BLPA’s Rearview Mirror: $542m to Spend

October 26, 2014

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Source:  thewrangleronline.com
Source: thewrangleronline.com, Creative Commons

We’re hoping to be able to take a breath, after the down drafts we’ve seen in the market. Historically, we have seen some upward movement in the stock indices in November and December. M&A was fairly diverse this week, with a heavy concentration in e-commerce.

When we reviewed private placements this week, there were some huge capital raises: $542m for Magic Leap, $350m for Koudai (China), and $185m for Mozido. I hate to be the skeptic, but I have never seen a company be successful in the aftermath of huge capital raises. Frothy market out in the Left Coast. Inevitably, these huge capital raises lead to a lack of focus with some degree of wastefulness. I hope to be proven wrong.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

Are you feeling any whiplash from the market? The S&P 500 low for the year was October 15th; the high for the year was September 18th. Last week, stocks traded below the 200-day moving average for the first time in two years. This week, we’re back above the 200 day moving average. Scott Minerd, Chief Investment Officer at Guggenheim Partners summed it up: “Last week’s investment roller coaster was something we had been expecting—U.S. stocks delivered their usual bout of seasonal volatility right on cue[2].”   November and December tend to be strong months on the Dow, historically showing growth of between one and two percent.

The Dow blue chips are taking it on the chin: AT&T, Coca-Cola, IBM, Wal-Mart and GE are all stagnant to declining. AT&T and IBM, in particular, generated news. The formula of ditching hardware and selling services and software is no longer working. McDonald’s is retreating on all fronts. As a result of all this dismal growth in large caps, the Dow is lagging the market.

McDonald’s (MCD: NYSE)in particular is an ugly sight, with earnings below expectations, showing declines in all segments, all geographies. Comparable store sales declined 3.3 percent from a decline in customer traffic. Revenues were $6.98b as opposed to $7.32b YOY, with earnings of $1.1b as opposed to 1.5b. Ouch!

Yahoo!, (YHOO: Nasdaq) announced flatfish revenues of $1.15b and Non-Gaap earnings of $0.52 per share as opposed to $0.34 per share. The Company particularly stressed its growth in mobile advertising to $200m per year.

IPOs[3]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions are from the S-1 filing.

Proteon Therapeutics (PRTO: Nasdaq) in Waltham, Massachusetts, sold 6.1m shares at $10 per share, raising $61m at a valuation of $140m. The stock closed the week at $10.00 per share.

  • We are a late-stage biopharmaceutical company focused on the development of novel, first-in-class pharmaceuticals to address the needs of patients with renal and vascular disease. Our product candidate, PRT-201, is a recombinant human elastase that we are developing to reduce vascular access failure in patients with chronic kidney disease undergoing or preparing for hemodialysis, a lifesaving treatment that cannot be conducted without a functioning vascular access. We believe the data from our completed Phase 2 trial of PRT-201 in patients undergoing creation of an arteriovenous fistula, or AVF, support that a one-time, local application of PRT-201 during AVF surgical placement reduces AVF failure, thereby improving patient outcomes and reducing the burden on patients and the healthcare system.

France

DBV Technologies (DBVT: Nasdaq) sold 4.3m shares at $21.64 per share, raising $93m at a valuation of $399m. The stock closed the week at $27 per share.

  • We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin. Our therapeutic approach is based on epicutaneous immunotherapy, or EPIT, our proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin. We have generated significant data demonstrating that Viaskin’s mechanism of action is novel and differentiated, as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, that capture the antigen and migrate to the lymph node in order to activate the immune system without passage of the antigen into the bloodstream. We are advancing this unique technology to treat patients, including infants and children, suffering from severe food allergies, for whom safety is paramount, since the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such an anaphylactic shock.

Mergers & Acquisitions[4]

Click on the highlighted text for more deal information.

E-Commerce

E-commerce services provider, Digital River (DRIV: Nasdaq), based in Minneapolis, is being acquired by Siris Capital Group for $840m.

Olson, a Minneapolis-based integrated marketing technology and digital solutions provider, is being acquired by ICF International for $295m.

St. Louis-based ShipWorks, a multi-carrier shipping tool used by online merchants, is being acquired by Stamps.com for $22m.

