Good Thursday Morning,
Daylight – Tech strikes fear in the heart of Banks and Boats – Not exactly Silicon Valley bank, but The Central Bank of Ireland added an unexpected company to its roster of digital payment providers – Facebook Payments International Limited. The license it granted authorized Facebook to provide basic financial services, such as electronic money transfers, to all citizens of the EU. Amazon’s PayPal-like payments service grew 100 percent in 2016; Banks of Amazon, Google or Facebook coming your way. Short-term equivalent of small piranhas, nibbling away at parts of a bank’s services, but in the longer-term, most banks will fold back into commercial and business lending, where they can actually make money and a difference.
Economics – What’s Not Cooking – The boat industry is suffering, still down by more than 20 percent from its pre-recession highs while homes, cars and even timeshares (fractional ownership of a condo in Coconut Grove Miami is still a timeshare) are all in striking distance of taking over the highest of historical highs.
Live Rounds – Stock market just yesterday booked the longest streak of closing highs in 25 years, which usually sends the boat and yacht market sky high, but the big boat manufacturers say their industry has caught a disease called Millennial sailor malaise, which nobody in their 20s or 30s have any interest of plopping down $30 or $40 grand for a boat. Also, two boat apps, one being We Are on a Boat, match people who would like to be on a boat with people who are willing to share their boat, Monkey Business. The other app, Getmyboat, is a boat rental market place anywhere in the world. Boat manufactures will become boat clubs, crosses between Harley and a Florida timeshare – whole new industry. High margin on the sunglasses.
M&A – PayPal Holdings agreed to acquire TIO Networks for $233 million.
Culture – I’m starting to think Verizon and Yahoo are two purple hull peas in a pod – Yahoo is going to take a 300-million-dollar haircut on the sale of its core internet business to Verizon. The original deal carried a $4.8 billion price tag, so they are now rounding it off to a pricey $4.5 billion. By the way, last night I received some long winded, condescending letter from Yahoo about another breach, but by the same hackers.
Hot – Meanwhile, While You were Sleeping – T-Mobile outflanks Verizon with strong customer gains. T-Mobile U.S. outpaced larger rivals in the final three months of last year. The company added 933,000 “postpaid” phone subscribers, who are billed on a recurring monthly basis, in the fourth quarter. The results affirmed T-Mobile’s enduring success in stealing customers from larger U.S. telecom companies by slashing prices and offering eye-catching promotions. With Trump and a new Secretary of Treasury in the White House, I’m buying T-Mobile and punting on Yahoo. Today.
Looking for a Heart of Gold – NetApp shows scale and stock jumps nine percent after hours on Wednesday with strong earnings and an upbeat outlook – following the data storage company’s reported net income of $146 million, or 52 cents a share. The stock has outperformed the S&P 500 SPX +0.50 percent, which is up nearly eight percent in the past three months and 26 percent in the past year.
Style – Yik Yak is back with a messaging app called Hive, which is essentially Slack for college students. Hail Mary by investors who retained the engineering talent after the big layoff in December. Easier and less painful to spend the money in Yik Yak’s bank account than it is to account and return pennies on the dollar to investors.
Buzzard’s Roost – German music streaming service, SoundCloud, has lost two of its top executives, Marc Strigel, COO, and its finance director, Markus Harder, and the company is urgently seeking funds after warning in late January that it will most likely run out of cash this year. SoundCloud needs to settle for a down round. The company raised $100 million in June from a group of investors, including Twitter, and was last valued at about $700 million, about $690 million too much.
Investment Banking – Leonard Green & Partners and CVC Capital Partners are hiring investment bankers to help it sell BJ Wholesale Club, an operator of wholesale warehouse clubs – or take the company public. LOL.
Hedge Funds – Walmart has become more or less a hedge fund, trying to dig itself out of a hole with that one billion dollar Jet. The company has agreed to acquire Moosejaw, an online retailer of outdoor goods, for $51 million. Jet was an e-commerce company that Walmart got talked into buying. The hottest tribe in business right now is hired hackers to crack your systems. How about Investment Bankers who come in and talk you out of deals?
Spotlight – It’s all hush-hush all around Livingston, Mont., but here is a member Yellowstone major league local scoop – explore the unknown Yellowstone Boiling River where an underground aquifer, fed by an active volcano, produces steam, and hot and cold water taps flow together to make warm springs with a river that runs through it. Local hang-out.
IPO – Apollo Global Management hired Deutsche Bank AG and Credit Suisse Group AG to solicit acquisition offers for Chuck E. Cheese, a family restaurant franchise.
Exits – E2open, a provider of on-demand software for supply chain management, acquired Steelwedge, a provider of cloud services for supply chain management.
Accion Venture Lab sold its stake in Clip, a provider of digital payment services to small and medium-sized businesses in Mexico, to an undisclosed buyer.
Marwit Capital sold Arc Machines, a manufacturer of orbital welding equipment, to ESAB Welding & Cutting Products.
Venture Capital – Top Hat, a teaching platform provider, raised $22.5 million.
MealPal, a subscription meal service, raised $15 million.
Minute Media, a sports media company, raised $15 million.
Komprise, a developer of data-management software, raised $12 million.
Electric Cloud, a software provider, raised $6 million.
Get Spiffy, a Research Triangle Park maker of an app for on-demand car washes and detailing services, raised $5 million.
Gamalon, a provider of statistical machine learning software, raised $4.45 million.
Surrozen, a biopharmaceutical company focused on developing drugs that repair human tissues, raised $33 million.
Private Equity – FreshTracks Capital invested in THINKMD, a maker of a point-of-care clinical assessment tool for gathering patient information.
Zenith American Solutions, a third-party employee benefits administrator, acquired Pacific Federal, an employee benefits company.
Carnelian Energy Capital Management invested an undisclosed amount in Grit Oil & Gas Partners, an oil and natural gas company.
Platinum Equity agreed to acquire Interior Logic Group, a provider of turn-key design, from MSouth Equity Partners.
LFM Capital acquired Heartland Steel Products, a manufacturer of steel storage, tubing, and security products.
H.I.G. Capital acquired the assets of Xtera Communications, an optical networking company that filed for bankruptcy in November.
SoftBank Group agreed to buy Fortress Investment Group for $3.3 billion. At $8.08 per share, SoftBank’s offer values the company at a 39 percent premium to its February 13 closing price.
Nuance Communications acquired mCarbon Tech Innovations, a mobile media company, for around $36 million.
Integra LifeSciences Holdings has made an all-cash offer to acquire Johnson & Johnson’s Codman neurosurgery business for $1.05 billion.
Trian has taken a $3.5 billion stake in Procter & Gamble.
And that’s what’s ahead, Cliff