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General Atlantic, Sequoia Capital are key drivers in Oracle bid for TikTok

Investment firms with large existing stakes in ByteDance pursue deal for app’s US operations, as potential alternative to Microsoft

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General Atlantic and Sequoia Capital, two major investors in TikTok’s Chinese parent company, are manoeuvring to be part of a deal to acquire the US operations of the popular video sharing app as it seeks to avoid a ban by the Trump administration, according to people familiar with the discussions.

The investment firms, which own large stakes in Beijing-based ByteDance, are key drivers behind a possible bid for TikTok by a group including Oracle, the people said. The Oracle group emerged recently as a possible alternative to Microsoft, which said early this month that it was in talks to buy TikTok’s operations in the US and three other countries.

Microsoft had said it might invite some US investors to join its bid. But more recently Sequoia and General Atlantic grew concerned that they wouldn’t have a place in a Microsoft deal and looked for another potential tech partner that could give them a piece of the action, some of the people said. They are now pushing the potential Oracle bid, which quickly won President Trump’s public support, although some of the people said the Microsoft talks are fluid and outside investors could still be included as minority investors in Microsoft’s bid.

Sequoia and General Atlantic both hold seats on ByteDance’s board. Sequoia’s seat is occupied by its China head, Neil Shen, while its efforts in the US to participate in an acquisition are being led by global managing partner Doug Leone. General Atlantic’s effort is led by its chief executive, Bill Ford, who represents his firm on ByteDance’s board. The investment firms have two points of interest that potentially conflict: their obligation as board members to maximise the value to ByteDance of its prized asset, and trying to buy into TikTok in the US at a good price to capitalise on its potential.

ByteDance has been under pressure to reach a deal to sell TikTok’s US arm ahead of a 45-day deadline the White House imposed in a 6 August executive order that bans the app — which the Trump administration says poses an economic and national security threat to US interests — if it isn’t sold to US buyers. A subsequent presidential order set a 90-day deadline for any transaction to be completed.

Bidders have been asked to submit offers by the end of the week, and one of the parties could enter exclusive negotiations soon, according to people familiar with the matter. It isn’t clear that a sale will happen, however. TikTok filed a lawsuit Monday challenging Trump’s initial executive order, saying his administration failed to follow due process in issuing it.

At least three camps have been circling a possible TikTok deal. In addition to Microsoft and the Oracle group, Twitter also had preliminary talks about a potential combination, people familiar with those discussions said.

Twitter remains interested but its approach hasn’t made significant headway, the people said.

Microsoft’s discussions are more advanced than any others, some of the people familiar with talks said — potentially a critical advantage given the tight timetable and the complexity of the negotiations, especially as it relates to guaranteeing the companies could satisfy US national security concerns. Microsoft has said it aimed to complete discussions with ByteDance no later than September 15, adding there is no certainty it would be able to conclude a deal.

TikTok representatives have engaged with other companies about potential involvement in a bid. They approached Netflix to gauge its interest in a deal, people familiar with those discussions said, but the video streaming giant passed, one of them said.

Oracle isn’t as obvious a potential buyer as Microsoft. Oracle has a sizable cloud computing operation and technical capabilities, but it is mainly focused on serving business clients and has virtually no experience running a social media platform or other major consumer-facing business. Microsoft is an even bigger player in business computing but also owns the LinkedIn social media site and the Xbox videogame business. It also is much bigger and has about $136bn of cash, some three times what Oracle has on hand.

Because ByteDance either has to agree to a deal that satisfies the government or risk its TikTok asset being banned entirely in the US, Microsoft and other suitors have significant leverage in price negotiations.

There are widely different views on valuation. ByteDance has estimated TikTok’s US operations and those in the other countries could collectively be worth more than $50bn, one of the people said, while some people familiar with TikTok’s operations put the number significantly lower. TikTok has about 100m users in the US, and they are considered among the most lucrative worldwide for the app, which is still believed to be losing money

Paying a fire-sale price could pose a risk for Microsoft, which has a sizable business in China, or another buyer, by potentially further inflaming sentiment in China, where talk of a forced sale and the US government taking a cut from the transaction has been criticised.

Zhang Yiming, ByteDance’s founder and chief executive, favours Microsoft, said people familiar with his thinking. Zhang, who briefly worked at the company, likes its culture and has a good relationship with Microsoft CEO Satya Nadella, one of these people said.

While Oracle lacks experience running consumer tech businesses, it has political connections that could help its pursuit of TikTok. Larry Ellison, Oracle’s co-founder, chairman and largest shareholder, earlier this year threw a fundraiser at his home for the president. Chief executive Safra Catz also worked on the executive committee for the Trump transition team in 2016 and has donated to his re-election campaign.

Asked about a possible Oracle bid last week, Trump said, “Well, I think Oracle is a great company and I think its owner is a tremendous guy, a tremendous person. I think that Oracle would be certainly somebody that could handle it.”

Sequoia also has ties to the administration and has been lobbying for ways to enable TikTok to keep operating in the US. Leone, the Sequoia global managing partner, has called treasury secretary Steven Mnuchin and Trump’s adviser and son-in-law Jared Kushner as part of this effort, according to people familiar with those discussions.

Leone and his wife have donated tens of thousands of dollars to Republican candidates this election cycle, including to the president’s re-election effort. In January, Leone hosted a reception for Secretary of State Mike Pompeo at his California, home.

Ford has donated thousands of dollars to Republican congressional candidates this election cycle as well.

—Georgia Wells and Joe Flint contributed to this article.

