cayman Feeder, LP 6/28/2019 $400,000,000 TPG NewQuest Equity IV, L.P. 6/26/2019 Indefinite Nashville TN Investors QOF I LP 6/28/2019 Indefinite Savannah GA Investors QOF LP 6/28/2019 Indefinite Liftbridge Senior Living Holdings, LP 6/27/2019 $60,000,000 Whitman/Peterson Core Plus, LP 6/27/2019 $115,000,000 iCapital BREP Europe VI Offshore Access Fund, L.P. First Sale Yet to Occur Indefinite Iron Edge VC, LLC 2/12/2019 Indefinite Great Hill Equity Partners VII, L.P. 6/28/2019 $2,500,000,000 Navegar II L.P. 6/27/2019 $200,000,000 CV/PRIMARY BAYSIDE LLC 6/26/2019 Indefinite IK IX Fund No.2 SCSp First Sale Yet to Occur $3,136,925,000 IK IX Fund No. 1 SCSp First Sale Yet to Occur $3,136,925,000 Platform Ventures Opportunity Zone Fund I, LP 6/27/2019 $300,000,000 Platform Ventures Opportunity Zone Fund I A, LP 6/27/2019 $300,000,000 Medicxi III LP 6/21/2019 Indefinite Nassau Private Credit Onshore Fund LP 6/26/2019 Indefinite Nassau Private Credit Offshore Fund LP 6/26/2019 Indefinite Nassau Private Credit Master Fund LP 6/26/2019 Indefinite PV Saline Investors, LLC 6/28/2019 $850,000 PV Saline Holdings, LLC 6/28/2019 $1,000,000 CIP Capital Fund III, L.P. First Sale Yet to Occur $700,000,000 NEWPORT UNIVERSITY TOWN CENTER, LLC 6/25/2019 $7,500,000 Alan Glenn SPV II LLC 6/26/2019 $775,000 EquityZen Growth Technology Fund LLC – Series 388 7/10/2019 $270,705 EquityZen Growth Technology Fund LLC – Series 374 7/9/2019 $180,611 PE Premier EW Healthcare Partners Fund 2 Onshore Feeder LP 6/27/2019 Indefinite OrbiMed Royalties III Private Investors, LLC 6/28/2019 Indefinite OrbiMed Royalties III Private Investors Offshore, L.P. 6/28/2019 Indefinite Synova Capital Fund IV LP 6/27/2019 $462,820,000 Apollo Natural Resources Partners (Lux) III, SCSp 6/24/2019 Indefinite A10 USD (Feeder) L.P. First Sale Yet to Occur Indefinite CAZ eSports Fund, L.P. – Artist eSports Edge Portfolio 6/28/2019 Indefinite Corrum Capital Aviation Partners II, LP 6/10/2019 Indefinite LHCP Project Auto, L.P. 6/25/2019 $10,000,000 MVP LS FUND CXXI, LLC 7/3/2019 $2,000,000 MVP LS FUND CXXVII, LLC 7/4/2019 $2,000,000 MVP LS FUND CXXVIII, LLC 7/8/2019 $2,000,000 NC Flats on Front Partners, LLC 7/1/2019 $2,000,000 A10 EUR (Feeder) L.P. First Sale Yet to Occur Indefinite Apax X EUR L.P. First Sale Yet to Occur Indefinite Trill Impact (No.1) SCSp First Sale Yet to Occur Indefinite Apax X USD L.P. First Sale Yet to Occur Indefinite SEI Global Private Assets V, L.P. 6/28/2019 Indefinite SEI Global Private Assets V (P), L.P. 6/28/2019 Indefinite Summit Partners Co-Invest (Giants), L.P. First Sale Yet to Occur Indefinite Summit Partners Co-Invest (Giants-B), L.P. First Sale Yet to Occur Indefinite Private Equity Solutions SCSp 6/26/2019 Indefinite Union Lake Max Investments LLC 6/27/2019 Indefinite ACCEL-KKR CAPITAL PARTNERS CV III, LP First Sale Yet to Occur Indefinite 603 West 50th Street Fund, L.P. 6/21/2019 Indefinite NP Globe Co-Investment LP 6/24/2019 $17,000,000 Metropolitan Real Estate Partners Co-Investments Fund II-EAP M, L.P. 6/24/2019 Indefinite GEC Estis Co-Invest LLC 7/1/2019 Indefinite Metropolitan Real Estate Partners Co-Investments Fund II-EAP, L.P. 6/24/2019 Indefinite Metropolitan Real Estate Partners Co-Investments Fund II-EAP, L.P. 6/24/2019 Indefinite Aspireon Opportunities Fund, LP, Series 2: Closed-End Strategies First Sale Yet to Occur Indefinite LUCAS & RYAN, LLC 7/1/2019 $30,065,000 TRC GREAT LAKES LLC First Sale Yet to Occur Indefinite ORIGINAL HOLDINGS, LLC First Sale Yet to Occur Indefinite Landmark Pacific Partners Offshore 19C, L.P. First Sale Yet to Occur Indefinite EquityZen Growth Technology Fund LLC – Series 433 6/27/2019 $2,000,000 EquityZen Growth Technology Fund LLC – Series 407 6/24/2019 $4,000,001 EquityZen Growth Technology Fund LLC – Series 375 6/24/2019 $4,250,001 Majestic Palms Group LLC First Sale Yet to Occur $800,00 Partners Group Client Access 31, L.P. Inc. 6/25/2019 Indefinite Levine Capital Aggregation Fund I, LLC First Sale Yet to Occur $20,000,000 Valedor CP II Feeder Fund, LP 6/26/2019 Indefinite Valedor CP II Feeder Fund Blocker, LP 6/26/2019 Indefinite Private Equity Regulation D Filings (New Notices) July 05 to 11, 2019 Source: SEC Filings
July 12th, 2019

