Rearview Mirror: The Week Ending February 23rd, 2014

The Market, IPOs, Mergers & Acquisitions, Private Placements

What’s Happenin’?

Week Ending February 23, 2014

This is the week that evaporated—literally.  We went headfirst into our audits, answering document requests and other questions.  And then Zap! @#%&* the flu-or something equivalent hit.  Two days disappeared into nothingness.  Please pass the Mucinex!

Ukraine Flying
Ukraine Flag

More important, the situation in the Ukraine seems to be stabilizing with the “good guys” coming out on top.  We are praying for a peaceful transition, and the lack of Russian intervention.  Everyone in the country knows the stakes and the risks, and appear to be working towards a peaceful transition.  We were impressed at the lack of looting at the presidential palace—which would have provided a tidy excuse for Russian intervention.  What a great payoff!

The Market/Earnings[1]

Click on the Company Name for the earnings announcement, and the Company Symbol for the stock chart.

We in the “February offensive,” where stocks advance in the face of disappointing economic news.  Quarterly sales are up 1.1 percent and earnings are up 9.6 percent.  Wring out those inefficiencies.

Walmart (WMT:  NYSE) announced flat sales, at $129.7b, and earnings of $4.4b, which were down 21 percent.  Weather was the explanation.  200 stores had been temporarily shuttered.  Walmart is now focusing on smaller format stores, for a quick “in and out,” and more on-line sales.  If they’re trying to copy Amazon, don’t they know that you don’t win by following someone else’s formula?

Tesla Motors (TSLA:  Nasdaq) had another super quarter.  Vroom, vroom!  Sales were $615m vs. $306m yoy and earnings of 33 cents vs. 12 cents yoy.  6,892 cars were sold, and believe it or not, Tesla is “the most beloved car” in America.

Meanwhile. Bitcoin and its exchange, Mt. Gox, are having technical issues, with people concerned about having access to their Bitcoin.

IPOs[2]

Click on the Company Name for the S-1 filing and the Company Symbol for the stock chart.

No IPOs this week, but lots of filing and rumors of filings.  Grubhub, and King Digital Entertainment, the corporate parent of Candy  Crush Saga, have filed for an IPO, and Starwood Capital is rumored to be filing.

Mergers & Acquisitions[3]

Click on the highlighted phrase for the Company’s M&A announcement. 

Xora, Inc., a cloud based leader in mobile workforce management is being acquired by ClickSoftware Technologies, a leading provider of automated mobile workforce management and optimization solutions for the service industry, for $15m.

On-line bank Simple is being acquired by Spanish financial services group BBVA for $117m.

TreoSolutions, a leading provider of data analytics and business solutions to healthcare payers and providers, acquired by 3M.

DAX Technologies, a leading provider of Customer Experience Management (“CEM”) software is being acquired by Spirent Communications for $37m.  The CEM software enables wireless and mobile service providers to understand and quantify services as experienced by their users.  Spirent is a communications technology company, based in London.  DAX Technologies is based in Matawan, New Jersey.

Other transactions in the works are:

1) The sale of family-owned Russell Stover, the family owned candy business, for $1b, and 2) Safeway has announced that they are holding “talks.”

Apps

The big news was Facebook’s acquisition of WhatsApp for $19b.  The companies do seem to be odd bedfellows.  FB has shown itself to be extraordinarily mercenary and commercial and has violated its users privacy more than a few times.  WhatsApp’s founder,  Jan Koum is known for being hyper-focused on privacy and opposed to advertising on his product.  Koum knows first hand about government surveillance, having lived in the Ukraine with government surveillance until he was 16 years old, when he came to the United States.  The app was developed as an easy way to communicate with his family back home.

Israeli Security Companies

Israeli startup SlickLogin is being acquired by Google.  Truly an acqui-hire, as the product development began in August, and the company was formed in December.

Private Placements[3]

Click on the Company name of the website or deal information.

Apps

San  Luis Obispo-based MindBody raises $60m round at a $450m valuation.  MindBody is an OpenTable-like scheduling service and saleforce.com-like CRM for spas and health clubs.

Duolingo, a free language education app through your iPhone and Android mobile device, raised a $20m Series C round.

Postmates, an app-based local delivery service, raised $16m Series B round.

ClubLocal, a type of “Angie’s List” raised an $11m round.  Performed through an app, “book licensed and insured local services at pre-negotiated prices in SF [sic] / Bay Area.”  Groupon was the lead investor.

Side.Cr, a shared ride service, raised $10m.  Sidecar allows the customer to set the price, choose the driver and car, with the fastest access.

Financial Services

ZenPayroll, a modern version of ADP, raised a $20m Series A round.  Zen Payroll is accessible from any web-enabled device.

Kapitall, a SoHo based brokerage firm, raised $13m.  Kapitall is a stock trading site that uses techniques borrowed from the world of video games.  The goal is to make investing seem approachable.

Security

Ionic Security, developer of the Ionic Fusion Platform, a distributed data security platform, raised $25.5m Series B round.  The Company is in quasi stealth mode, with only a home page and a “contact” form on the web.  Ionic Security is Atlanta-based.  It’s our experience that companies in the South tend to be more restrictive with their information.

 

Cylance, a novel cyber security company, raised a $20m Series B round.  Cylance uses proven algorithmic science techniques of other industries into highly predictive mathematical models for better decision making in cyber security.

Software Applications

Carlsbad-based, MaintenanceNet, a leading provider of warranty and maintenance contact management services and data-driven lead generation, raised a $12m round.  Pivotal to the service is MaintenanceNet’s has a cloud-based service contract management platform.

Foods

Hampton Creek Foods, which produces egg-free alternatives for products like mayonnaise and cookie dough, raised a $23m Series B round.  Investors include Li Ka-shing’s Horizons Ventures.

Medical

British-based, GC Aesthetics, (“GCA”) raised a $60m round. GCA manufactures silicon breast implants, and uses the brands Nagor and Eurosilicone.

Learning

Wisconsin Rapids-based Renaissance Learning raised $40m from Google Ventures at a valuation of about $1 billion.  Renaissance Learning products help students accelerate their learn faster and teachers teach more effectively.

Canada

Toronto-based TutorGroup, the premier online education platform and largest English-language learning institution in the world, raised a $100m Series B round.  The principal target markets are China, Taiwan and Asia, but also North and South America.  Investors include Alibaba.  The TutorGroup is now launching a scholarship program for students in the United States and Singapore to learn Chinese.

China/Malyasia

Secret Recipe, a Malaysia-based chain restaurant, raised a $30.7m round from China conglomerate, the Fosun Group.  Secret Recipe is expanding into China.

Berlin

Berlin-based curated men’s shopping service, Outfittery raises 13m EUR round.

Keep safe, keep warm.

Margaret Johns

Founder & Managing Director

We love to hear your opinions and comments at mjohns@bluelakepartners.com.

If you find this newsletter informative and interesting, please share.

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.

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

This newsletter is 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.


[2] WSJ Moneybeat, Feb 10-14, 2014

[3] Certain information from Renaissance Capital, in addition to the SEC, nasdaq.com, and other sources.

[4] TechCrunch, Company websites and other news media.

[5] TechCrunch, Company websites, other news media.

Image Source:  Ukraine Flag, Skharkirov on Flickr, 2007.