Term Sheet — Thursday, August 9

NO DEAL

Good morning, Term Sheet readers.

Rite Aid and Albertsons have agreed to terminate their merger agreement.

Rite Aid CEO John Standley said that the pharmacy chain had been unable to convince shareholders of the merits to the merger. Grocery giant Albertsons, meanwhile, issued a statement saying it disagreed with Rite Aid stockholders’ concerns that the deal would undervalue the chain and that it refused to change the financial terms of the deal.

If the deal had gone through, Rite Aid shareholders would have owned some 30% of the combined companies.

The merger was supposed to be mutually beneficial — help bolster Albertsons’ plans to go public after more than a decade of ownership by private equity giant Cerberus Capital Management while helping Rite Aid sell all of its assets after the federal government blocked its full sale to Walgreens in 2015. But perhaps most interesting what the CEOs at both companies said: "The merger is the best way for them to compete in businesses increasingly threatened by Amazon.com Inc., along with an emboldened Walmart."

Following the failed merger, both companies will now have to figure out other strategic plans in an effort to stay buoyant in their respectively competitive markets. Read more at Coins2Day.

WHEN THE SEC COMES KNOCKING: The SEC is looking into Tesla CEO’s Elon Musk tweet to take his company private. Regulators want to determine whether Musk was truthful when he tweeted that he had secured funding for what would be the largest-ever corporate buyout, according to the WSJ. And if his claim was false or misleading, Musk could be in hot water with the SEC.

THE VALLEY MEETS WASHINGTON: Founders Fund partner Trae Stephens and Oculus VR founder Palmer Luckey quietly built a secretive defense tech startup called Anduril Industries. (You might remember Stephens from Term Sheet’s ‘5 Qs With a Dealmaker’ in which he detailed his passion for defense tech.)

The duo has published a thought-provoking piece in The Washington Post called, ‘Silicon Valley should stop ostracizing the military.’ In the op-ed, Luckey and Stephens argue that the tech industry has a responsibility to help the U.S. Maintain its global lead. “If tech companies want to promote peace, they should stand with, not against, the United States’ defense community,” they write.

Here’s an excerpt:

When U.S. Tech companies — which have profoundly benefited from the liberties and protections of operating in the United States — shun working with their own government, they do not freeze the global race for defense technology. They simply make the path easier for the United States’ adversaries by default — or worse, by actively collaborating with countries such as China. Whether through action or inaction, companies choose sides.

Tech companies like to talk about making the world a better place. In the past, much of their success in doing so — such as the development of GPS and the Internet — was the result of collaborating with government. Helping ensure that the United States can continue to defend allies and deter aggressors is a powerful way to keep making the world a better place in the coming decades.

Term Sheet readers, I’d love to hear your thoughts on this topic. Email me at [email protected].

VENTURE DEALS

• Beijing Bytedance Technology Co, owner of China’s news aggregator Jinri Toutiao, aims to raise about $3 billion in funding at a $75 billion valuation, according to Reuters. Read more.

• Letgo, a New York-based app to buy and sell locally, raised $500 million in funding from Naspers.

• Capsule, a New York-based online pharmacy, raised $50 million in funding. Investors include Glade Brook Capital Partners.

• PerkSpot, a Chicago-based HR technology platform, raised $50 million in funding from Susquehanna Growth Equity.

• The Professional Fighters League, a Washington D.C.-based mixed martial arts league, raised $28 million in Series B funding. Investors include Elysian Park Ventures, SWaN Ventures, Kevin Hart, Mark Burnett, Tony Robbins and Ted Leonsis.

• Hinge Health, a San Francisco-based provider of digital care for chronic musculoskeletal conditions, raised $26 million in Series B funding. Insight Venture Partners led the round, and was joined by investors including Atomico.

• IS5 Communications Inc, a Canada-based provider of cyber-secure industrial platforms, raised C$22 ($16.9 million) in funding. Phoenix Contact Innovation Ventures led the round, and was joined by investors including ClearSky.

