Swedish last-mile delivery companies Instabox and Budbee to become Instabee in $1.7B merger
Swedish last-mile delivery companies Instabox and Budbee have have announced plans to merge in a 18 billion krona ($1.7 billion) deal.
The two companies, which were both founded out of the Stockholm area in 2015, serve as the delivery and logistics partner for major brands including multinational clothing retailer H&M, offering delivery services directly to people’s homes as well as automated lockers in strategic locations.
Instabox operates in Sweden, Denmark, the Netherlands, Norway, and Germany, while Budbee serves Sweden, Denmark, the Netherlands, Finland, and Belgium.
Instabox had raised around $336 million since its inception, and recently hit a $1 billion valuation off the back of a fresh round of funding, while Budbee was recently valued at around $700 million, which is how the new combined entity arrived at its valuation of $1.7 billion. Moreover, when the merger is complete — it still needs approval of the Swedish Competition Authority — the company will be known as Instabee, with Budbee cofounder Fredrik Hamilton assuming the role of CEO and Instabox cofounder Alexis Priftis becoming Executive Chairman of the Board.
Come together
Though the trajectories each company has taken since their foundations have been a little different, they have arrived in roughly the same place in terms of the types of services they offer and the markets they operate in. On top of that, in what has become an increasingly competitive industry in a turbulent economic landscape, we’ve seen a growing push toward consolidation and purse-string tightening, with the likes of U.S. grocery delivery giant Instacart recently slashing its valuation by almost 40% to around $24 billion, and closer to home Netherlands-based Just Eat Takeaway is scaling back in some markets and offloading its international ventures in pursuit of “more sustainable, profitable growth.”
While Instabox and Budbee operate in a different market to these companies, the challenges remain the same — and given how closely aligned they are in terms of history, product, and markets, it makes sense that they come together rather than competing for the same dollars both with each other and other established players and venture-backed newcomers.
“I have been long-term in my plans since the start, and this move is an amazing opportunity to create something truly substantial,” Hamilton said in a statement. “I have of course followed Instabox closely during the years, and I’m impressed by their journey.”
Priftis added that he saw this move as a “great fit between two companies that share a lot of common values.”
Instabox and Budbee’s founders, along with Swedish investment firm Kinnevik, will be Instabee’s largest shareholders, along with previous backers which include H&M, EQT Ventures, Creades, Verdane, AMF, among others.
Volkswagen Seeks To Raise Up To $9.4 Billion From Porsche IPO
Volkwagen is looking to raise up to $9.4 billion from its forthcoming IPO of Porsche, a new report from Bloomberg says. That would make it Europe's largest listing "in more than a decade", the report says.
The company said this weekend that, despite havoc in both European capital markets and European auto markets, it was seeking out a valuation of 70 billion to 75 billion euros for its listing, down from an 85 billion figure that was being tossed around prior.
As the report notes, other forthcoming IPOs - like Intel's planned IPO for Mobileye - have also scaled back expectations due to market volatility.
However, for Porsche, Qatar Investment Authority, Norway’s sovereign wealth fund, T. Rowe Price and ADQ have all signed on to subscribe to preferred shares totaling as much as 3.7 billion euros.
VW’s Chief Financial Officer Arno Antlitz told Bloomberg: “We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors.”
VW has been pitching the investment opportunity as a way to combine the best of companies like Ferrari and Louis Vuitton.
The valuation puts Porsche at 10.2x EBITDA, the report says, well below Ferrari's valuation of 23.1x EBITDA.
Porsche's target for the year is for 39 billion euros in revenue. The IPO will also hand over decision-making to the Porsche-Piech family, who lost control of the company more than 10 years ago during a battle with VW, the report says.
Investors are going to be allowed to subscribe to 25% of Porsche preferred shares, which have no voting rights. The Porsche-Piech family will buy 25%+ of the company's common shares with voting rights and has agreed to pay a 7.5% premium on top of the price range.
Despite the spin-off, however, some have raised questions about its future independence, since Oliver Blume, Porsche’s chief executive, is being appointed to head VW.
Find below the latest numbers on VIV’s buyback following last week’s transactions
Indeed, VIV bought last week 1.1m shares at an average price of €8.49
Bank of Cyprus/Lone Star: takeover needs more than just a higher price
Not only shareholders but local regulators as well will need convincing
Cyprus has attracted a different sort of visitor recently. US buyout group Lone Star has taken an interest in Bank of Cyprus, the island nation’s largest lender. It has made three unsolicited offers and says it is pondering a fourth. The latest values the bank at almost €700mn. But an attractive price alone may not win Lone Star the prize it craves.
