June 19, 2022: Expect More M&A Activity

Major indices reverted back to their pre COVID peaks, and the S&P posted its worst week since March 2020 despite a slight rise yesterday, according to Morning Brew. M&A is likely to pick up, and is likely to be a significant driver of value for Canadian tech firms in 2022, according to PwC. Telus Corp. (T-TSX) said Thursday it agreed to pay $2.3 billion (US$1.8 billion) plus assume $600 million in debt to buy LifeWorks Inc (LWRK-TSX), a Toronto-based human resource consulting and technology services company in the health and wellness sector. Thirty-five privately-held Canadian tech startups are on their way towards reaching $1 billion in annual revenue, according to a new data-based initiative from Kitchener-Waterloo tech hub Communitech. Voyager Digital (VOYG-TSX) signed a term sheet for US$200 million and 15,000 BTC revolving line of credit with Alameda Research. Klarna Bank AB is considering raising fresh funds at a significantly lower valuation than it achieved a year ago, according to people familiar with the situation, a sign of the punishing environment for tech companies. Roku stock jumped after unveiling Walmart e-commerce partnership. Shares of e-commerce companies Jumia and MercadoLibre plummet following Insider’s report about Amazon’s expansion plan in Africa and South America. Alibaba, NIO stocks soar after report Ant Group OK’d to set up financial holding company. The U.S.-listed shares of China-based companies were seeing big and broad gains in premarket trading Friday, after Reuters reported that China’s central bank accepted Ant Group’s application to set up a financial holding company. MicroStrategy CEO Michael Saylor says there’s no margin call on its bitcoin loan and it has plenty of collateral. Coinbase stock falls 15% as cryptocurrencies lose billions.

Solar is hot – community solar is hotter. Community solar is the smallest segment of the U.S. solar market; however, it is growing rapidly and would undeniably represent the fastest growing segment should the DOE’s 2025 goal be met. As such, there are not many ways for investors to participate outside of a few companies including Sophic Client, UGE International (TSXV:UGE, OTCQB:UGEIF). 

Sophic Client Jasper PIM (JPIM:CA): CEO interview – mega opportunity from small and micro customers. Jasper Commerce offers solutions that simplify product information management (PIM) for major brands such as, Samsonite, Skullcandy, and Jamieson Vitamins, among others. Read more in our interview with, Jon Marsella, CEO/Founder. 

Voyager Digital (VOYG-TSX) signs term sheet for US$200 million and 15,000 BTC revolving line of credit with Alameda Research.

The Company signed a non-binding term sheet with Alameda Research to secure a revolving line of credit providing Voyager with access to further capital. The Company pursued this term sheet considering the current crypto market conditions. The proceeds of the credit facility are intended to be used to safeguard customer assets in light of current market volatility and only if such use is needed. Voyager is putting the facility in place to better serve and protect its customers. The term sheet with Alameda Research provides for revolving term credit facilities each having a term expiring December 31, 2024, and having an annual interest rate of 5% payable on maturity. The first credit facility is a cash/USDC-based credit facility with an aggregate principal amount of US$200 million. The second revolving credit facility is for 15,000 in Bitcoin (BTC). The credit facilities will only be used by Voyager if needed to safeguard customer assets. In addition to the funds available under the credit facilities, Voyager has more than US$200 million on its balance sheet. https://bit.ly/3tL5RxM

Telus buying LifeWorks in Canadian tech tie-up.

Telus Corp. said Thursday it agreed to pay $2.3 billion (US$1.8 billion) plus assume $600 million in debt to buy LifeWorks Inc., a Toronto-based human resource consulting and technology services company in the health and wellness sector. Telus will acquire all of the issued and outstanding common shares of LifeWorks for $33 per share. Including the $600 million in debt, the deal value for LifeWorks totals $2.9 billion. Shares of LifeWorks closed at $18.20 on Wednesday. The stock is down 28.7% so far this year. https://bit.ly/3xDWWj8

Crypto company FTX Exchange acquires Bitvo, plans to officially launch in Canada.