Neighborhood information site, Walk Score is being acquired by Redfin, the online real estate brokerage firm.

RightSignature, an online electronic signature company, is being acquired by Citrix Systems.

Restaurant-Kritik, a Hamburg, Germany-based restaurant review company, is being acquired by Yelp.

Security

Perimeter Internetworking Corp, also known as SilverSky and based in New York, is being acquired by BAE Systems for $232m. SilverSky is a provider of cloud security solutions.

Nexgate, a pioneer in security and compliance solutions for social media communication channels, is being acquired for $35m by Proofpoint (PFPT: Nasdaq), a leading security-as-a-service provider.

Software

Firebase, which helps you build real-time, collaborative apps with the Firebase API, is being acquired by Google.

IT/Telecom Services

Westower, a telecommunications services firm, focusing on construction and maintenance of communications infrastructure related to wireless networks throughout the United States, is being acquired by Mastec Inc., an infrastructure construction company, for $199m.

San Francisco-based BEAR Data Solutions, which provides IT infrastructure solutions & services, is being acquired by Datalink for $18m.

Intergen, an IT services firm, is being acquired by Empired, an Australian IT services firm, for 19m NZD.

Entertainment

CinemaWell.com, a service for watching movies or creating videos, is being acquired by Facebook for $99m. Today CinemaWell.com is showcasing Russian and Polish movies.

Finance

Worldwide Payment Systems, a provider of international payment processing, is being acquired by Onyx Payments, a payment processor for hotels and travel distributors.

Energy

ESCO Energy Services Company, a leader in energy efficiency upgrades and lighting retrofit projects, is being acquired by ForceField Energy (FNRG: Nasdaq).

Private Placements[5]

MultiMedia/Technology

Dania Beach, Florida-based Magic Leap, creators of a Dynamic Digitized Light Field Signal(TM), raised a $542m Series B round.

PLAYSTUDIOS, an audio production facility, raised a $20m Series C round.

Software/Tools

Mirantis, a pure play OpenStack company, a $100m Series B round. The valuation is said to be around $800m.

Benu Networks, the Billerica-based provider of networking and software solutions for network operators deploying Wi-Fi and Cloud services, raised a $28m Series C round.

Snowflake Computing, which provides a data warehouse solution in the cloud, raised $26m Series B round.

Urban Airship, a mobile marketing company which provides tools to app developers to increase customer engagement with push notifications and other attributes, raised a $12m Series D round.

Zignal Labs, which designs a real-time data analysis, decision-making platform, raised an $11m Series B round. The Company is based in Washington, D.C. and San Francisco.

Finance

Austin-based Mozido, a mobile payments platform, raised a $185m Series B round.

Bitnet, a digital payments platform company that enables the use of bitcoin in payments, raised a $14m Series A round.

Miami-based Technisys, which provides cyberbank solutions to Latin American countries, raised a $13m Series B round that included Intel Capital.

Orchard Platform, a lending platform serving institutional investors, raised $12m Series A round.

Recurly, a subscription billing and recurring billing management company, raised a $12m Series B round.

Healthcare

Phreesia, a point of service platform for data entry and collections in the healthcare industry, raised a $30m Series E round.

China

Koudai, a mobile shopping platform based in Beijing, raised $350m.

Beijing housekeeping services app maker, Ayibang. raised a $10m Series B round.

Philippines

51Talk, a Philippine-based ESL company targeting China, raised a $55m Series C round.

Indonesia

Indonesian marketplace, Tokopedia, raised a $100m Series E round.

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Pug tuxedo
Souce: Pinterest, Creative Commons

With the crisp weather, the trees are into the last half of the season, shedding all their leaves. The colors are more brown and yellow than red and orange. It’s also getting mighty close to that ghouling time, with Halloween parties galore. The neighborhood children expect, with eager anticipation, the Pugz in costume. True to form, Abby will be the princess, Pierre is the devil and Max is the gentleman.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

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Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

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Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

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We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

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This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

 

[1] WSJ Morning Moneybeat

[2] Guggenheim Partners, October 23. 2014

[3]Renaissance Capital

[4] TechCrunch and company websites

[5] TechCrunch and company websites