Rearview Mirror: Week Ending March 9th, 2014

The Market, IPOs, Mergers & Acquisitions, Private Placements

What’s Happenin’?

Week Ending March 9th, 2014

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Source:  Wikipedia
Source: Wikipedia

You heard it here first:  The leading indications of a Spring thaw are here.    The ground is peeking through along the pug walkways.  Can it be?  Daylight savings time this weekend Springs forwards.

The Market/Earnings[1]

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

“All bull markets are born in pessimism, grow in skepticism and die in euphoria.” –Chen Zhao, BCAResearch, Montreal, Canada.

Again, lots of talk about the Lord giveth and the Lord taketh.  Ukraine, and Crimea’s “vote” to join Russia are front and center [along with the missing Malaysian airliner].  For these reasons, Monday experienced a “short term” flight to safety in the markets.

People were musing about the jobless reports:  If its good, it’s good.  If it’s bad, it’s because of the weather.  175,000 workers were added to the payroll and the jobless rate increased to 6.7 percent.  Which was interpreted as good news:  The jobless rate was higher because more people are looking for work.  Or maybe you might do as an out-of-work Londonderry resident is doing:  Find employment by running for the office of Town Clerk.  Creative.

Canadian Flexcoin, a Bitcoin exchange, has gone under.  Yet another.  This time, approximately $660,000 was stolen.  A few fortunate Flexcoin customers had their Bitcoin in “cold storage” disconnected from the internet.  Their holdings are safe.

Cerberus Management has agreed to buy Safeway (SWY:  NYSE) for $9.4 billion, and will be merging it with Albertsons.  Which means West Coast residents will have one grocer.  Safeway was last trading at $38.60 per share, having traded as low as $22 per share over the past year.  Cerberus Management, you may recollect, was the august firm behind the Chrysler buyout in 2007.  Although the Cerberus loss on the Chrysler deal was estimated only to be 10 percent at the end of the day.  Saved by the sale of Chrysler’s finance arm to TD Bank.

The earnings reports of interest were retailers:  Staples and RadioShack.  It’s not a good time to be in bricks and mortar.

Staples (SPLS:  Nasdaq) will be closing 225 stores as fourth quarter sales dropped 10 percent to $5.9b, and “adjusted” earnings dropped 28 percent to $212m or $0.33 per share.  The stock dropped from $13.50 to $11.50.  Thunk!  But, please don’t close my local store!

Radio Shack (RSH:  NYSE) announced that it will be closing 1,100 stores,  Net sales declined to $935m from $1,171m YOY, and accompanied by a net loss of $191.4m or $1.90 per share as opposed to a net loss of $63m YOY.  The stock dropped from $2.70 per share to $2.15 per share.

IPOs[2]

Two pharmaceutical IPOs and one marketing IPO:

Marketing

Coupons.com (COUP:  Nasdaq) raised $168m at $16.00 per share at a valuation of $1.16b.  The stock closed the week at $30 per share.  Coupons.com operates a digital promotion platform, with over 2,000 brands from more than 700 consumer goods companies.

 Pharmaceutical

Aquinox Pharmaceuticals (AQXP:  Nasdaq) sold 4.2m shares at $11.00 per share, raising $46.2m at a valuation of $105m.   The stock closed the week at $11.95 per share.  Aquinox is a clinical-stage pharmaceutical company developing novel drug candidates to treat inflammation and cancer.

Recro Pharma (REPH:  Nasdaq) sold 3.8m shares at $8.00 per share at a valuation of $43m.  The stock closed the week at $8.30 per share.  Recro Pharma is a clinical stage specialty pharmaceutical company developing non-opioid therapeutics for the treatment of pain, initially in the post-operative setting.

Mergers & Acquisitions[3]

(10 transactions noted)

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

Large company acquires small company:

FreeWheel, a video ad content acquired by Comcast for $320m.  FreeWheel gives its customers the technology and services needed to manage advertising and operations across a multiplicity of devices.