Bahamas-based FTX Exchange, one of the world’s largest cryptocurrency companies, plans to officially launch its business in Canada by acquiring Bitvo Inc., a Calgary-based crypto exchange that is regulated by all 13 provincial and territorial securities commissions across the country. The move by FTX comes amid severe industry volatility, as cryptocurrencies continue to plunge to multiyear lows. Several crypto companies, such as Coinbase Global Inc., are making deep cuts to their work force. Crypto lender Celsius Network Ltd. has halted operations indefinitely – leaving millions of its customers in limbo, and accelerating a global rout for crypto. Neither FTX or Bitvo would reveal the exact terms or valuation for the acquisition, which is expected to close in the third quarter this year pending regulatory approval. https://tgam.ca/3xsKwu0 

M&A likely to be a significant driver of value for Canadian tech firms in 2022.

Recent data from PwC indicates that the growth of Canadian mergers and acquisitions in 2021 mirrored a global explosion in M&A deal-making last year. Given new market headwinds that have emerged since 2021, the two PwC reports offer an outlook for what to expect from M&A for the rest of 2022. According to PwC’s Global M&A Industry Trends study, global M&A broke prior records by a considerable margin. The number of announced deals surpassed 62,000 globally in 2021, up 24 percent from 2020. The value of all publicly disclosed deals reached US$5.1 trillion, 57 percent higher the total deal value than in 2020. PwC’s Canada-focused M&A report found M&A activity across the country saw similarly explosive growth last year. In 2021, the total value of Canadian private M&A deals exceeded $171 billion, up from $105 billion in 2020. The report also found Canadian M&A deal volume increased by 24 percent over the same period. PwC’s Canadian report noted that it’s still unclear how inflation, higher interest rates, and increased risks around the global economy will impact valuations, but said M&A will likely continue to be a “powerful tool to create value” for Canadian firms in 2022. https://bit.ly/3QsKUl7 

New analysis identifies 35 Canadian tech companies on path to $1 billion in annual revenue.

Thirty-five privately-held Canadian tech startups are on their way towards reaching $1 billion in annual revenue, according to a new data-based initiative from Kitchener-Waterloo tech hub Communitech. Communitech has identified companies like Burnaby-based legaltech startup Clio, Kitchener-Waterloo EdTech firm ApplyBoard, and Montréal-based construction company RenoRun as among the 35 Canadian startups on the path to hitting $1 billion in annual revenue, based on their current annual revenue and growth rate. This 35 firm list was assembled by Communitech using data gathered by Silicon Valley Bank, analysis by New York data science firm Two Sigma, and a model it developed to assess company potential. Last year, the companies named generated $5.1 billion in combined annual revenue, average annual revenue of $141 million, and average year-over-year growth of 149 percent during 2021. https://bit.ly/3mUChlH

Wealthsimple, valued at $4 billion last year, joins the fintech layoffs list.

Canadian fintech giant Wealthsimple, which was valued at $4 billion as of last year, is laying off 159 people — or about 13% of its staff. The Toronto-based company has been a leader in the realm of democratizing financial products for consumers, including stock trading, crypto asset sales and peer-to-peer money transfers. And now it appears that Wealthsimple is an example of another company that experienced a boom during the early days of the pandemic and is now seeing a slowdown in business. Wealthsimple’s last raise was a $610 million round led by Meritech and Greylock. At the time, the company said it had over 1.5 million users and had over $10 billion in assets under management as of the last publicly available numbers. It has raised about $900 million over its lifetime, according to Crunchbase. Prior to today’s layoff, it had 1,262 employees. https://tcrn.ch/3xE492G

CapIntel closes $14.2 million Series A to fuel US expansion of wealth management sales platform.

CapIntel caters to three of Canada’s Big Five Banks and some of the country’s largest wealth and asset management firms. Now it wants to tackle the United States (US) market. Over 10,000 financial advisors currently use the Toronto-based FinTech startup’s wealth management sales platform to provide more than two million households with investment advice and services. CapIntel’s “majority equity” Series A round, which included a small SAFE component, closed in May. In addition to FinTech Collective, the round saw participation from Toronto’s Fengate Asset Management on behalf of its investor, the LiUNA Pension Fund of Central and Eastern Canada. The financing brings CapIntel’s total funding to about $16.1 million (US$12.5 million). https://bit.ly/3xUmkCm 

Snowman gaming studio spinout Pok Pok closes $3.9 million to help kids learn through play.

