PayPal's play for Pinterest; Trump SPAC deal; Houzz moves towards IPO; WeWork finally goes public; and much more
Happy Friday!?
Another action-packed week in the world of corporate M&A – in what could end up being one of the biggest deals of 2021, PayPal has offered to buy digital pinboard site Pinterest for $45 billion, people familiar with the matter have told Reuters. Such a combination could herald more financial technology and social media tie-ups in e-ecommerce.
It would be the biggest acquisition of a social media company, surpassing Microsoft Corp's $26.2 billion purchase of LinkedIn in 2016.
The deal talks come as internet shoppers increasingly buy items they see on social media, often following "influencers" on platforms such as Instagram and TikTok. Acquiring Pinterest would allow PayPal to capture more of that e-commerce growth and diversify its income though advertising revenue.
PayPal has offered $70 per share, mostly in stock, for Pinterest. The online payments provider hopes to successfully negotiate and announce a deal by the time it reports quarterly earnings on Nov. 8.
BREAKINGVIEWS had this to say about the potential tie-up – “PayPal’s Pinterest interest displays both greed and fear. The $320 billion payments company is mulling nearly a $45 billion bid for the scrapbooking social network. The news sent PayPal’s stock down 7%, and in one sense, investors are rightly skeptical: PayPal has thrived on its own since its 2015 spinout from eBay. But payments companies and banks are racing to own consumer gateways, and Pinterest has what might be valuable land for PayPal.”
If you thought nothing could top the headlines generated by PayPal-Pinterest this week, you would be mistaken – in what could easily turn out to be one of the strangest ever SPAC deals, former U.S. President Donald Trump will launch his own social media app, TRUTH Social, through a new company formed by a merger of the Trump Media and Technology Group and a SPAC. ?
Trump said his new company would "stand up to Big Tech" companies such as Twitter and Facebook that have barred him from their platforms.
Since the deal was announced, it has won an exuberant endorsement from investors, with shares in the Patrick Orlando SPAC closing up more than 350% on Thursday after rising more than 400% earlier in the day.
Orlando now stands to make a lot of money (at least on paper), if the deal goes through – the deal has delivered a potential windfall of $420 million for the former finance executive who has been trying for a decade to reinvent himself as a serial dealmaker.
Orlando's stake in Digital World Acquisition Corp, the Miami-based blank-check acquisition firm he is leading, was worth $423 million on Thursday after his deal to merge with Trump Media and Technology Group was announced, according to a regulatory filing and Reuters calculations.
Even hedge funds that invested in the SPAC are set to make five times their investment, according to Reuters calculations.
Elsewhere, my colleagues and I scooped that Houzz Inc, the U.S. online home remodeling platform that capitalized on the boom in renovations during the COVID-19 pandemic, has hired Goldman Sachs to prepare for an IPO.
Houzz is aiming to go public early next year. The Palo Alto, California-based company was last valued at about $4 billion in a private funding round led by ICONIQ Capital in 2017.
And finally, WeWork’s two-year wait to become a public company is over -- shares of WeWork jumped nearly 9% as they finally started trading in New York on Thursday, capping an arduous journey to the public markets for the storied office-sharing company that was once valued as high as $47 billion.
While WeWork's top management led by current chairman and SoftBank executive Marcelo Claure insist the worst is over, the office-sharing firm continues to lose money, two years after an IPO fiasco.
More worryingly for WeWork, the company continues to live under the shadow of founder Adam Neumann, who negotiated an exit package of billions at the time of his ouster from the company -- Neumann continues to hold a sizable stake in the business, valued at nearly $1 billion, and under the terms of his exit package from WeWork, he will be eligible to observe board meetings from next year, even though he is not a board member anymore.
Neumann's name can be seen dozens of times through the business combination filing, even though he holds no executive roles at WeWork anymore.
With that, here are the other main highlights of the Reuters deals file this week:
U.S. antitrust regulators have extended the approval process for at least five oil and gas mergers and acquisitions in the last three months, as President Joe Biden's administration scrutinizes deals in a bid to tackle soaring energy prices, according to regulatory filings and corporate lawyers.
Chipmaker GlobalFoundries, owned by Abu Dhabi's sovereign wealth fund Mubadala Investment Co, is aiming for a valuation of about $25 billion in its initial public offering in the United States.
SoftBank Group is in talks to sell the Paris-based robotics business behind its Pepper android to Germany's United Robotics Group, according to sources and documents reviewed by Reuters, scaling back a business it once touted as a major growth driver.
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Zix Corp, a U.S. provider of email security solutions, is exploring strategic alternatives that include a sale of the company, according to people familiar with the matter.
Western Digital’s talks to merge with Japanese chipmaker Kioxia Holdings Corp have stalled, according to two people familiar with the matter, highlighting challenges in completing deals in the evolving semiconductor sector.
In the first nine months of 2021, Latino startups from Brazil's online lender Nubank to Colombian delivery firm Rappi raised $14.8 billion in new money, a jump of 174% since last year, data provided to Reuters by CBInsights showed. The Latino boom has caught the eye of some of the biggest names in private equity and venture capital such as SoftBank Group, General Atlantic and Sequoia Capital. Now Wall Street's banks are looking to tap into the gold rush by taking more Latino "unicorns" public in the United States.
Duke Energy is in advanced settlement talks with Elliott Management Corp that could see the U.S. power utility add two directors backed by the activist investment firm to its board, people familiar with the discussions said.
Two early investors in blank-check company Digital World Acquisition Corp. sold their holdings as news emerged that it was merging with former President Donald Trump's new media venture.
DraftKings has another month to decide on a formal offer for Entain as the betting firms continue talks on the details of a possible deal, including the U.S. company's plans for Entain's BetMGM venture with MGM.
After its planned 2019 initial public offering went down in a spectacular fireball, WeWork on Thursday finally became a listed company. It completed its merger with blank-check vehicle BowX Acquisition, and the shares opened at around $11 apiece on the New York Stock Exchange the next morning, up 10% from the illustrative level when the SoftBank Group-backed office-sharing outfit struck its merger deal back in March. It gives WeWork an equity value just shy of $9 billion.
Indian fintech firm Paytm has received approval from the capital markets regulator for its $2.2 billion stock market listing that is likely to be India's biggest ever IPO, a source familiar with the matter told Reuters.
Thank you for reading this week’s edition! Please do share the newsletter with anyone you think might be interested.
Have a great weekend!
Warm regards,
Anirban?
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Anirban Sen
U.S. M&A Editor in Charge
Thomson Reuters
Twitter: @asenjourno