_{PRIVATE DEAL OF THE MONTH}

General Atlantic and Stripes Take a Lunge with Vuori

If you are like me, you have probably begun slowly replacing your Lululemon wardrobe with Vuori over the past few years as the brand has gained traction. While Vuori isn’t quite at Lulu’s scale yet, it’s undeniably comfortable.

And in an effort to get a corporate discount on all of its Vuori merch, General Atlantic and Stripes have placed a massive bet on Vuori, with GA leading the $825 million round valuing the Company at $5.5 billion.

Listen, this valuation is crazy, we all know that right? We are looking at a $5.5 billion valuation, implying a 13x revenue multiple!

GA’s bet though is that there are many people like me out there, who think that Vuori can overtake Lulu in the athleisure segment. Lulu is a $40 billion company and is generally a public market success story (See the 5-year performance chart below).

Now, about that valuation—Lulu, which is more mature and arguably has fewer growth levers left, trades at around a 3x revenue multiple. While still a rich valuation, it’s much more reasonable by comparison.

There’s no guarantee that Vuori will become the next Lululemon, but one thing is for sure: the athleisure market is expanding rapidly. People like me are pushing the boundaries on when it’s appropriate to wear athleisure in formal settings, which only fuels that growth.

I personally hope that Vuori is the next Lulu and a rocket ship for GA, but that is partially because I am hoping for a couple of extra pairs of pants thrown my way as a loyal customer here.

_{PRESENTED BY SENSATE}

The $5T Wellness Market Awaits

Join top VCs and back a Tracxn-named ‘Minicorn’ tackling two major challenges: stress and sleep. Sensate’s relaxation device has earned accolades from Forbes ("genius"), Real Simple (Best Sleep Aid), and Time (Innovation of the Year)—all while delivering calming relief in just 10 minutes.

Sensate Highlights:

• 2023 Revenue: $5.32M net, with $17M+ in cumulative revenue

• High Conversion Rate: 50%+ of users upgrade to premium subscription

• Global Reach: Selling in 50+ countries and online at Amazon, Best Buy, and Walmart, with over 20 B2B partners

• Patented Innovation: Protected by patents in the U.S., U.K., Europe, and Asia

• VC-Backed Growth: Supported by 9 VCs including Incisive Ventures, TenOneTen, Dangerous Ventures, and Capital Factory

With the wellness economy expected to reach $9T by 2028, Sensate is positioned to make a lasting impact. Product-market fit is proven, and profitability is projected with the current funding round.

_{PUBLIC DEAL OF THE MONTH}

Siemens Flies Away with Altair Engineering Acquisition

While us Americans have spent the better part of the past few weeks looking at the election, companies have been busy looking at deals, led by Siemens dropping a multi-billion dollar deal earlier this month.

So what deal is bringing us back in from our star spangled hype train? Well, it’s European, unfortunately. Siemens has agreed to acquire Altair Engineering for $113/share, or ~$10 billion.

This represents a ~19% premium to the unaffected share price prior to the transaction, and is expected to add ~$150 million of cost synergies, in addition to $500 million or more of revenue synergies.

The transaction is expected to be EPS accretive within two years of closing, and will be fully funded using existing cash on the balance sheet.

Siemens has a strong balance sheet, but as we have discussed previously investors tend to get a little worried if public companies take on substantive debt to fund acquisitions, especially at high premiums, but Siemens is taking proactive steps with a deleveraging strategy funded by cash from the recent sale of its Innomotics division, which wrapped up earlier this year.

Additionally, Siemens has a solid history of acquisitions, which has been supported by a disciplined approach to its portfolio, including divestments of non-core assets in recent years, which have netted over $8 billion in value to Siemens.

Despite the hefty premium paid, it looks like Siemens shareholders are neutral on the transaction, with the stock only trading off slightly over the past month, including a slight rally over the past few days.

Obviously, Altair shares have traded up significantly, jumping up to ~$104/share, which implies shareholders are leaving some room for potential transaction risks associated with this deal as it awaits approval.

This will be an interesting transaction to follow. Siemens’ history of successful acquisitions means they have the expertise to fund, close, and integrate deals smoothly. It will be interesting to see how long Siemens holds this one and if my analyst will be writing a Buysiders_v2 about this divestment one day.

_{ACTIVIST CAMPAIGN OF THE MONTH}

Nissan Gets Taken for a Ride

When you think of corporate raiders, most people think of the golden age of American finance, where guys like Icahn were raiding corporations. Nowadays, people think of Bill Ackman and Paul Singer, a man who scares the Argentine Navy more than Margaret Thatcher ever could.

What rarely gets attention is activism targeting established firms in non-Western markets. That’s precisely the case here, as Effissimo, a prolific Asian activist firm, has taken a large stake in Nissan. This move follows Nissan’s recent announcement of deep cost-cutting and restructuring measures after months of declining share prices and a staggering 94% drop in net income for the first half of the year.

Nissan’s ambitious plan includes a reduction of 9,000 jobs and a major overhaul of its operations, including a 20% cut in production capacity, quite a steep decline compared to its production peak just a few years ago.

Nissan shares have jumped up ~12% over the past 5 days on the back of the announcement of Effisimo’s involvement in the company.

Japanese companies are historically insulated from public criticism and shrouded in a bit of mystery (and hierarchy and bureaucracy), so activism has historically been challenging and frowned upon in the region.

But in recent years, activism has started to gain traction as investors see untapped potential for improvement in large Japanese corporations.

Effissimo, already a major player with a 30% stake in Nissan’s specialty and commercial vehicle division, is one of Japan’s most influential activist investors. Its moves often signal opportunity to other investors, prompting analysts to question whether the market has been overly pessimistic about Nissan.

While understanding the intricacies of Japanese corporate culture may be complex, one thing is evident: Nissan is facing serious challenges and lagging behind its domestic competitors. With Effissimo stepping in, there’s hope for a turnaround. Activism can be a force for positive change, and perhaps this is the catalyst Nissan needs to steer toward a brighter future.

_{NEWS ROUNDUP}

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