Pok Pok was spun out of Toronto gaming studio Snowman by parents who wanted to give their young children a different kind of mobile game. The Toronto-based EdTech startup is the company behind Pok Pok Playroom, an award-winning, play-based learning mobile iOS game for kids aged two to six designed to both entertain and encourage children to become “creative, out of the box thinkers.” After spending the last year “fine-tuning” Pok Pok Playroom, Pok Pok has secured $3.9 million  (US$3 million) in seed funding from gaming-focused VCs to ramp up its sales and marketing efforts. The startup also plans to invest some of the capital in research and development, as the company looks to add more toys to the Pok Pok Playroom and grow into serving other age groups. The app is available in Canada on a subscription basis for $11.49 per month or $74.99 annually. The startup also offers a free seven-day trial. https://bit.ly/39ugdeL 

Babbly secures $3.2 million to scale speech development software for children.

Toronto-based SaaS startup Babbly has raised $3.2 million (US$2.5 million) in an all-equity seed round that closed in March. Representing Babbly’s first institutional raise, the financing was led by Esplanade Ventures and with participation from American Family Insurance Institute for Social Impact, and Trend Forward Capital. Esplanade Ventures’ Sheldon Elman will join Babbly’s board of directors. Founded in 2018 by Maryam Nabavi (CEO) and Carla Margalef Bentabol (CTO), Babbly is developing a speech and language development platform for infants using artificial intelligence (AI). Babbly collects video and audio recordings from parents and leverages machine learning models to analyze children’s speech patterns.  https://bit.ly/3mPs61E 

Inovia raises $420 million for fifth early-stage venture fund.

Inovia Capital has secured $420 million (US$325 million) for its fifth fund focused on early-stage investing. The latest fund adds a new pool of early-stage capital for Inovia to draw on as continues its multi-layered investment strategy: committing cheques early and then doubling down on its winners. Fund V brings Inovia’s total capital under management to US$2.2 billion. This is the first early-stage fund Inovia has closed since the $265 million (US$200 million) raised for Fund IV in 2019. At that time, the venture firm also raised $430 million (US$400 million) for a growth-stage fund. Inovia did not share the full list of LPs in Fund V, though the list includes a number of longtime investors. The LPs in Fund V include Alberta Enterprise Corporation, AVAC Group, Business Development Bank of Canada (BDC), Teralys Capital, British Columbia Investment Management Corporation (BCI), Caisse de dépôt et placement du Québec (CDPQ), Fondaction, Fonds de solidarité FTQ, iA Financial Group, HarbourVest, Investissement Québec, Kensington, Northleaf, Scotia Bank, and Trans-Canada Capital (TCC). https://bit.ly/3OclCWm

Fintech giant Klarna slashes fundraising ambition.

Klarna Bank AB is considering raising fresh funds at a significantly lower valuation than it achieved a year ago, according to people familiar with the situation, a sign of the punishing environment for tech companies. The Swedish payments firm is in talks with investors about a deal that could value the company at around $15 billion, the people said, less than it was seeking just last month. The Wall Street Journal reported Klarna was in talks to raise up to $1 billion at a low $30-billion-range valuation. One of the people said the current talks could yield at least $500 million. There is no guarantee a deal will take place. https://on.wsj.com/3Osrzid

Lawmakers make bipartisan push for new government powers to block U.S. investments in China.

Congress is pressing ahead with legislation that could rewrite the rules for American companies investing abroad, proposing the screening of investments in countries like China seen as adversaries to protect U.S. technologies and rebuild critical supply chains. The measure, part of broader legislation to bolster U.S. competitiveness with China, would require American companies and investors to disclose certain new outbound investments and authorize the executive branch to form a new interagency panel to review and block investments on national security grounds, according to congressional aides and a revised draft of the bill reviewed Monday by The Wall Street Journal. https://on.wsj.com/3Oo82zn

Spotify to slow hiring plans, cites economic uncertainty.

Spotify Technology SA will slow hiring growth by 25%, the latest sign of how fears of a recession are weighing on the economy.The world’s largest on-demand audio service has been on a hiring spree for years, adding more than 2,000 employees between 2019 and 2021 for a total of 6,617 at the end of last year. The company will continue to add headcount in the coming months, but it will adjust its plans in light of macroeconomic factors, Chief Executive Officer Daniel Ek said in a note to staff Wednesday. Inflation and rising interest rates have led to rising worries in the corporate world of an economic slowdown. The S&P 500 is down more than 20% this year, and technology stocks like Spotify have been hit particularly hard. Shares in the company have declined more than 50% so far this year. https://bloom.bg/3xv6PiN

Digital World stock tumbles after SPAC buying Trump Media discloses another SEC subpoena.