DealBook Briefing: Why Are Stocks Still Rising?

Good Friday morning. (Was this email forwarded to you? Sign up here.)

Economic fears are climbing — but so are the markets, with the S&P 500 and the Dow Jones industrial average both setting records yesterday. As Stephen Grocer of the NYT explains, it’s because investors have nowhere else to go.

Investors should be worried. The continuing U.S.-China trade war, a slowing global economy and simmering geopolitical tensions are all huge causes for concern. The Fed is open to cutting interest rates because things look so bad.

But they feel that there is no alternative — TINA, in Wall Street speak — to investing in stocks. Lower interest rates mean that borrowing costs will be low, which means that investing in bonds is less attractive than in equities.

It’s not as if investors are popping champagne. “They are very aware of the signs that an economic slowdown is taking place,” JC O’Hara, the chief market technician at MKM Partners, told Mr. Grocer. “But in a TINA market, where are they going to put their money?”

Still, the rally could continue for a while. Research by Audrey Kaplan of the Wells Fargo Investment Institute shows that stock-market rallies after Fed rate cuts tended to last at least 12 months after the central bank acted.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in Sun Valley, Idaho, and Michael J. de la Merced and Jamie Condliffe in London.

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At a meeting at the White House yesterday, 200 people gathered to discuss the problems facing social media. Or one problem, at least: the alleged censorship of free speech.

In attendance were some Mr. Trump’s most ardent digital warriors, Katie Rogers of the NYT writes, including right-wing voices like James O’Keefe, Ali Alexander and Bill Mitchell. Not on the list: anyone from Twitter, Facebook or Google.

Mr. Trump congratulated them for “bypassing the corrupt establishment” and traditional media. Referring to the content that they produce, he said that “some of you guys are out there,” adding, “I mean, it’s genius, but it’s bad.”

“We have terrible bias,” Mr. Trump told the audience, referring to social media companies whom he has accused of censoring conservative views. “Big Tech must not censor the voices of the American people.”

• He added that he is directing his administration “to explore all regulatory and legislative solutions to protect free speech and the free speech rights of all Americans.”

• And he congratulated Senator Josh Hawley, Republican of Missouri, for working on “very important legislation.” Mr. Hawley has proposed that tech companies shouldn’t receive legal immunity for user content if they can’t prove they’re politically neutral.