Write to Rolfe Winkler at rolfe.winkler@wsj.com, Miriam Gottfried at Miriam.Gottfried@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

From The Wall Street Journal

Source: https://www.penews.com/articles/general-atlantic-sequoia-capital-are-key-drivers-in-oracle-bid-for-tiktok-20200826

Private Equity

Bin ‘Dear Sirs’ in legal letters, litigation partner says

‘Dear colleagues’ or ‘Dear [Name of firm]’ are better ways of greeting other lawyers, says Hausfeld’s Craig

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A senior litigation partner has called for an end to the “outmoded” use of “Dear Sirs” as a form of address in legal letters.

Lianne Craig, head of commercial disputes at litigation firm Hausfeld, said the term “feels increasingly outmoded and incorrect,” in a post on Linkedin.

Craig said it was a “source of constant consternation that emails and letters from the other side on one of my matters are repeatedly addressed as ‘Dear Sirs’ when it is obvious that we are fielding an all-female team and that it might be polite to address us in some other (more appropriate) way”.

She said Hausfeld had decided to address opposing parties as “‘Dear [Name of firm]’” but said she had also seen “‘Dear Colleagues’ which is also Ok”.

“I’m not sure why firms that tout themselves as being progressive still use the old form: it feels increasingly outmoded and incorrect,” Craig wrote.

Hausfeld is not the first law firm to ban the phrase Dear Sirs. Magic Circle firm Freshfields Bruckhaus Deringer scrapped the use of the term in 2016 – replacing it with “Dear Sir or Madam” in the UK and “Dear Ladies and Gentlemen” in the US.

Earlier this year US litigation firm Quinn Emanuel told staff they should use “Dear Colleagues” or “Dear Counsel” in correspondence with opposing parties.

Craig told Financial News, Private Equity News‘ sister publication, that Hausfeld updated its style of greeting in early 2020.

“The workforce is much more diverse than it was when ‘Dear Sirs’ developed as a customary form of address and society has moved on,” Craig wrote in an email. “We must also take into account a wider range of gender identities than male/female.

“It’s good to talk about the issue because it’s easy to allow inertia to prevent progress,” she added. “In my experience, most people do not object to updating the customary form once it’s pointed out to them that it’s no longer relevant.”

To contact the author of this story with feedback or news, email James Booth

Source: https://www.penews.com/articles/litigation-partner-calls-for-end-use-of-dear-sirs-in-legal-letters-20201127

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EU negotiator en route to London for Friday evening Brexit talks

The UK’s transition period is set to end on 31 December, leaving just five weeks for a deal to be agreed

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The EU’s team of negotiators tasked with finding a post-Brexit trade deal are on their way to London, ahead of another week of crunch talks with the UK.

Having been in self-isolation for two weeks in Brussels after one member of the team tested positive for coronavirus, chief negotiator Michel Barnier said in a tweet that the group will be travelling to London later on 27 November for more talks.

He added that he will be briefing members of the European Parliament and representatives from member states before the expedition, giving an update that the “same significant divergences persist” between the two sides.

Sticking points in the deal talks thus far have included fishing rights, a level-playing field, governance of the agreement and the question of border arrangements between Northern Ireland and the Republic of Ireland.

“In line with Belgian rules, my team and I are no longer in quarantine. Physical negotiations can continue,” he said.

President-elect Joe Biden waded into the debate on the Irish protocol earlier this week, telling reporters that the US does not want to see a “guarded border” between the two countries.

He said he had been speaking to Prime Minister Boris Johnson, Irish Taoiseach Leo Varadkar, and officials in France and elsewhere to lend support to a deal on the matter.

Johnson was also expected to have a call with European Commission president Ursula von der Leyen this week to give an update on the teams’ progress.

Investment bank JPMorgan raised its assessment of the talks to 80% in favour of a deal being agreed ahead of the talks on 24 November, on reports of stronger signs of the two sides reaching a consensus.

The UK’s transition period is set to end on 31 December, leaving just five weeks for a deal to be agreed.

JPMorgan analyst Malcolm Barr said that the EU and UK may now be working on flexible arrangements so that a provisional version of a deal could be in place by 1 January, with EU parliament members to vote on that agreement on 28 December.

To contact the author of this story with feedback or news, email Emily Nicolle

Source: https://www.penews.com/articles/eu-negotiator-en-route-to-london-for-friday-evening-brexit-talks-20201127

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Private Equity

VC firms help B2B software-as-a-service specialist Paddle to $68m Series C round

Paddle, a B2B software-as-a-service platform, has closed its Series C round on $68m to continue its growth momentum.

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Paddle, a B2B software-as-a-service platform, has closed its Series C round on $68m to continue its growth momentum.

The investment was supported by FTV Capital, Kindred Capital, Notion Capital and 83 North.

Paddle offers an all-in-one revenue delivery platform that supports acquisition, renewals, and expansion of companies.

Services available include managed payments, checkout, compliance, data management and more.

Its revenue delivery platform is designed to remove friction for B2B SaaS companies, empowering them to increase their net dollar retention by responding faster to growth opportunities.

Over the past four years, the company has seen an average annual revenue growth of more than 175%. It has doubled in the last year alone, it claims.

In a blog post from Paddle CEO Christian Owens said, “We created Paddle because we’ve seen first-hand the things that limit the growth of a SaaS company often have very little to do with the quality of your product.

“Dealing with payments, managing subscriptions, localizing checkouts in multiple languages, and handling tax and compliance across dozens of markets is hugely complex and each of these challenges makes it harder for businesses to scale quickly.”

Copyright © 2020 FinTech Global

Source: https://www.altassets.net/private-equity-news/by-news-type/deal-news/vc-firms-help-b2b-software-as-a-service-specialist-paddle-to-68m-series-c-round.html

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