Shares of Digital World Acquisition Corp. tumbled 8.2% in premarket trading Monday, after the special purpose acquisition company (SPAC) that is buying the company behind Donald Trump’s Truth Social said it received another subpoena from the Securities and Exchange Commission related to the acquisition. The SPAC said the subpoena seeks additional information on “communications regarding and due diligence of of potential targets other than TMTG” [Trump Media & Technology Group Corp.] and relationships between Digital World and certain advisors, shareholders, as well as certain forward-looking information about TMTG. Digital World are previously disclosed in May a subpoena from the SEC seeking documents and information regarding several things, including meetings of the board of directors, the evaluation of potential acquisition targets including TMTG, communications relating to TMTG and payments made to certain advisors. The stock has plunged 38.6% over the past three months through Friday, while the S&P 500 has declined 7.2%. https://bit.ly/3MO9BFt 

Roku stock jumps after unveiling Walmart e-commerce partnership.

Roku is jumping into the e-commerce space with Walmart. On Thursday, shares in Roku jumped after company unveiled a partnership with Walmart to make TV streaming the next frontier in online shopping by closely tieing entertainment to an e-commerce store.  Going beyond the QR code, TV viewers will be able to use their remote device during a shoppable TV commercial to select a product and go directly to checkout using Roku Pay, Roku’s payments platform. Walmart will be the exclusive retailer to allow streamers to shorten the time from inspiration to purchase, as products are fulfilled by Walmart directly on Roku’s streaming platform. By tapping “OK” on the Walmart checkout page, the order will be instantly done and emailed details will follow with shipping, return and support information. This first pilot program that fuses entertainment with transactional commerce is underway. Shares in Roku were up $3.35, or just over 4 percent, to $81.93 in after-hours trading on Thursday. https://bit.ly/3QxzqwS 

Shares of e-commerce companies Jumia and MercadoLibre plummet following Insider’s report about Amazon’s expansion plan in Africa and South America.

Two leading e-commerce companies in Africa and South America saw their stock tumble on Thursday, following Insider’s report about Amazon’s plans to further expand into those regions. Jumia, a leading online marketplace provider in Africa, saw its shares drop nearly 10% as of Thursday afternoon. MercadoLibre, the largest e-commerce company in Latin America with services across Brazil, Argentina, and Chile, slipped more than 7%. The declines come amid broader market rout this week after the Federal Reserve announced the biggest interest-rate increase in nearly 30 years. The S&P 500 was down about 2.9% as of Thursday afternoon, while the Nasdaq Composite dropped 3.6%. https://bit.ly/3N0WGjL

Alibaba, NIO stocks soar after report Ant Group OK’d to set up financial holding company.

The U.S.-listed shares of China-based companies were seeing big and broad gains in premarket trading Friday, after Reuters reported that China’s central bank accepted Ant Group’s application to set up a financial holding company. That fueled hopes that China’s regulatory crackdown was easing. The iShares China Large-Cap exchange-traded fund jumped 4.1%. Among the more-active China American depositary shares (ADS), shares of Alibaba Group Holding Ltd. shot up 9.3%, NIO Inc. ran up 5.1%, JD.com Inc. climbed 9.2%, Pinduoduo Inc. powered up 6.8% and XPeng Inc. hiked up 6.7%. The FXI ETF has gained 0.1% over the past three months through Thursday, while the S&P 500 has dropped 16.9%. https://bit.ly/3QpEXFw

MicroStrategy CEO Michael Saylor says there’s no margin call on its bitcoin loan and it has plenty of collateral.

MicroStrategy investors should not worry about a potential margin call on its loan backed by bitcoin as the software maker has plenty of collateral to pledge if needed, CEO Michael Saylor told Bloomberg on Tuesday.  “As long as the Silvergate loan remains collateralized with an LTV less than 50%, there is no margin call,” Saylor wrote in an email to Bloomberg, referring to loan to collateral value ratio. “We manage accordingly.” MicroStrategy’s stock rose more than 3% during Tuesday’s session after Monday’s 25% plunge on fears of a margin call as bitcoin plummeted. Bitcoin’s recent sell-off has pushed the cryptocurrency’s price towards US$21,000. The company in May said bitcoin would need to fall to around that price before a margin call would be triggered on its $205 million loan made by a unit of Silvergate Bank. Bitcoin on Tuesday traded at US$22,284.76, paring losses to 1%. MicroStrategy took out debt to buy bitcoin at higher prices. It owns almost 130,000 bitcoin on its balance sheet, purchasing them at an average price of US$30,700 over the past two years. https://bit.ly/3MTWfYy

Coinbase stock falls 15% as cryptocurrencies lose billions.

