What You Need to Know for June 20th

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The Main Story

Earlier this week, Marathon CEO Bruce Richards called borrowers that do liability management exercises (LMEs) “wise”. He’s talking his own book - highlighting how their creative capital solutions group is there to help borrowers. Richards says bankruptcies are costly and LMEs help avoid that, but actual results are mixed. Thus far, every company that’s done an LME so far has eventually restructured again. So in reality, LMEs are a mechanism for borrowers to delay the inevitable, and for opportunistic lenders to clip a fee, secure better economics; and disadvantage other lenders. 

It’s disappointing seeing Richards push a harmful and untrue narrative - but he’s gotta talk the book of his opportunistic group. 

This trend of LMEs will continue as we enter the “golden age of opportunistic credit”, due to weak credit documents that will enable all of these out of court restructurings that are expected in the next few years.

Headlines 🔍

• Primo Water and BlueTrition agree to merge, creating a leading North American pure-play healthy hydration company: the transaction offers a compelling strategic rationale and combines the complementary strengths of Primo Water and BlueTriton, creating a North American leader in pure-play healthy hydration with diversified offerings across products, formats, channels, and consumer occasions.

• Chaos at Stonehenge: This is unreal…

• IPO rebound in Europe falters as volativity dents confidence: IPO activity in Europe is now likely to take an early summer break after companies raised about $13.3B so far this year, more than double the amount over the same period in 2023.

• Luxury sneaker maker Golden Goose postpones planned IPO: While there was enough demand for the shares being offered, the set price was toward the lower end of its range and volatility across Europe equity markets fueled concern the stock would fall further after a debut.

• Driven by Big Tech demand for clean-energy powered data centers, solar is growing faster than any electricity source: Although new solar plant openings are outpacing their natural gas counterparts, renewable capacity is limited by the time and resources required to connect transmission lines to the grid.

• Chegg shares surged 19% after management announced deep job cuts in restructuring plan: Post-pandemic-era boom, the company brought in a new CEO to counter mass customer migration to ChatGPT, Perplexity, and other low to no cost AI alternatives (especially favored by the company’s young, low budget demographic).

• Amazon invests $11B to expand cloud and logistics in Germany: The news was heartening for a nation that has struggled to attract investment thanks to high interest rates and over-complicated red tape. For AMZN, the investment serves as a vote of confidence in European AI opportunities.

• Steve Cohen’s Point72 readies new hedge fund targeting AI stocks: Expected to launch late this year or early next, the fund will seek to identify companies tapping into what Cohen described as the “transformational” potential of new technologies. Cohen’s committing to AI with his in-house venture firm and a PE shop focused on applying AI to improve portfolio companies’ operational efficiency.

• Electric SUV maker Fisker files for bankruptcy: The filing marks the second time founder Henrik Fisker has seen one of his car companies go bust. Henrik was unable to leverage his experience to overcome weaker than expected EV demand and internal software and design setbacks.

• Amazon labor union votes to join forces with Teamsters

• US mortgage rates drop below 7% for the first time since March

• Here’s the rundown on ZYN halting sales on their U.S. website:

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M&A Transactions💭 

Hikma Pharmaceuticals (LON: HIK) reached a definitive agreement to acquire the US Finished Dosages Form Business Unit of Xellia Pharmaceuticals for $135.0M. Leerink Partners advised on the sale.

The Aaron’s Company (NYS: AAN), a specialty retailer, has reached a definitive agreement to be acquired for $504.0M by IQventures. JP Morgan advised on the sale.

Stellar Blu Solutions, developer of software for connectivity, has reached a definitive agreement to be acquired for $245.0M by Gilat Satellite Networks (NAS: GILT). Houlihan Lokey advised on the sale.

ECO Special Waste Management, provider of industrial waste management services, has reached a definitive agreement to be acquired for $447.97M by Seche Environnement (PAR: SCHP).

Base Gruppen, an office property, was acquired for $103.9M by The Storebrand Group (OSL STB).

Aadifidelis Solutions, provider of online platform intended for loan distribution and financing, has reached a definitive agreement to be acquired for $1.9B by BLS E-Services (NSE: BLSE).

An office building of Zurich Insurance Group (SWX: ZURN) has entered into a definitive agreement to be acquired by Besant Capital for $108.23M.

Sustain.Life, developer of sustainability management software, was acquired for $100.0M by Workiva (NYS: WK).

SRS Distribution, distributor of residential roofing materials, was acquired for $18.25B by The Home Depot (NYS: HD). Jefferies and Goldman Sachs advised on the sale.

Silk Road Medical (NAS: SILK), medical device company, has reached a definitive agreement to be acquired for $1.16B by Boston Scientific (NYS: BSX).

Pavilion Energy, Provider of energy resources, has reached a definitive agreement to be acquired for $2.0B by Shell (LON: SHEL).

Jun Group, developer of a social video platform, has reached a definitive agreement to be acquired for $185.0M by Verve Group. Canaccord Genuity advised on the sale.

GEMS Education, operator of a network of private schools, has entered into a definitive agreement to be acquired for $2.0B by Brookfield Corporation (TSE: BN). deNovo Partners and Goldman Sachs advised on the sale.

Kotak Mahindra Genera Insurance, provider of general insurance services, was acquired for $666.78M by Zurich Insurance Group (SWX: ZURN). Morgan Stanley advised on the sale.

Revel Systems, developer of cloud-based point of sale systems, was acquired for $250.0M by Shift4 Payments (NYS: FOUR). William Blair advised on the sale.

Private Placement Transactions💭

Waabi, developer of a self-driving technology, has raised $200.0M of Series B venture funding led by Uber and Khosla Ventures.

Talkiatry, provider of mental health care services, has raised $130.0M of Series C venture funding led by Andreessen Horowitz.

Rockit, manufacturer of energy drinks, has raised $719.55M of pre-seed funding led by Sauce.vc and Rannvijay Singha.

Insightec, developer of MRI-guided focused ultrasound devices, raised $150.0M of venture funding led by Ally Bridge Group, Nexus Neurotech, and Fidelity Management & Research.

Huntress, operator of a security platform, raised $150.0M of Series D venture funding led by Sapphire Ventures, Kleiner Perkins, and Meritech Capital Partners.

Clip, developer of a digital payment platform, raised $100.0M of venture funding led by Morgan Stanley Tactical Value at a pre-money valuation of $1.9B.

Noteworthy Chart 🧭

Best of YouTube ⌚️

Yahoo Finance dives into why the FED won’t cut rates before December. While rates remain higher for longer, are there any signals as to when the Fed will start cutting rates?

Meme Cleanser 😆 

In Other News

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