PE Week Wire — Thursday 7/3


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The Carlyle Group has sold media wholesaler Baker & Taylor Corp. for $255 million to affiliates of Chicago-based buyout shop Willis Stein & Partners. Carlyle had acquired Baker & Taylor Books, Baker & Taylor Video and Soft Kat businesses from W.R. Grace & Co. in March 1992.

Velocimed Inc., a Minneapolis-based maker of medical devices for cardiac and neurological diseases, has raised $18 million in Series C funding. Investors included Warburg Pincus, Vertical Group and RiverVest Partners. In related news, the company received FDA approval to begin its first investigational device exemption (IDE) clinical trials for a proximal embolic protection device designed for coronary applications.

Seattle Genetics Inc. (Nasdaq:SGEN) stockholders have approved a $41 million private placement transaction. The deal was originally announced in May, and should be completed within five business days. JPMorgan Partners and Baker Brothers Investments are leading the transaction, alongside participation from Delphi Ventures, BA Venture Partners and T. Rowe Price Health Sciences Fund.

Stratos Lightwave Inc. (Nasdaq: STLW) has agreed to acquire Sterling Holding Co., a Mesa, Ariz.-based producer of RF and Microwave interconnect products. Sterling has received venture funding from such investors as Citigroup Venture Capital, which will own approximately 27% of the newly combined company.

American Securities Capital Partners and Private Power have teamed up to acquire six operating subsidiaries of Primary Energy Inc., a subsidiary of NiSource Inc. (NYSE: NI). The value of the transaction was put at approximately $335 million in cash and assumed debt. The new venture will be called Primary Energy Holdings LLC.

Alliance Gaming Corp. (NYSE: AGI) has agreed to sell its Bally Wulff gaming route subsidiary to a private equity investment group advised by Orlando Management. The deal is for $16.5 million in cash, and is expected to close by the end of July.

Yang Tze-kaing, president of China Development Industrial Bank, has been named vice finance minister of Taiwan. He replaces Sam Wang, who was named chairman of the Taiwan Futures Exchange. Both moves will become effective later this month.

The Deal is reporting that LymphoSign Inc., a Toronto-based drug developer, has raised $5.9 million in first round funding from VenGrowth Capital Partners and GeneChem Therapeutics Venture Fund.
NEWS FROM WEDNESDAY 7/2

The Carlyle Group and Finmeccanica have agreed to acquire the FiatAvio SPA aerospace businesses of Fiat Group for €1.5 billion (approx. $1.73 billion). The acquisition will be carried out through a special purpose vehicle, which will be 70% owned by The Carlyle Group and 30% by Finmeccanica. The acquisition – which is expected to close by year-end – includes senior debt financing from Banca Intesa, Citigroup, Lehman Brothers and Mediobanca. Subordinated debt is being provided by Citigroup, Lehman Brothers and Goldman Sachs.

Acusphere Inc., a Watertown, Mass.-based specialty pharmaceutical company focused on microparticle technology, has filed for a $69 million initial public offering on the Nasdaq. The company has raised over $130 million of venture capital since its 1993 founding, with investors including Thomas Weisel Group (29.8% ownership), Bank of America Venture Partners (14.5%), Burr, Egan, Deleage & Co. (8.5%), Polaris Venture Partners (6.6%), MVI Medical Ventures (6.1%) and Audax Group (5.5%).

Cohesive Technologies Inc., a Franklin, Mass.-based developer of liquid chromatography solutions, has raised $9.5 million in Series B convertible preferred funding. Psilos Group Partners led the deal, and was joined by fellow new investors Hudson Partners, Bold Capital, Uni-Pac and Mitsubishi International Corp., plus return backer Bioscience Partners. The company now has raised around $36 million, including several angel rounds and a $13.6 million Series A deal in August of 2000 at a post-money valuation of $27 million.

Lehman Brothers (NYSE: LEH) announced this morning that it is considering a merger with investment advisory firm Neuberger Berman Inc. (NYSE: NEU). No further details were provided.

Ultra-Scan Corp., an Amherst, N.Y.-based developer of advanced ultrasonic authentication and access systems, has raised $18 million in new financing led by Paychex Inc. founder Tom Golisano. As part of the deal, Golisano has joined the Ultra-Scan board of directors.