Technology companies deny accusations of bias, and to date there has been no solid evidence that backs up Mr. Trump’s view.

“Thursday’s summit was a public embrace of a group” that Mr. Trump “thinks are powerful allies,” Charlie Warzel of the NYT opinion page writes. “The summit suggests that 2016’s meme army was just proof of concept for an information war in 2020.”

The e-commerce giant said yesterday that it will spend $700 million to retrain about a third of its American workers to do more high-tech tasks, Ben Casselman and Adam Satariano of the NYT write.

• It would be one of the world’s largest employee-retraining efforts, applying to about 100,000 workers — from corporate employees to warehouse laborers — by 2025.

• The hope is to “move a large swath of workers up one or two rungs on the skills ladder, turning warehouse floor workers into IT technicians and low-level coders into data scientists.”

“With unemployment low and workers scarce, companies like Amazon feel pressure to look internally to fill their labor needs,” Mr. Casselman and Mr. Satariano write.

This is “a large-scale experiment in whether companies can remake their existing work forces to fit a fast-changing technological world,” Mr. Casselman and Mr. Satariano write. So far, other government and corporate attempts have largely flopped.

Amazon’s effort could help answer a big question, Mr. Casselman and Mr. Satariano write: “Will automation be a solution for the great challenges of the 21st-century economy — low wages, rising inequality and anemic overall growth — or make those problems worse?”

Business executives and other frequent American visitors to China are being detained by Chinese officials more frequently, the NYT writes, revealing that an escalation in tensions between Washington and Beijing over their trade fight is having wider consequences.

• A Chinese-American executive at Koch Industries was told by Chinese authorities that he couldn’t leave the vicinity of his hotel room in southern China, the NYT reports, citing unnamed sources. He was detained and interrogated for days — until the State Department intervened.

• One American industry group recently told its members that it was developing a contingency plan for use if one of its offices was raided or its servers seized.

• The increase in detentions escalated after Canadian officials arrested the C.F.O. of Huawei at the behest of American officials late last year.

• It’s unclear how big the problem is — in part because companies may not speak publicly about the issue because they could face punishment in China’s politicized courts, boycotts from the state-run news media and more.

• “The Chinese government has upped the ante,” James Zimmerman, a partner in the Beijing office of the law firm Perkins Coie, told the NYT. The aim, he added, was to “send a message to the Trump administration that they can engage in hostage diplomacy if push comes to shove.”

The countries still intend to tax large technology companies, despite the Trump administration’s plans to investigate whether that could amount to an unfair singling out of American businesses.

• French lawmakers voted yesterday to impose a so-called digital tax of 3 percent on the revenue companies earn from providing digital services to French users.

• British leaders also unveiled draft legislation yesterday that outlines a similar tax, of 2 percent.

The Trump administration is examining whether the French plan counts as an unfair trade practice that should be punished with retaliatory tariffs.

But it’s also scrambling to form an international agreement, Jim Tankersley and Alan Rappeport of the NYT write:

• “Administration officials have tried to shape an effort being led by the Organization for Economic Cooperation and Development to broker an international system for taxing digital profits.”

• Mr. Tankersley and Mr. Rappeport add that the administration is pushing the Senate to vote next week on long-foundering updates to international tax treaties, “which could demonstrate to allies that it is serious about leading the effort to broker a digital armistice.”

Reckitt Benckiser agreed yesterday to pay a $1.4 billion settlement over federal investigations into the sales of an opioid treatment. It was the biggest payout yet in the opioid crisis, and Hannah Kuchler of the FT writes that other pharmaceutical companies could face big bills, too.

Reckitt Benckiser was under investigation for sales of Suboxone, which isn’t an opioid but a drug used to treat opioid addiction, by a now-former subsidiary. Shares in the company rose yesterday despite the fine, as investors welcomed clarity on its legal outlook.

Other drug makers have paid far smaller amounts. Insys, which makes a fentanyl-based spray, reached a $225 million settlement last month. And Purdue Pharma, the creator of OxyContin, has paid out over $800 million in the past decade.

Pharmaceutical companies argue that they’re not responsible for the crisis, and some experts say there’s no clear line of responsibility.