Basis Science, the smart watch maker funded on Kickstarter, is being acquired by Intel for $100m

Content creation platform, CloudPress, created by three University of Washington graduates, is being acquired by News Corp.  The Company was created in January 2013 in Cairo to start CloudPress as part of Flat6Labs, a tech accelerator based in the Middle East. CloudPress lets people create cookbooks, buying guides, how-to guides.  The service will be shut down and the founders will join News Corp. in New York City.

Please tell me what News Corp. knows about small businesses?

Software

Zite was acquired from CNN by Flipboard for $60m.  This is being viewed as a way to squash a competitor.  CNN and Flipboard are forming an advertising partnership, the Zite recommendation technology will be added into Flipboard, and most of the Zite team will join Flipboard.

Vizify acquired by Yahoo!  Vizify allows one to convey information in a visual context.  If you see a demo, you’ll want to sign up.  But alas, no longer.  Presumably Yahoo! will be rolling out this service at some point.

App Acquisitions

Apartments.com acquired by CoStar Group for $585m.  CoStar Group is a commercial real estate information company and somewhat recent IPO, now valued at $5.8b with revenues of $350m.

Glad to Have You acquired  by HomeAwayGlad to Have You is a mobile app for vacationers and homeowners.

Echo Nest acquired by Spotify.  Echo Nest is the industry’s leading music intelligence company, providing developers with the deepest understanding of music content and music fans.

Education

Sky Software, which provides cloud solutions to higher education in the Asia Pacific, is being acquired by the Tribal Group for 21m AUD  software.  Tribal Group is based in Bristol, England, and is a global provider of products and services to the international education, training and learning markets.

Korea

Illinois-based Semblex acquired by Korea-based manufacturer Jinhap for $27m.  Semblex is a manufacturer of fasteners and cold-headed components for the automotive, commercial and distribution markets.

Private Placements[3]

(14 transactions noted that were also over $10m)

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

Software/Systems

Electronic signature platform, DocuSign, raised  $85m to accelerate development of a digital transaction management platform.  The courts have validated the legality of electronic signatures.  Currently, it is my go-to method of signing and dating documents, though I use a much simpler method.

Pleasanton, California-based ServiceMax raised a $71m Series E round to expand its field service solution products.  Veeva Systems, a company that went public last year, is the comparable.  ServiceMax is used by GE, Bombardier, Kodak, Canon and over 300 other customers.

DigitalOcean, which provides “simple” cloud hosting for developers raised a $37m Series A round.

Los Angeles-based Machinima, a next generation entertainment network for gamers, raised an $18m round.

New York-based, Lotame, known for its data management platform (DMP) raised $15m.

CloudBees, an Enterprise Platform as a Service (PaaS) for Java applications, raised an $11m round, led by Verizon Ventures.

Media

Menlo Park-based GuideSpark, which provides customized videos for employee communication on all HR topics, raised  $15m.

On-line business news site, Business Insider, raised a  $12m round led by Jeff Bezos.

Slyce, a visual search platform focused on the retail environment, raised an $11m Series A round.

Canary, a provider of stand-alone $199 home security systems consisting of a camera and sensors, raised a $10m Series A  round.  Currently, the systems only contacts the home/apartment owner if an intrusion is detected; the ability to call the police is in development.

Finance

A high tech pawn shop or “personal asset lender”, borro out of New York City, raised $112m, principally from Victory Park Capital, which is based in Chicago.

On-line technology-based business lender in New York City, OnDeck, raised $77m.  The algorithm decides if you will get your loan.

Retail

Boston-based Wayfair, an online retailer of home furnishings and decor, raised a $157m Series B round.

Auction.com, an online marketplace where users can sell and buy real estate in an auction setting, raised $50m from Google Capital at a valuation of $1.2b  marketplace.

Medical

Billerica-based RainDance Technologies, an innovative genomic tools company, raised $16m Series E from GE Ventures.

UK

UK-based private business information service DueDil raised a $17m Series B round.

3sun, a specialty provider of hydraulic, control and instrumentation products and services to the international oil and gas industries, raised 10m GBP.

Have a great week, now that we have “sprung” forward.

Margaret Johns

Founder & Managing Director

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.


[1] WSJ Moneybeat, Feb 24-28, 2014

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

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

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