Cryptocurrencies lost billions and fell below a US$1 trillion market cap. Investors are fleeing risk assets in light of Friday’s inflation report. Coinbase stock fell as much as 15% Monday amid a broader crypto selloff that slashed billions from the total market value. Shares of the popular cryptocurrency platform were changing hands at US$49.73 at presstime. Coinbase stock is down 82% from the start of the year. Coinbase made headlines in recent weeks when it rescinded several job offers via email over shifting market conditions, and said it expected a hiring freeze to continue into the “foreseeable future.”  Risk assets are proving less attractive after Friday’s Consumer Price Index report showed inflation rising at the quickest pace in 41 years. https://bit.ly/3tAizPY 

Zendesk stock rises on report of talks with activist investor Jana.

Shares of Zendesk Inc. rose more than 4% in the extended session Tuesday after The Wall Street Journal, citing people familiar with the matter, said that the software company is in talks with activist investor Jana Partners LLC. Zendesk and Jana are “discussing a truce” that could involve Chief Executive Mikkel Svane stepping down, in addition to changes to the board, including removing director Carl Bass, the Journal reported. Zendesk earlier this month said it would continue as a standalone public company after receiving “no actionable” buyout bids as it pursued a potential sale. The stock ended the regular trading day down 5%.  https://bit.ly/3tFd16J

Amazon says it’s going to start making Prime deliveries by drone later this year, beginning in California.

Amazon said Monday it’ll start making Prime Air deliveries via drone later this year. It’ll begin in Lockeford, California. Customers will have packages dropped off in their backyards. Customers there will see items available for Prime Air delivery on Amazon. They’ll make purchases as usual, and a drone will fly to the designated delivery location. The device will descend into the customer’s backyard, hover and release the package, and fly back up again. The FAA gave Amazon the all-clear to start delivery drone operations in 2020. Prime Air has seen some turbulence over the years. In March, Insider’s Katherine Long reported that Amazon’s drones had crashed at least eight times in the past 13 months. At least one of those crashes led to a fire, setting a field ablaze in Oregon. https://bit.ly/3Od500H

Google engineer believed chatbot had become an 8-year-old child. Experts say it’s not sentient — just programmed to sound ‘real’.

Last week, a Google engineer was put on leave after he claimed the company’s chatbot was sentient. Insider spoke with seven experts that said the chatbot likely isn’t sentient. There are no clear guidelines for determining whether a robot is alive and conscious, experts say. It’s unlikely — if not impossible — that a Google chatbot has come to life, experts told Insider after one of the search giant’s senior engineers was suspended for making startling claims. A Google spokesperson said a team of ethicists and technologists have reviewed Lemoine’s claims. They said there is no evidence to support them. https://bit.ly/39leyIt

Facebook is changing its algorithm to take on Tik Tok, leaked memo reveals.

Facebook employees were recently given a new directive with sweeping implications: make the app’s feed more like TikTok. Simply bringing Reels, the company’s short-form video feature, from Instagram into Facebook wasn’t going to cut it. Executives were closely tracking TikTok’s moves and had grown worried that they weren’t doing enough to compete. In conversations with CEO Mark Zuckerberg earlier this year, they decided that Facebook needed to rethink the feed entirely. In an internal memo from late April obtained by The Verge, the Meta executive in charge of Facebook, Tom Alison, spelled out the plan: rather than prioritize posts from accounts people follow, Facebook’s main feed will, like TikTok, start heavily recommending posts regardless of where they come from. And years after Messenger and Facebook split up as separate apps, the two will be brought back together, mimicking TikTok’s messaging functionality. Combined with an increasing emphasis on Reels, the planned changes show how forcibly Meta is responding to the rise of TikTok, which has quickly become a legitimate challenger to its dominance in social media. While Instagram has already morphed to look more like TikTok with its focus on Reels, executives hope that a similar treatment to Facebook will reverse the app’s stagnant growth and potentially lure back young people. The moment is similar to when Facebook copied Snapchat as it was growing quickly, but this time, the stakes are arguably higher. Investors are doubting Meta’s ability to navigate challenges to its ads business. And with its stock price already battered, the company needs to show that it can grow if Zuckerberg wants to keep funding his metaverse vision. https://bit.ly/3y1V0SH

YouTube says more than 1.5 billion people are watching Shorts each month.