Aurora Foods Inc. (NYSE: AOR) has undertaken a comprehensive restructuring designed to reduce its outstanding indebtedness, strengthen its balance sheet and improve its liquidity. As part of the restructuring, Aurora has entered into an agreement with J.W. Childs Associates whereby the Boston-based private equity firm will make an investment of $200 million for a 65.6% equity interest in the reorganized Aurora at a transaction value of approximately $925 million. Aurora also announced that it has begun discussions with its bank lenders and bondholders regarding the terms of the restructuring.

Sylvan Learning Systems Inc. (Nasdaq: SLVN) has agreed to sell its K-12 businesses to Educate Inc., a new K-12 education company backed by Apollo Management (which also backed Sylvan prior to its 1993 IPO). Terms of the deal were undisclosed, although Sylvan co-founder Chris Hoehn-Saric will become chairman and CEO of Educate Inc.

Phillips-Van Heusen Corp. has sold its minority interest in Gant Company AB to Gant Holdings AB, a newly formed entity whose shareholders 3i Group PLC, the three founding partner of Gant Company AB and LV Capital, the private equity arm of LVMH Moet Hennessy Louis Vuitton. The deal is worth approximately $19 million.

StratEdge Corp., a San Diego-based producer of packages for high-speed semiconductors, announced that an agreement has been reached for a management buyout of the corporation. StratEdge was previously funded by MK Global Ventures, and now is privately held through the management buyout group.

Thomson Venture Economics and the National Venture Capital Association released new data today showing that two venture-backed companies went public during Q2 2003, raising a total of $164 million. Overall, only five U.S.-based companies hit the public markets during this period.

The Alaska Science & Technology Foundation is nearing the end of operations, after its $100 million government commitment was cut by Alaska Gov. Frank Murkowski due to budgetary constraints. The 12-year-old group had provided startup capital to early-stage, Alaska-based companies.

eMotion Inc., a San Francisco-based provider of digital asset management software and hosted services, has acquired Artmachine Inc., a Palo Alto, Calif.-based provider of global marketing services. Artmachine had raised approximately $7.5 million in venture capital from such firms as VantagePoint Venture Partners, Plum Holdings and IPO.com. As part of the deal, eMotion raised $2.5 million in new funding from return backers Wasserstein & Co., Constellation Ventures, Chartwell Capital, Crossbow Ventures and Off Stump Ltd., plus new investor VantagePoint. The company now has raised over $70 million in private funding.

Abbraj Capital, a Dubai-based private equity firm previously known as Rasamala Partners, has closed the Abbraj Buyout Fund with $125 million in committed capital. It is believed to be the largest private equity fund exclusively devoted to investments throughout the Middle East.

James Mackay has been named president of Investors Management Group, a Des Moines, Iowa-based institutional asset management firm focused on foundations, endowments, financial institutions, insurance companies and public funds. The group has $4 billion in client assets under management, and is a wholly owned subsidiary of AMCORE Investment Group. Prior to joining Investors Management Group, Mackay was senior vice president of strategic development for H&R Block Financial Advisors.

KPS Special Situations Fund II has acquired the assets of bankrupt Wire Rope Corp. of America Inc. for approximately $53 million in assumed debt and $1.5 million in cash. Wire Rope is a St. Joseph, Missouri-based producer of high carbon wire and wire rope products.

Endo Pharmaceuticals Holdings Inc. (Nasdaq: ENDP ) announced today the pricing of its secondary offering of 15 million shares of its common stock at $15.50 per share. The vast majority of these shares are being sold by Endo’s controlling shareholder, Endo Pharma LLC, which prior to this proposed offering owns approximately 75% of Endo’s outstanding shares. Endo Pharma LLC is an affiliate of private equity firm Kelso & Co.

 

ThreeFive Photonics BV, a Netherlands-based developer of all-optical devices for telecom networks, has filed for chapter 121 bankruptcy protection. The company has received venture funding from Atlas Venture and Gilde Investment Management.

Emoonlighter has finalized an agreement to acquire the employer membership base of Guru.com, a defunct online marketplace for freelance talent.

WaveRider Communications Inc. (OTCBB:WAVC) has agreed to acquire Avendo Wireless Inc., an Ontario-based company backed by Primaxis Technology Ventures Inc., BDC Venture Capital, Venture Coaches and Temple Ridge Capital. Terms of the deal were not disclosed.

Douglas Zemke has been named president of Milken University, according the the Associated Press. Zemke is a 1966 graduate of Millikin, and is a founding managing member of InDecatur Ventures.

The Chicago Tribune is reporting that Mark Achler has been named president of Rightfield Solutions LLC, a provider of Web-based presentations to medical patients. Achler was a co-founder of early-stage venture firm Kettle Partners, which the article says stopped adding new portfolio companies in Jan. 2001.