• Capsule8, a Brooklyn, N.Y.-based zero-day attack detection platform purpose-built for production, raised $15 million in Series B funding. ClearSky Security led the round, and was joined by investors including Bessemer Venture Partners and Rain Capital.

• Good Catch, a New York-based food tech brand, raised $8.7 million in Series A funding. Investors include New Crop Capital, Stray Dog Capital, Clear Current Capital, VegInvest, Rocana Capital, Blue Horizon, EverHope Capital, Baleine & Bjorn Capital, M13 and Starlight Ventures.

• Audius, a San Francisco-based developer of a decentralized, community-owned and artist-controlled music-sharing protocol, raised a $5.5 million in Series A finding. General Catalyst and Lightspeed co-led the round, and were joined by investors including Kleiner Perkins, Pantera Capital, 122West and Ascolta Ventures.

• Kebotix, a Cambridge, Mass.-based materials discovery company, raised more than $5 million in seed funding. One Way Ventures led the round.

• Sagewise, a Long Beach, Calif.-based tech company focused on resolving disputes involving smart contracts, raised $1.25 million in seed funding. Wavemaker Genesis led the round.

HEALTH AND LIFE SCIENCES DEALS

• DNAlite Therapeutics Inc, a San Francisco-based gastrointestinal gene therapy biotech startup, raised $1.5 million in seed funding. Berkeley Catalyst Fund led the round, and was joined by investors including University of California Berkeley, Blue Bear Ventures, SOSV, the Baldota family, BrightGene and SVE Capital.

PRIVATE EQUITY DEALS

• Providence Equity Partners made an investment in KPA, a Lafayette, Colo.-based provider of environmental health and safety risk management solutions. Financial terms weren't disclosed.

• VLS Recovery, which is backed by Aurora Capital Partners, acquired Beauchan Rail Services, a Friendswood, Texas-based provider of railcar cleaning and product transfer services. Financial terms weren't disclosed.

• Symplicity Corp, a portfolio company of H.I.G. Capital, acquired Contratanet, a network of career portals for jobs and internships in Brazil. Financial terms weren't disclosed.

• Lincoln Road Global Management LLC made an investment in Pro-Tec Fire & Safety, an Atlanta-based provider of fire extinguisher and safety services. Financial terms weren't disclosed.

• Sotera Health, which is backed by Warburg Pincus and GTCR, acquired Gibraltar Laboratories, a Fairfield, N.J.-based provider of microbiology and analytical chemistry testing for pharmaceutical and medical device manufacturers. Financial terms weren't disclosed.

• Sentinel Capital Partners sold WellSpring Pharma Services, a Sarasota, Fla.-based pharmaceutical contract manufacturing organization. Financial terms weren't disclosed.

• Carrick Capital Partners made an investment in Discovery Health Partners, an Itasca, Ill.-based information-driven healthcare cost containment solutions. Financial terms weren't disclosed.

IPOs

• Amalgamated Bank, a New York-based union-owned commercial bank, raised $104 million in an offering of 6.7 million shares priced at $15.50, at the lower end of its $15 to $17 range. The firm posted interest income of $139.1 million in 2017. Barclays, J.P. Morgan, and Keefe Bruyette Woods are underwriters. It plans to list on the Nasdaq as “AMAL.” Read more.

• Rattler Midstream Partners, a Midland, Texas-based provider of natural gas and water-midstream services in the Permian Basin, filed to raise up to $100 million in an IPO. The firm posted revenue of $51.5 million in 2017 and income of $25.2 million. Diamondback backs the firm. Credit Suisse, BofA Merrill Lynch, and J.P. Morgan are underwriters. It plans to list on the Nasdaq as “RTLR.” Read more.

EXITS

• Blackstone acquired PSAV, a Schiller Park, Ill.-based events company. The sellers were Goldman Sachs and Olympus Partners. Financial terms weren't disclosed.

• Prospect Partners sold its interest in Water Co. Holding, an operator of water treatment appliances outlets, to Culligan International Company.

FIRMS + FUNDS

• Welsh, Carson, Anderson & Stowe, a New York-based private equity firm, raised more than $2.8 billion for the first close of its thirteenth fund, according to an SEC filing.