A lot of people are watching short-form videos on YouTube after nearly two years of YouTube giving creators lucrative cash bonuses and expanding features to be increasingly like TikTok. 1.5 billion monthly users who are logged in to an account are watching short-form videos on YouTube’s TikTok clone, the company announced today. That’s compared to around 2 billion logged-in users who visit the platform monthly as of April, according to TechCrunch. Launched in 2020, YouTube Shorts is the platform’s answer to TikTok’s ascent. Since then, Shorts have gradually made their way across the platform, including in recommendations, and the company has added additional features mimicking TikTok, like sampling. As of April, Shorts were racking up 30 billion views a day, according to Google. https://bit.ly/3mRS3Of

Twitch expands ad programs to pay streamers more money.

Twitch is expanding its ad incentive program to include more creators and pay them more money. Earlier this year, Twitch began offering select streamers a flat, guaranteed payment in exchange for running a fixed amount of ads during a fixed number of hours. Now, Twitch is opening up the program to include more partners and is changing the way it structures payouts to pay creators more. Originally, payouts earned with the ad incentive program were calculated using a CPM model. Basically, streamers would get a flat rate for every 1,000 ads watched on their channel. Back in April, a Bloomberg report stated that Twitch was investigating ways to increase earnings by potentially decreasing revenue share with its top streamers. The report sparked immediate backlash from the platform’s best-known names; however, Twitch has not confirmed that it will make any changes to its current model. https://bit.ly/3mOZ4PZ 

Steam games are coming to Nreal’s augmented reality glasses.

Nreal users can now play some Steam games on their augmented reality glasses. The Chinese company has released the beta version of “Steam on Nreal,” which gives users a way to stream games from their PC to their AR eyewear. Nreal admits that installing the beta release will require a bit of effort during the setup process, and the current version is not optimized for all Steam games just yet. It will work on both Nreal Light and Nreal Air models, though, and it already supports some popular titles like the entire Halo series. In an effort to offer more content and perhaps entice those on the fence to grab a pair of its glasses, Nreal has also announced AR Jam, an online international contest for AR developers that will kick off on June 27th. Developers can compete in various categories that include at-home fitness, art, games and video, with each one having a US$10,000 grand prize. Those interested can head over to the company’s Developer page for more information. https://engt.co/3xWNBnA 

FuboTV now integrates gambling into live sporting events.

FuboTV will soon let you place bets on live sports. Some users will get to make wagers using real cash, while everyone can participate in free contests. Starting June 19th, all FuboTV users will be able to predict the outcome of live games. Before select games start, users will be able to choose which team they think will win. This will earn them points — not actual cash — that’ll give them a place on a leaderboard, letting them compete against friends and other FuboTV users. FuboTV calls this game Perfect Pick’ems and says it plans on launching other competitions in the future. Just like live betting features offered by other services, like DAZN and Sling, FuboTV’s gambling features face one large but slowly disappearing obstacle: legality. In 2018, the Supreme Court overturned a law that makes sports gambling illegal, meaning individual states are free to choose whether to make sports gambling and its various forms legal. As states move toward loosening restrictions, other major services are bound to give users a way to get in on gambling, with Disney even exploring ways to integrate gambling with ESPN. https://bit.ly/3OgZVo6

Penn National Gaming employee made US$560,000 trading on insider information, feds say.

In March 2021, Penn National began discussions with Score Media & Gaming, of Toronto, regarding a potential acquisition, and in June, assigned several employees to conduct due diligence. Roda was one of those employees. Penn National Gaming operates gambling properties in more than 20 states and pushed into digital gaming by buying Canada’s Score Media & Gaming, operator of theScore app, for about US$2 billion. The deal built on Penn National’s stake in Barstool Sports Inc., a sports content and podcasting brand. Penn National has also launched a Barstool-branded betting app in the United States. In a court filing, the U.S. Attorney’s Office in Philadelphia alleged the following: On July 8, Roda was added to the team at Penn National and Penn Interactive that conducted due diligence on the deal. Then, on July 22, Roda purchased 200 Score Media call option contracts for about US$13,000. A senior officer at Penn Interactive told Roda in August the acquisition would be announced within days, and Roda purchased 300 more Score Media call option contracts for US$7,000. The following day, Penn National announced it would acquire Score Media, whose stock price rose dramatically. Roda turned the US$20,935 he spent on 500 call options into US$581,697, netting profits of US$560,762, federal officials said in U.S. District Court for the Eastern District of Pennsylvania, in Philadelphia. https://bit.ly/3mWjd6D

Amazon offers to share data, boost rivals to dodge EU antitrust fines.