Reuters and Total Telecom are reporting that Randall Kreup has resigned as CEO of Procket Networks Inc., a Milipitas, Calif.-based company that has raised $272 million of venture capital and that once was valued at over $1.2 billion. The resignation is said to be for “personal reasons.” Kreup will be replaced on an interim basis by Paul Matteuci, a venture partner with Procket backer U.S. Venture Partners.

NEWS FROM TUESDAY 7/1

Yell Group PLC, a UK-based telephone directories producer, has confirmed rumors that it is planning an initial public offering. The plan is to raise GBP850 million (approx. $1.4 billion), which would value the company at between $2.9 billion and $3.5 billion. Dow Jones is reporting that the road show begins today, which means private equity investors may soon see some return from their $3.5 billion buyout (approx. 30% equity) of Yell from British Telecom in 2001. The equity backers were Apax Partners and Hicks, Muse, Tate & Furst, which hold a combined 95% interest in Yell. They considered an IPO last year, but ultimately postponed the float after deciding that market conditions were inhospitable to such a large offering.

Sanera Systems Inc., a Sunnyvale, Calif.-based provider of enterprise storage networking solutions, has raised $35 million in third-round funding. The new capital was provider by existing investors ArrowPath, CMEA Ventures, Enterprise Partners Venture Capital, Goldman Sachs, Greylock and Storm Ventures.

Altheimer & Gray, a struggling Chicago-based law firm, has confirmed that it is on its way out of business. The firm had scheduled a dissolution vote for yesterday, but put off the inevitable end while management looks for some last-minute operational capital to help wind things down slowly (according to the Chicago Tribune). The firm currently employs nearly 1,000 people, including around 320 attorneys. Altheimer & Gray had been looking to merge with Philadelphia-based Duane Morris, but the deal recently fell through.

Kerasotes Theatres, a Chicago-based motion picture exhibition company, has received a $75 million equity investment from Providence Equity Partners Inc. In addition to Providence’s investment, Kerasotes also secured a $170 million senior credit facility through Deutsche Bank last October.

EG Technology Inc., an Atlanta -based digital video company, has raised $7.4 million in second round funding. Sevin Rosen Funds led the deal, and was joined by return backers Noro-Moseley Partners, H.I.G. Ventures, Gray Ventures and the Yamacraw Seed Capital Fund.

KaVaDo Inc., a New York-based provider of Web application protection solutions, has raised $10 million in Series C funding led by Pequot Ventures. Also participating were return backers Banc of America Equity Partners, Neurone Ventures and 3i. As part of the transaction, Karen White of Pequot Ventures will join the KaVaDo board of directors.

The Dial Corp. (NYSE: DL) has completed the divestiture of its Argentina business to The Value Brands Co. de Argentina SCA and TVBC SPA., entities designated by Argentinean private equity firm the Southern Cross Group.

SmartSynch, a Jackson, Miss.-based provider of smart metering solutions to the energy and utility industry, has raised an undisclosed amount of new capital from existing investors JP Morgan Partners, Kinetic Ventures, Lime Rock Partners, Nth Power, OPG Ventures, Siemens Venture Capital and members of the company’s management team. To date, SmartSynch has raised over $35 million in venture capital financing, including a $23 million Series B round in early 2001 at a post-money valuation of $54 million.

Analex Corp. (Amex : NLX) has approved an investment in the company by Pequot Ventures. The transaction involved Analex selling Pequot $12 million to $15 million of convertible preferred stock at a price per share equal to the lower of $2.23 (which is 15% less than the trailing average closing price of Analex common stock for the 20 trading days preceding June 19, 2003). As a condition to the equity financing, Pequot would purchase approximately $10 million aggregate principal amount of convertible secured subordinated promissory notes from Analex, the proceeds of which would be used to repurchase the equity holdings of Analex Chairman Jon Stout, certain of his family members and certain entities controlled by Mr. Stout and his family. The Stout family equity would be repurchased at an effective purchase price of $2.63 per share of common stock.

Brian Cunningham has rejoined the life sciences practice at Cooley Godward LLP. He had worked at the law firm from 1989 through 1998, after which he spent five years at South San Francisco-based drug discovery company Rigel Pharmaceuticals. He most recently served as that company’s president and COO.

Air Asia, a Malaysian low-cost airline, has received $26 million in private equity financing from the Islamic Development Bank (Bahrain), Crescent Venture (Saudi Arabia) and Deucalion Capital (Germany). The deal values Air Asia at $100 million.

