Axios Pro Rata: Striking sale

Plus, marijuana insurance. | Thursday, August 31, 2023

Open in app View in browser     Axios Pro Rata By Dan Primack · Aug 31, 2023     Top of the Morning Illustration: Aïda Amer/Axios   Around 900 union workers at Japanese department store operator Sogo & Seibu went on strike today, protesting a pending acquisition by U.S. investment firm Fortress Investment Group. Why it matters: Labor disruptions in Japan have become rare, with fewer than two dozen strikes last year that lasted more than half a day. Also increasingly unusual are corporate acquisitions in which the buyer knows it's strongly opposed by the workforce, whether organized or not. The big picture: Sogo & Seibu has approximately 100,000 customers visit its flagship store each day. This the first strike in its history, and the first by workers of a major Japanese department store since 1962. And it comes on the same day that the Japanese government proposed new guidelines to promote M&A in the country. Backstory: Seven & i, the Tokyo-listed owner of convenience store chain 7-Eleven, agreed in 2022 to sell Sogo & Seibu for $1.5 billion to Fortress, which at the time was owned by Japan's SoftBank. But the deal closing has been repeatedly delayed, due to objections from workers and some local government officials. Specifically, Fortress plans to make discount electronics retailer Yodobashi Camera a major tenant within Sogo & Seibu — i.e., a "shop-in-shop" — and the union believes the move could cheapen the store's reputation, thus ultimately destroying jobs. Meanwhile, SoftBank earlier this year agreed to sell Fortress to Abu Dhabi sovereign wealth fund Mubadala and Fortress management, thus eliminating the firm's Japanese ownership. Timeline: Despite knowledge of the pending strike, Seven & i's board voted to affirm the sale, and Fortress this morning announced that its acquisition will close tomorrow. Fortress said in its press release that it plans to "maintain Sogo & Seibu's workforce to the extent possible." The firm declined to comment further when contacted by Axios. The bottom line: Private equity has taken pains over the past decade to appear more worker-friendly, at least upon introduction, including a growing initiative to provide employees with equity upside. This deal is a hard turn in the opposite direction, in a country where the departure is particularly conspicuous.     The BFD Illustration: Lazaro Gamio/Axios   Frontier Risk Group, a commercial insurance startup focused on the cannabis industry, has raised $3.1 million in seed funding led by Casa Verde Capital. Why it's the BFD: This comes just as we learned that HHS officials recommended that the DEA move marijuana to a lower-risk category under the Controlled Substances Act, which could be a massive boon for the cannabis market. Details: Frontier Risk has agreements with reinsurers, many of whom don't understand or directly service cannabis, and argues that stringent regulations on cannabis growers means they have less intrinsic risk than do their agricultural peers. Other investors include Euclid VC, Inter-Atlantic Capital Group and lawyer Bruce Macfarlane. The bottom line: "This historic recommendation is the best news for the cannabis industry in 70 years, but this isn't a done deal, as the DEA has to accept this recommendation before we see federal rescheduling actually happen. Rescheduling will remove some financial burdens, unfairly placed on the cannabis industry, naturally freeing-up capital so companies can focus on streamlining, innovating and continuing to grow the industry." — James Whitcomb, Frontier Risk CEO and former CEO of cannabis brand Parallel     Venture Capital Deals • AI21 Labs, an Israeli developer of generative AI systems for the enterprise, raised $155m in Series C funding at a $1.4b post-money valuation from Walden Catalyst, Pitango, SCB10X, b2venture, Samsung Next, Google and Nvidia. https://axios.link/3PjYh8E 🚑 AeroSafe Global, a Rochester, N.Y.-based provider of outsourced cold chain solutions for life sciences, raised $43m. NewSpring Healthcare led, and was joined by Peloton Equity, Merck Global Health Innovation Fund, Hamilton Lane, Flexstone Partners, Wave Equity Partners and Escalate Capital. https://axios.link/45vRNJz 🚑 Otto (fka Televet), an Austin, Texas-based customer engagement platform for veterinary clinics, raised $43m in Series B funding from Hill's Pet Nutrition and insiders Mercury Fund and Boehringer Ingelheim. www.otto.vet 🌎 Sortera, a Markle, Ind.-based materials sorting company, raised $30.5m in Series C funding. RA Capital Management-Planetary Health led, and was joined by T. Rowe Price, Mineral Resources Group, Macquarie GIG Energy Transition Solutions, Assembly Ventures, Breakthrough Energy Ventures and Chrysalix. www.sorteraalloys.com 🌎 CH4 Global, a Henderson, Nev.-based startup that uses seaweed to reduce methane emissions from livestock burps, raised $29m in Series B funding from DCVC and Cleveland Avenue. https://axios.link/44ub5xv • Ivy, a Berlin-based open banking startup, raised $20m in Series A funding led by Valar Ventures. https://axios.link/3PkkAuS • Speak, an English language learning platform, raised $16m in Series B2 funding led by Lachy Groom. https://axios.link/3YW0xWW • SatSure, an Indian provider of satellite-based Earth observation data and analytics, raised $15m in equity and debt. Baring PE Partners and Promus Ventures co-led, and were joined by Omidyar Network India and xto10X. www.satsure.co 🚑 Teale, a French mental health platform for employees, raised €10m in Series A funding. Alter Equity and Bpifrance co-led, and were joined by insiders Isai and Evolem. https://axios.link/3szj7b8 • Praso, a Brazilian food purchasing platform for small retailers, raised $9.3m in Series A funding. Valor Capital Group and NFX co-led, and were joined by insiders Base Partners, Formus Capital, Iporanga Ventures and Endeavor Scale-Up. https://axios.link/3QZjINq 🚑 PatchRx, a Tulsa, Okla.