Amazon has offered to share marketplace data with sellers and boost the visibility of rival products on its platform, trying to persuade EU antitrust regulators to close their investigations without a fine by the end of the year, people familiar with the matter said. The world’s largest online retailer is hoping its concessions will stave off a potential European Union fine that could be as much as 10% of its global turnover, Reuters reported last year. The European Commission in 2020 charged Amazon with using its size, power and data to push its own products and gain an unfair advantage over rival merchants that sell on its online platform. It also launched an investigation into Amazon’s possible preferential treatment of its own retail offers and those of marketplace sellers that use its logistics and delivery services. Amazon has now proposed to allow sellers access to some marketplace data while its commercial arm will not be able to use seller data collected by its retail unit, the people said. The company will also create a second buy box for rival products in the event an Amazon product appears in the first buy box, the people said. https://reut.rs/3QsIDWZ

Warren proposes sweeping ban on location and health data sales.

As the Supreme Court’s expected decision to overturn Roe v. Wade looms over Washington, Sen. Elizabeth Warren (D-MA) has announced sweeping legislation to ban the sale of location and health data. Warren’s Health and Location Protection Act — cosponsored by a slate of Democratic senators, including Sens. Bernie Sanders (I-VT) and Ron Wyden (D-OR) — would bar “data brokers from selling or transferring location data and health data.” There are few limitations, making the bill one of the most strident proposals aimed at regulating data sales. If approved, the bill would empower the Federal Trade Commission, state attorneys general, and people hurt by an unlawful data sale to sue brokers found to have violated the law. The FTC would also receive an additional $1 billion over the next decade to aid in enforcing the law. The only exceptions to the bill apply to specific activities protected by HIPAA or the First Amendment, according to the text of the bill.  https://bit.ly/3QncvEe

Apple goes deeper into finance with buy now, pay later offering.

Apple tiptoed into finance with Apple Pay and the credit card it launched three years ago with Goldman Sachs Group Inc. Now it is going all in. The tech giant is launching a buy now, pay later offering in the U.S. later this year that will allow consumers that shop with Apple Pay to split purchases into four payments every two weeks. Apple will underwrite the loans and fund them, which also means absorbing losses when borrowers fail to repay. An Apple subsidiary has obtained lending licenses in most states to offer the new payment plans, called Apple Pay Later. Much like a bank, the tech giant will rely on credit reports and FICO scores to check applicants’ financial standing. But it also plans to use its giant store of Apple ID data for identity verification and fraud prevention, the people said. https://on.wsj.com/3Qf3ddz

What Taiwan risk? Island’s chipmakers embark on US$120 billion buildup.

Taiwan’s chipmakers have launched an unprecedented investment spree worth around US$120 billion that will strengthen their grip on the global market, even as the U.S. warns against overreliance on an island at risk of a Chinese invasion. TSMC has just completed four new facilities in the area. Still hungry for capacity, the company is now building four more fabs there for production at the cutting-edge 3-nanometer level. Each of these locations will cost around US$10 billion. This construction boom extends beyond TSMC and the city of Tainan. At least 20 new factories are under construction or recently completed across the island, Nikkei research shows, stretching from New Taipei City in the north to Kaohsiung in the south. Builders include foundry United Microelectronics Corp. and memory chip maker Nanya Technology. These projects together represent over 2 million sq. meters of floor space — the size of more than 40 baseball stadiums. No other place in the world is seeing such a buildup of chipmaking capacity. Investments for TSMC’s planned U.S. plant in Arizona and its proposed plant in Japan’s Kumamoto Prefecture will cost US$12 billion and US$8.6 billion, respectively. https://s.nikkei.com/3HD9DiK

iPhone chipmaker to start 2nm processor production by 2025.

