Silicon Valley Icon, NBA Team Owner to Lead UC Venture Fund

Vivek Ranadivé—founder of $4.3 billion TIBCO Software—will juggle Sacramento Kings ownership duties with heading the University of California’s new innovation fund.

The University of Californian (UC) has landed another big name for its investment team.

Vivek Ranadivé—a tech legend from founding TIBCO Software and now sports heavyweight as owner of the NBA’s Sacramento Kings—will lead a venture fund dedicated to UC-born innovation. University President Janet Napolitano and CIO Jagdeep Bachher revealed the long-awaited appointment in a press call this morning.

“I look forward to supporting his efforts to merge music, entertainment, and sports with the latest in technology.” —Drake

“When we developed the concept of investing in innovation emerging from the UC—what, at the time, we were calling UC Ventures—we knew we would need a strong entrepreneur who could build and lead a world-class venture group,” Bachher said.

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Ranadivé brings a strong track record: The MIT graduate founded a first-generation Wall Street tech firm Teknekron in 1986 and real-time data platform TIBCO Software in 1997, which he sold for $4.3 billion last year. His most famous leadership, however, may be in basketball, profiled by Malcolm Gladwell for coaching his daughter’s middle school team to national championships. Two years ago, Ranadivé bought the Sacramento Kings.

“Everything I have I owe to the state of California,” he said on the UC announcement call. “I arrived in this country from India at age 17 with only $50 dollars in my pocket to study engineering.”

Ranadivé will be responsible for building the innovation fund’s team, and sourcing opportunities. The UC’s $100 billion asset pool has earmarked $250 million to anchor the fund, which the system said will not draw from tuition or state money.

A parade of celebrities offered Ranadivé their congratulations on his latest project, including venture capitalist Marc Andreessen, Google-cum-Alphabet CEO Eric Schmidt, famed basketball player Shaquille O’Neal, and others.

“I want to congratulate Vivek on this exciting new venture and look forward to supporting his efforts to merge music, entertainment, and sports with the latest in technology,” said Drake, a Grammy-Award winner artist.

Drake has expressed interest in Ranadivé’s speciality. According to his recent song “6PM in New York,” “If me and [fellow artist] Future hadn’t made it with this rapping, we probably be out in Silicon trying to get our billions on.”

Towers Watson and insurance brokerage Willis secured enough shareholder votes Friday to move ahead with their controversial $18 billion merger, but have failed to silence the critics.

Striking opposition from major shareholders (BlackRock, Driehaus Capital) and the largest proxy advisors (Institutional Shareholder Services [ISS], Glass, Lewis & Co.) had put the deal in doubt. Their opposition forced management to delay votes by three weeks and renegotiate.

“I’ve been doing this for eight years now, and I don’t recall any other deal that was such a good value-creating transaction and yet shareholders really objected to it,” ISS’ M&A Director Chris Cernich told CIO. “The industrial logic is very strong on this one, and nobody doubted that.”

“We do not believe this transaction provides sufficient value to Towers Watson shareholders—even with the improved terms. We voted against the transaction.”

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For or very much against the deal, stakeholders echoed Towers and Willis’ rationale for the union: The potential to “create substantial incremental shareholder value through revenue, cash flow, and EBITDA [earnings before interest, taxes, depreciation, and amortization] growth superior to what either company could achieve independently,” as the two firms said in the approval announcement.

But ISS, along with many prominent Towers investors, took issue with the original and revised terms’ fairness. The initial $4.87 per share dividend effectively discounted Towers shares by 9.3%, according to ISS’ analysis. “As a merger-of-equals, shareholders didn’t expect to receive a premium,” Cernich explained. “But there was no precedent for why a 9% discount was appropriate.” Accepting that haircut to “get the deal done,” he continued, means Towers would have to grow in value by 18.6% to break even. “That’s a big hole to climb out of.”

But even among peer proxy firms, the merger proved divisive. New York City-based Proxy Mosaic recommended shareholders approve the original terms, deeming the focus on Towers’ share dividend “very short-termist.” Director of Research David Whissel argued that the “quite vocal” dissident shareholders and proxy firm competitors “seemed to be missing what a merger-of-equals is all about: A low-premium or no premium deal, with pretty significant cost synergies. The idea is that you capture the upside, which takes the place of the premium.”

Still, following high-profile proxy and investor pushback, management sweetened terms for Towers investors at the eleventh hour, foremost by doubling the much-maligned dividend to $10. This allowed the merger-of-equals to move ahead with 62% outstanding shareholder support, according to a regulatory filing submitted Friday. Most mergers earn well over 80% approval.

Willis and Towers co-announced the successful vote, predicting the transaction would close “very early in the New Year.” Pending regulatory approval, Willis shares will undergo a reverse stock split, with each Towers share converted into one share of Willis Towers Watson.

But for the merger’s most visible critics, the $10 dividend offer was too little, too late.

Driehaus Capital, which owns a 1.5% stake in Towers, reiterated its opposition within hours of the approval announcement.

“We do not believe that this transaction provides sufficient value to Towers Watson shareholders—even with the improved terms offered on November 19. Accordingly, we voted against the transaction this morning,” wrote two Driehaus portfolio managers in an open letter. Towers Watson represented the $9.5 billion asset management firm’s largest position by far as of September 30—a position it intends to retain in post-merger Willis Towers Watson.

“We expect them to deliver the extraordinary value promised in their ardent defense of the Willis transaction,” the letter concluded.

Towers Watson & Willis Share Prices Since Merger Proposal: June 1 – Dec. 15, 2015

TW Chart Towers Watson (TW): Blue / Willis Group (WSH): Red