-based medication management startup, raised $8m. Atento Capital led, and was joined by Vast Ventures, Cortado Ventures, Forum Ventures and Plains VC. https://axios.link/3qQ9TXD 🚑 Clock.bio, a British developer of regenerative medicines, raised $4m from Blueyard Capital. www.clock.bio • Agave, an API for construction industry software, raised $2.9m in seed funding led by Accel. https://axios.link/3QXkp9Z 👽 Martian Lawyers Club, a developer of game personalization tech, raised $2.2m in seed funding. Fly Ventures led, and was joined by System.One, Dhyan Ventures and Amar Shah. https://axios.link/3P1EZDs • Fianu Labs, a Fulton, Md.-based governance automation startup, raised $2m in seed funding from DataTribe. www.fianu.io 🚑 Mimetrik, a British developer of digital dentistry products, raised £2m in seed funding led by Northern Gritstone. https://axios.link/3L8ksMv     A message from Axios Stay informed with the latest deals news     Axios Pro: Deals is the smartest way to stay ahead of everything happening in VC, M&A and PE. Learn more now.     Private Equity Deals • Cordiant Digital Infrastructure agreed to buy Irish broadband provider Speed Fibre from the Irish Infrastructure Fund for €190.5m. https://axios.link/3P0MB9g • GLAS, a London-based loan administrator backed by Levine Leichtman Capital Partners, agreed to buy Pristine, a French asset management and trust firm. www.glas.agency • GTCR acquired Once For All, a Paris-based provider of compliance and supply chain management software, from Warburg Pincus. www.onceforall.com • ModuGo, an Ann Arbor, Mich.-based portfolio company of Kinderhook Industries, acquired Kelcon, a West Springfield, Mass.-based provider of portable storage containers. www.modugo.com • Sycamore Partners has merged apparel brands Ann Taylor, Loft and Talbots under a new umbrella company called KnitWell Group.     Public Offerings • Big C Retail, a Thai hypermarket operator, postponed its planned Bangkok IPO, citing market conditions. https://axios.link/3R1R7qH     Liquidity Events • Crenlo Engineered Cabs, an Angeles Equity-owned maker of operator cabs and rollover protective structures for heavy equipment, agreed to sell its Brazilian unit to JOST Werke. www.engineeredcabs.com 🚑 MaryRuth Organics, an LA-based health supplements maker backed by Butterfly Equity and CFT Capital Partners, is exploring a sale that could fetch nearly $1b, per Reuters. Houlihan Lokey and Mally Collective are managing the process. https://axios.link/3Phv7Hi • TPG is in talks to sell its majority stake in Hollywood talent agency CAA to French billionaire François-Henri Pinault for around $7b, per Bloomberg. The deal could include minority investor Temasek increase its stake by buying out CMC Capital. https://axios.link/45PXRfx     More M&A 🚑 Serina Therapeutics, a Huntsville, Ala.-based developer of Parkinson's disease treatments, agreed to go public via a reverse merger with AgeX Therapeutics (NYSE American: AGE). https://axios.link/45xg1D4 • Tradeweb (Nasdaq: TW) completed its acquisition of Australian derivatives trading platform Yieldbroker for A$125m in cash. www.tradeweb.com • Universal Music Group agreed to buy Chabka, a MENA-focused digital music distribution business. https://axios.link/3KYfJNy     Fundraising • Alvarez & Marsal Capital, a Connecticut-based PE firm, is opening an office in West Palm Beach, Florida. https://axios.link/3qYsbpt 🌎 Energy Foundry, a Chicago-based energy tech and cleantech VC firm, is raising up to $100m for its second fund, per an SEC filing. • Hillhouse Capital is targeting around $1.4b for a new renminbi-denominated fund, per the FT. https://axios.link/45rH1nw • Sound Ventures, the VC firm co-founded by Ashton Kutcher and Guy Oseary, is raising its fourth fund, per an SEC filing.     It's Personnel • Reid Hoffman will not be a general partner on the next fund for Greylock, which is targeting $1b, per the WSJ. He joined the VC firm in 2009, after co-founding LinkedIn and being an early employee at PayPal, and helped spur Greylock's shift from an East Coast to a West Coast firm. https://axios.link/3Phu8a2     Final Numbers Data: U.S. Bureau of Economic Analysis; Chart: Axios Visuals The bad news from yesterday's Q2 GDP revisions is that the economy grew slower than originally estimated, at 2.1% rather than 2.4%. The good news is that this more modest growth could convince the Fed to stop hiking rates, perhaps better guaranteeing a soft economic landing. Axios' Neil Irwin goes deeper.     A message from Axios Stay informed with the latest deals news     Axios Pro: Deals is the smartest way to stay ahead of everything happening in VC, M&A and PE. Learn more now.   Thanks for reading Axios Pro Rata, and to copy editors Mickey Meece and Bryan McBournie! Please ask your friends, colleagues and department store workers to sign up. Dive deeper into VC, PE and M&A Axios Pro is your personal deals analyst, with industry-specific coverage of companies, trends and funding rounds that other outlets miss. Subscribe today.   Axios thanks our partners for supporting our newsletters. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. To stop receiving this newsletter, unsubscribe or manage your email preferences.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: