Snap Subpoenaed; Dell Sweetens Go Public Deal; Bain Closes $1B Fund

by 1 month ago

The Water Coolest

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THE HEADLINES

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SNAP BACK TO REALITY

They say imitation is the best form of flattery, right? If so, Facebook has been doing a bang-up job of showering Snapchat in admiration. Following Evan Spiegel’s rejection of Zuck’s $3B buyout in 2013, Facebook (and Instagram in particular) has gone tit for tat with Snap’s latest features.

And now Snap is facing subpoenas from both the SEC and DOJ over whether or not it misled investors prior to its IPO regarding how Instagram’s copy-cat features would adversely affect the firm’s stock price. The action stems from a lawsuit set forth by investors.

For what it’s worth, Snap’s pre-IPO filing had this to say: “Instagram, a subsidiary of Facebook, recently introduced a “stories” feature that largely mimics our Stories feature and may be directly competitive.” However, salty “traders” who probably got Snap as their free Robinhood stock claim the company didn’t go far enough.

You can’t blame the angry horde of investors for shooting their shot … Snap has had nothing short of a pathetic run as a public company.

Water Cooler Talking Point: “Remember: past performance is no guarantee of future results.”

 

SWEETENING THE DELL

Earlier this year, Dell Technologies Inc. declared its eagerness to become a public company (again). The game plan is a $22B buyback of an affiliate tracking stock, DVMT, in order to streamline its structure and ultimately re-enter the public markets without an IPO. The tracking unit could cost Dell up to $109 per share at this point, and the company is said to be upping the cash portion of the deal to close to $13B.

Confused? A tracking stock is when a company splits off a (typically highly profitable) division of its business to allow investors an opportunity to invest in the high growth area. In this case, DVMT is the stock that tracks Dell’s VMWare division. VMWare Inc. is 80% owned by Dell but reports financial separately, so Dell must buy it back and effectively buy out any investors. Got it? Good.

Unfortunately for Dell, one of those investors is the world-renowned curmudgeon, Carl Icahn. The activist investor who owns 8.3% in the tracking stock is claiming that the buyout deal is undervaluing the DVMT stock and robbing shareholders of $11B in value. The finalized deal should be announced this week.

Water Cooler Talking Point: *Avril Lavigne ‘Complicated’ plays* “So let me get this straight … Dell owns the majority of a stock that tracks the performance of a division it has a majority ownership in but is not part of the company? This is going to be more of a clusterf*ck than who gets what in the inevitable breakup of the Kardashian-Jenner-West estate.”

 

MONEY IN THE BAIN-K

“You ain’t sh*t, Masayoshi.” – Mitt Romney, probably.

Bain Capital Ventures the Boston-based investment firm announced that it has closed a new $1B fund which will invest in early-stage startups. The money is to be spread across three funds within the Bain Capital Venture’s ecosystem.

$650M will be earmarked for Bain’s eighth flagship vehicle, $250M will go towards co-investment in growth stage startups, and $100M, which came straight from Bain’s partners, will be invested with everything else. BVC, which has been around since 2001, has invested in such household names as Rent the Runway, SurveyMonkey, and LinkedIn. Ever heard of them?

Those aren’t the only investments the company has made, however. In the past year alone, BVC has funded more than 14 seed and Series A rounds. The company typically invests in anywhere from 12 to 14 companies per year.

Water Cooler Talking Point: “Real talk: who do I need to sell my soul to for a partner job at Bain?”

 


IN OTHER NEWS

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  • Despite a 38% increase in revenue, Uber’s loss hit almost $1B, an increase quarter-over-quarter. The self-reported financials were released ahead of a (slightly less highly) anticipated 2019 IPO.

 

  • WWJD? Craig Wright, who claims to be the Satoshi Nakamoto (the inventor of bitcoin) plans to launch another version of bitcoin cash today following a software upgrade. But not everyone in the crypto-community is on board. On the other side of the coin, Roger Ver aka “Bitcoin Jesus” leads a faction who disagrees on how to best split the digital tokens. Prices of bitcoin fell below $6k to its lowest level in over a year.

 

  • Levi Strauss is planning to raise upwards of $800M at a $5B valuation in an initial public offering. ICYMI, the jean-maker was born in San Francisco in the 1870’s in the aftermath of the gold rush.

 

  • Victoria’s Secret hasn’t exactly been at the forefront of the women’s empowerment movement. Exhibit A: scantily clad “Angels” leaving little to the imagination in primetime (and in 3D!). As a result, sales have slumped at the L Brand owned lingerie peddler. And now, CEO Jan Singer is on her way out as the brand struggles to find its way in 2018.

 

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