Cyprus has done well to clean up its financial mess of a decade ago. The bank then chose to bail-in bank depositors during the European debt crisis. A 50 per cent haircut for savers with more than €100,000, mostly foreigners and including many Russians, helped finance the recovery. It has since disposed of many of its non-performing loans, as Cyprus’s economy rebounded after the crisis.
No doubt Lone Star had noted Cyprus has stabilised. System-wide bad loans have fallen 78 per cent, about €7bn lower, in the past five years. As a share of gross loans, NPLs stood at 11 per cent systemwide. Bank of Cyprus, with 40 per cent of the loan market, has done better getting its ratio closer to 6 per cent at the end of June.
A rebound in economic growth should mean real GDP expands by 4.5 per cent this year. While some links with Russian businesses linger, these now only account for about 2 per cent of outstanding loans.
Bank of Cyprus has returned to profit and expects to earn a return on tangible equity of 10 per cent in 2024. This turnround and the bid interest have helped the London-listed share price rally 36 per cent this year, a far better return than the MSCI Europe banks index
On this profitability, a simple regression of returns at European banks suggests it merits a valuation almost twice the 0.35 times tangible book value of Lone Star’s latest offer. Even with a sizeable discount for past transgressions, the bank’s shareholders deserve a higher price.
Not only shareholders but local regulators will need convincing. They will fear short-term capital gaining control of a bank only recently nursed back to health. Watchdogs are rushing to enact blocking legislation. Even a higher offer may not win the deal for Lone Star.
Meme-Stock Traders Embrace Avaya Despite Wall Street Fears
Online traders follow activist investor ‘The King’ and drive big gains in the company’s shares, which had fallen to 65 cents
Individual investors are backing a new underdog, Avaya Holdings Corp. AVYA 10.59% , pumping up the software company’s downtrodden stock by about 200% over the past month and confounding Wall Street professionals.
Avaya’s fans include day traders who congregate on Reddit and Twitter forums, and a 35-year-old software entrepreneur who has snapped up a 15% stake. They are facing off against a group of large fund managers such as Apollo Global Management Inc. APO -4.09% and Ares Management Corp. ARES -2.03% that could benefit if the company seeks bankruptcy-court protection.
Avaya share and bond prices reflect a high risk of bankruptcy, even after the recent rebound. Still, the willingness of individual investors to back the company while global markets tank shows the endurance of the meme-stock trend that fueled rallies for companies such as Bed Bath & Beyond Inc. and AMC Entertainment Holdings in early August.
“It seems naive that anyone would be willing to give them the benefit of the doubt,” said Lance Vitanza, a stock analyst at Cowen Inc. “Our model shows they’re going to be out of cash in June.”
A spokeswoman for Avaya declined to comment.
Institutional investors soured on Avaya, which sells software for corporate phone networks and for customer call centers, this summer. The company issued $600 million of new loans and convertible bonds, then badly missed earnings guidance and disclosed uncertainty about its ability to continue as a going concern. Its stock fell to 65 cents from around $5, and its loan prices dropped by nearly 40% to about 48 cents on the dollar, according to Advantage Data Inc.
The shares started to rebound in mid-August after Theo King, co-founder of cloud software company Faria Education Group Ltd., bought a 15.41% stake and said the market was undervaluing Avaya’s recurring revenue from its 90,000 customers. Mr. King followed up his purchases with a letter laying out a turnaround strategy and some reading recommendations for Avaya’s board of directors. The holdings and the letter were disclosed in an Aug. 23 regulatory filing.
He took to Twitter to rebut a bearish report by Cowen’s Mr. Vitanza and to call out Apollo for maneuvering to potentially take control of the company if it enters bankruptcy. “Lenders should be lenders—not try to become owners,” he tweeted. “Encourage [board of directors] to categorically reject.”
Avaya has announced about $250 million of cost cuts and Mr. Vitanza’s cash burn forecast is “not realistic,” according to Mr. King. Management has several options other than bankruptcy, including finding a strategic partner and consensually restructuring a convertible bond that comes due next year, he said. Avaya announced a first round of job cuts in early September.
The activist campaign got Mr. King a meeting with Avaya’s new chief executive, Alan Masarek. It also galvanized individual investors who pan for trading ideas on social media. Some liked Mr. King’s long-term vision for the company. Others bought in expecting the stock to pop because of a short squeeze, a common investment strategy among meme-stock enthusiasts. The percentage of Avaya’s shares sold short is about 28%, according to S&P Global Market Intelligence.
“This was something special,” said Brad Preuss, a 50-year-old life-insurance salesman in Jacksonville, Fla., who caught wind of the Avaya trade idea on Twitter. Mr. Preuss said he made about $50,000 buying Avaya shares around 70 cents, then selling them when they neared $2 a week ago. The stock now trades around $1.90.