TSMC, the iPhone chipmaker, announced that it will start 2nm chip production by 2025. This is the first time the manufacturer states when it’s going to produce its ultra-advanced new chips, as Samsung and Intel made a similar announcements. According to Nikkei Asia, TSMC made this announcement at an in-person event, and it’s the first time the iPhone chipmaker has specifically pinned down a schedule for its 2nm chip production. The Taiwanese chip titan said its 2nm tech will be based on “nanosheet transistor architecture” to deliver significant improvements in performance and power efficiency. Nanosheet architecture is a completely different infrastructure from the Finfet infrastructure used for 5nm chips, currently the most advanced on the market. Such new tech requires massive investments to make available. Recently, 9to5Mac reported that while Apple is using 5nm TSMC chips on its iPhones and Macs, the company is pushing the chipmaker to produce a 3-nanometer processor for Macs as soon as 2023. Apple also just recently announced its new M2 chip for the Mac, which is based on the A15 Bionic series, and it still uses the same 5-nanometer design. According to our previous coverage, this 3nm processor could feature “as many as four dies, with up to 40 CPU cores in total per chip. The three versions of the third-generation chip are reportedly codenamed ‘Ibiza,’ ‘Lobos,’ and ‘Palma.’” https://bit.ly/3xwDp3U

China’s chipmaking power grows despite US effort to counter it.

China’s semiconductor industry is showing signs of flourishing even in the face of Biden administration efforts to counter its growth, raising alarm bells in Washington. Chinese orders for chip-manufacturing equipment from overseas suppliers rose 58% in 2021, making it the biggest market for those products for a second year running, according to data provided by industry body Semi. While those figures appeared in April, the flood of machinery headed to China is now drawing more attention — especially as a legislative push to bolster the US chip industry with investments and incentives falters. The US Commerce Department, meanwhile, appears unwilling to crack down harder on Beijing, irking critics. https://bloom.bg/3mPg8oL

Wind and solar power are ‘bailing out’ Texas amid record heat and energy demand.

Texans are cranking on the air conditioning this week amid an unusually early heat wave, setting new records for electricity demand in the state, which surpassed 75 gigawatts on Sunday and smashed the 2019 record. Texas grid operator ERCOT projects it could approach that peak again on Tuesday. But unlike previous extreme weather events in Texas which led to deadly blackouts, the grid is holding up remarkably well this week. Several experts told CNN that it’s owed in large part to strong performances from wind and solar, which generated 27 gigawatts of electricity during Sunday’s peak demand — close to 40% of the total needed. Despite the Texas Republican rhetoric that wind and solar are unreliable, Texas has a massive and growing fleet of renewables. Zero-carbon electricity sources (wind, solar, and nuclear) powered about 38% of the state’s power in 2021, rivaling natural gas at 42%. Solar has been a smaller portion of the state’s energy mix than wind, but it is growing as well. Solar generated about 4% of electricity in Texas last summer, and is expected to grow to 7.2% this summer, EIA projections show.  https://cnn.it/3QlZHOB

Sophic Client Jasper PIM (JPIM-TSXV): CEO interview – mega opportunity from small and micro customers, meet Jon Marsella, CEO/Founder of Jasper Commerce.

Managing digital assets is costly, time-consuming, and error prone for the products eCommerce merchants sell. Fortunately, Sophic Capital client Jasper Commerce offers solutions that simplify product information management (PIM) for major brands such as, Samsonite, Skullcandy, and Jamieson Vitamins, among others. A key differentiator for Jasper Commerce is that they offer these solutions for even the smallest merchants, a cohort that is 17 million strong in the U.S. and who together with a larger enterprise merchant base, present a compelling opportunity for Jasper. https://bit.ly/3xFuTzP

Sophic Client UGE (UGE-TSXV, UGEIF-OTC): Solar is hot – community solar is hotter.

Community solar is the smallest segment of the U.S. solar market; however, it is growing rapidly and would undeniably represent the fastest growing segment should the DOE’s 2025 goal be met. As such, there are not many ways for investors to participate outside of the following companies: Altus Power (AMPS-NYSE) offers commercial, industrial, and community solar customer-focused solutions across the U.S. At the end of Q1 2022, the company had about 40MW of community solar power generation serving 5,000 customers and had another 55MW under construction. ReneSola (SOL-NYSE) is a developer of solar energy projects. In the U.S., Renesola Power has late-stage community solar projects in Minnesota, Maine, and New York. It also has projects under development in California, Florida, Pennsylvania, and Illinois. UGE International (UGE-TSXV, UGEIF-OTCQB), a Sophic Capital client, develops, builds, finances, and operates commercial and community solar projects in the U.S. as well as provide engineering and consulting services worldwide. UGE has over 500 MW of solar project experience since its founding in 2010 and currently has 334MW of projects in development, the vast majority of which are community solar. UGE also develops commercial solar projects in the Philippines. https://bit.ly/3y2cGh6