But all bets are off in October, when a huge case against 22 opioid manufacturers, distributors and pharmacies goes to trial. New details on how those companies operated could come out, spurring them to consider sweeping settlements to avoid further legal headaches.

The president took to Twitter yesterday to air his views on cryptocurrency, and in particular Facebook’s Libra project:

• “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he wrote.

• “Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” he added. “If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks.”

The attack follows criticism from the Fed chairman, Jay Powell, earlier this week, who said that “Libra raises a lot of serious concerns,” including the topics of privacy, money laundering, consumer protection and financial stability.

It also came as the president attacked Facebook and other tech companies as being biased against conservative viewpoints at the White House’s social media summit.

With the Fed, Mr. Trump and U.S. lawmakers piling on Libra, it will be interesting to see if the administration moves to crack down on the company’s project, or cryptocurrencies more broadly.

The consulting firm Accenture named Julie Sweet as its C.E.O.

Eric Lindblad is retiring as the head of Boeing’s 737 plane business, and will be replaced by Mark Jenks.

Bjorn Kjos will step down as C.E.O. of Norwegian Air.

The N.B.A. hired Kate Jhaveri, the head of marketing for Amazon’s Twitch streaming service, as its chief marketing officer.

Ryanair’s C.O.O., Peter Bellew, will leave at the end of the year.

Deals

• Negotiations to complete T-Mobile’s purchase of Sprint are reportedly bogged down over conditions for the sale of some assets to Dish Network. (WSJ)

• Anadarko scheduled a shareholder vote on its sale to Occidental Petroleum for next month. (Reuters)

• Postmates is said to have considered selling itself to rivals like DoorDash and Uber Eats. (Recode)

• Volkswagen has reportedly agreed to invest $2.6 billion into Ford Motor’s self-driving car division. (WSJ)

• J. Crew is said to be planning an I.P.O. for its Madewell clothing business. (Reuters)

Jeffrey Epstein

• The financier has offered up his Manhattan mansion and private jet as collateral for bail, in exchange for being granted house arrest instead of jail. (NYT)

• Mr. Epstein had to register as a sex offender in New York and Florida — but not in New Mexico, where he owns a huge ranch. (NYT)

• The scandal has also focused attention on Mr. Epstein’s longtime associate, the British socialite Ghislaine Maxwell. (WSJ)

Politics and policy

• The Fed chairman, Jay Powell, warned of “unthinkable harm” if the White House and Congress fail to raise the debt ceiling. (Hill)

• President Trump is considering price controls for prescription drugs, even as he faced setbacks on two other efforts to cap the cost of treatments. (NYT)

• Mr. Trump unexpectedly abandoned his effort to add a citizenship question to the 2020 census. (NYT)

• The White House reportedly convened top officials yesterday to end infighting over 5G policy. (Axios)

• Congressional legislation could put new limits on the use of anonymous shell companies. (DealBook)

Tech

• Huawei claims to have increased first-half revenue despite a U.S. ban on its ability to purchase American components. The rest of 2019 could be a different story. (SCMP)

• Google confirmed that contractors listen to audio recordings of users’ interactions with its smart speaker devices. (WSJ)

• YouTube is giving its creators new ways to make money. (TechCrunch)

• British Airways’ $230 million fine over a data breach is good news for cybersecurity companies, which are enjoying a rush of interest off the news. (FT)

• The Japanese cryptocurrency exchange Bitpoint was hacked, losing about $32 million worth of digital tokens. (Bloomberg)

Best of the rest

• California’s political leaders have set up a fund to help compensate victims for losses from fires started by utilities’ equipment, in an effort to shore up investor confidence in the companies. (NYT)

• Harvey Weinstein’s legal team has fallen apart. Again. (Daily Beast)

• “How China can create its own Goldman Sachs.” (Bloomberg Opinion)

• A poker-playing A.I. system can now beat the world’s top humans at multiplayer no-limit Texas Hold ’Em. (NYT)

Thanks for reading! We’ll see you next week.

You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

July 12th, 2019 July 12th, 2019 July 12th, 2019