Individual investors might also have rallied because of the involvement of large fund managers such as Apollo and Ares, which are also lenders to AMC. The two alternative asset managers are part of a group with dozens of members, including BlackRock Inc., that has hired law firm Akin Gump Strauss Hauer & Feld LLP to stake their claims against Avaya, according to people familiar with the matter.
“Let’s take Apollo to the moon,” a WallStreetBets poster stated in early September.
Swiftly Valued at More Than $1 Billion in Latest Funding Round
Grocery-tech company raised more than $100 million in a funding round led by venture-capital firm BRV Capital Management
Swiftly Systems Inc. raised $100 million in its latest funding round, boosting the valuation of the grocery-tech company to more than $1 billion, according to people familiar with the matter.
The capital infusion, from BRV Capital Management and others, is the second funding round this year for Swiftly and values it at $1.1 billion to $1.2 billion, one of the people said. In March, Swiftly said it raised $100 million in a Series B funding round led by Wormhole Capital.
Swiftly works with bricks-and-mortar grocery stores, pharmacies and convenience stores to upgrade their mobile apps and websites and to power their loyalty programs. Swiftly makes its money by selling ads for the retailers on their apps and websites. As of now, the Seattle company has signed 22,500 individual stores in the U.S. to its platform.
The funding round comes during a tough time for private companies seeking fresh capital as stock- and bond-market volatility take a toll. After a year-and-a-half of boom times for venture-capital check writing, the investors have become more conservative with their cash, even as they sit on a record pile of it.
That has contributed to pressure on the valuations of higher-profile players in the grocery ecosystem such as Instacart Inc. and Gopuff.
“Fundraising is always really hard,” said Sean Turner, chief technology officer of Swiftly. “It’s even harder in this environment.” He said the company chose to raise more money in a Series C funding round now to scale the business.
BRV Capital, which has offices in Korea, Japan, China and Silicon Valley, will join the board and help Swiftly as it considers expanding beyond the U.S.
EU seeks emergency powers to prevent supply chain crisis
Proposed rules aim to ease pressures caused by events such as Ukraine war
Brussels is seeking emergency powers to force member states to stockpile key products and break contracts during a crisis such as the war in Ukraine or the coronavirus pandemic, according to plans revealed by the European Commission on Monday.
The legislation, which intends to facilitate public procurement of critical goods and services, would deter the world’s leading exporters, such as China, from initiating similar measures without first informing the commission.
The “single market emergency instrument” would give the European Commission, the executive body of the EU, ample space to declare an emergency. Brussels would then be able trigger a number of interventionist measures to ensure the availability of goods, for example by facilitating the expansion or repurposing of production lines, the EU said.
Thierry Breton, internal markets commissioner, said the new legal tool would “provide a structural answer to preserve the free movement of goods, people and services in adverse times”.
“The best way to manage a crisis is to anticipate it, to reduce its impact or to prevent it from happening,” he said on Monday, adding that the new rules would allow Brussels to ask companies for information about their production capacity and inventory.
The proposals, which now need to be debated with member states and the European parliament, are unlikely to become law for several months but could be in place before the current commission ends its mandate in 2024. They are likely to require the approval of a qualified majority of EU states.
Breton said the new instrument would also allow regulators to prevent the fragmentation of the internal market. “We have clearly seen that in times of crisis, member states are tempted to introduce internal restrictions on the internal market (restrictions on exports of masks, cereals, border closures) and discriminatory measures (double fuel prices), aggravating the effect of the crisis.”
Margrethe Vestager, the EU’s executive vice-president in charge of competition, said: “The Covid-19 crisis made it clear: we must make our single market operational at all times, including in times of crisis. We must make it stronger. We need new tools that allow us to react fast and collectively.”
While member states agreed on the need to protect the single market in times of crisis, diplomats said many expressed concern when commission officials presented the plans last week, with some arguing that they would go too far in allowing Brussels to intervene in corporate operations. Others accused Brussels of seeking to boost its powers without carrying out proper impact assessments of the proposed measures.
Former eastern bloc countries in particular were wary of a “command economy”, one EU diplomat said, adding: “It’s very sensitive. Member states have a lot of questions.”
During the Covid crisis, regulators in Brussels passed legislation allowing export bans on vaccines as a response to the US blocking shipments of shots to Europe. Member states also forced businesses to shift production to ventilators and face masks as they faced supply bottlenecks.
There are currently similar issues in the fertiliser market, said EU officials. High gas prices have driven up costs for producers and curbed production by 70 per cent across the EU.
Officials said the bloc needed to be better prepared to react to the next supply chain crisis. Several other countries already have measures in place for strategic reserves and priority orders, such as the US Defense Production Act.