WeWork’s biggest investor, SoftBank Group Corp., took over 80 percent of WeWork in a $9.5 billion rescue package in October following the company’s botched initial public offering (“IPO”) attempt. Concerns about the company’s losses and corporate governance forced WeWork to shelve its plans for an IPO in late September leading to the need for an influx of capital to replace what was expected to be raised by WeWork in the IPO. (Eavis and de la Merced, The New York Times). WeWork, valued at $47 billion in January 2019, is valued at the start of 2020 at less than $8 billion. (Hsiao, Top1000funds.com). This $40 billion loss in less than a year is serving as a lesson for investors in high-profile startups with valuations upwards of $1 billion (“unicorns” or “unicorn companies”), and as a warning for growth-stock companies looking to make their public market debuts. (Alpeyev, Tan, Davis and Huet, Bloomberg). This post outlines WeWork’s turbulent 2019 and briefly explores what may become a “unicorn” startup burnout case study business students will study for years to come.
Read MoreThe United Kingdom's Competition and Markets Authority (“CMA”) paused Amazon's investment into online food delivery company Deliveroo while it investigates the deal. (Kate Holton and James Davey, Reuters). In May 2019, Amazon led a $575 million investment, with other businesses, into Deliveroo. (Business Insider). Although Amazon would only retain a minority share in Deliveroo, the CMA is concerned this investment could “result in Amazon and Deliveroo ceasing to be distinct.” (Danica Kirka, AP News).
Read MorePhone carrier giants Sprint and T-Mobile announced an unprecedented merger in the spring of 2018. The merger would create a $146 billion powerhouse company under the T-Mobile name. (Taylor Soper, GeekWire). As of now, T-Mobile and Sprint are the third and fourth-largest carriers in the U.S., just behind AT&T and Verizon. Id. However, the Department of Justice (DOJ) initially wasn’t sold and filed suit to block the merger. (U.S. D.O.J. Compl. 3. July 26, 2019). A deal of this size raises fair market and antitrust concerns for both the D.O.J. and Federal Communications Commission (F.C.C.) and is dependent on the regulators’ approval. (Taylor Soper, GeekWire).
Read MoreCalifornia-based GoodRx Inc. (“GoodRx”), an online and mobile app marketplace for discounts on prescription drugs, has acquired San Francisco-based telemedicine startup HeyDoctor LLC (“HeyDoctor”), an online platform that provides treatment, prescriptions, and lab tests from doctors for routine medical care. (Brown, Bloomberg; LaRock Business Insider). The combined company enables GoodRx to position itself solidly in the virtual health care market by providing HeyDoctor’s telemedical services to its vast network of loyal consumers.
Read MoreSenators Amy Klobuchar (D-MN) and Mike Lee (R-UT), of the Senate Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, recently launched a bipartisan probe into potential antitrust abuses by 5 members of Big Tech (Facebook, Microsoft, Apple, Google, and Amazon). (Victoria Graham, Bloomberg Law). These companies have exhibited a penchant for buying startup companies whose technology could potentially compete against their own or using “platform privilege” to crush competitors who refuse to be bought. This article identifies examples of the anti-competitive behavior in question, discusses the current legislative efforts being pursued to regulate Big Tech and explores economic arguments that support stronger regulation.
Read MoreThe United States Justice Department (the“DOJ”) is doing everything it can to prevent the proposed acquisition of Farelogix Inc. (“Farelogix”) by Sabre Corporation (“Sabre”). However, on November 14, 2018, Sabre announced it had entered into a $360 million agreement to acquire Farelogix. (Sabre). Both companies provide information technology systems that allow airlines to sell tickets. (David McLaughlin, Bloomberg). Sabre believes this acquisition will allow it to accelerate its plans to deliver “future-ready retailing, distribution and fulfillment solutions” that will unlock additional value in the airline industry. (Sabre). The DOJ, however, believes Sabre is attempting to eliminate a disruptive competitor, and, the acquisition, if approved, will lead to higher prices and reduced quality in airlines. (David Shepardson, Reuters).
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