The Straits Times is reporting that Cheah Kean Huat has been hired by boutique financial services firm PrimePartners Group to advise on venture capital investments. He most recently served as vice-president and general manager of HP Services Asia-Pacific.

NEWS FROM MONDAY 6/30
Worldview Technology Partners has cut $150 million off the size of its fourth fund, bringing its total capitalization down to $600 million. This is the second time that Worldview has swung the axe at Fund IV, which once stood at $1 billion. In other firm news, Worldview is preparing to say goodbye to a partner, and already has seen its CFO leave. PE Week subscribers can read the whole story in the protected Weekly Headlines section of www.PrivateEquityWeek.com.

John Abraham has joined Kodiak Venture Partners as a venture partner. He most recently served in a similar position with Battery Ventures, where he worked on deals for such companies as Applimation Inc., OpenCOLA, OpenNetwork Technologies and Optiant Inc.

Expand Beyond Corp., a Chicago-based provider of mobile software for IT management, has raised $3.66 million in Series B funding. Investors included new backer CrossBridge Venture Partners, alongside return buyer Menlo Ventures. In late 2001, Expand Beyond raised $11.2 million in Series A funding at a post-money valuation of $22 million.

Orthogon Systems, a UK-based provider of deep non-line-of-sight (NLOS) wireless technology for broadband networks, has raised $7 million in new venture capital funding from Atlas Venture and The Carlyle Group. The company – which also has a US office in Waltham, Mass. – has raised a total of $28 million.

Idealab scored a legal victory last week when a California Superior court judge threw out the most serious charges brought against the tech incubator by approximately 40 of its investors. The plaintiffs — which include such institutions as Spectrum Equity Investors, Dell and Traveler’s Insurance Group – had alleged fiscal mismanagement, and specifically asked for Idealab to be liquidated. A judge said no, and also threw out breach of contract and fraud allegations. All that is now left is a request to have two individuals – including Bill Gross – removed from the Idealab board of directors.

Mindguard, an Israel-based developer of stroke-prevention medical devices, has raised $15 million in third-round venture funding. Investors include Medtronic Inc., Pitango Venture Capital, Tamir Fishman Ventures, Fantine Europe Fund, Ofer Brothers Hi-Tech, Eucalyptus Ventures, Gemini Venture Capital and The Fuller Foundation.

MediaVast Inc., an online visual content company, has raised $4.7 million in Series B funding. The AOL Time Warner Opportunity Fund led the deal, and was joined by return backer Baroda Ventures.

The Wall Street Journal is reporting that InPhonic Inc., a Washington-based provider of Web-based wireless distribution solutions, has raised $56 million in Series D financing led by Technology Crossover Ventures.

Fluorous Technologies Inc., a Pittsburgh-based chemical technology company, has raised $3 million in Series A funding from Albany Molecular Research Inc. (Nasdaq: AMRI), Dr. Alfred Bader, Innovation Works and Fairview Fund.

George Gaines Jr. has been named a partner with BerchWood Partners LLC, a New York-based placement agent for private equity, real estate and hedge funds. Gaines previously served as managing director and global head of distribution for the private equity group at Salomon Smith Barney Investment Banking.

Nautic Partners has made an undisclosed investment in Corporate Lodging Holdings Inc., a Wichita, Kans.-based provider of contract lodging management services. Senior debt financing for the transaction was provided by Antares Capital Corp. and Merrill Lynch Capital.

Sandbridge Technologies Inc., a White Plains, N.Y.- based fabless semiconductor company, has held a $22.5 million final close on its Series B financing round. The company had previously announced a $19.5 million first close with investments from Atlas Venture, Bessemer Venture Partners, China Development Industrial Bank, Columbia Capital, Doughty Hanson Technology Ventures and Infineon Ventures. The new cash comes from Siemens Venture Capital. According to an SEC filing, Sandbridge had been willing to accept upwards of $30 million.

Voxware Inc. (OTC: VOXW), a Princeton, N.J.-based supplier of voice-based solutions for logistics, announced the closing of $5.6 million in private financing led by Edison Venture Fund and Cross Atlantic Capital Partners.

Bitfone Corp. has received new venture funding from Motorola Ventures, which brings the company’s total venture capitalization up to $35 million.

The Wall Street Journal is reporting that the Bill and Melinda Gates Foundation will invest $22 million in a nonprofit venture capital fund that will support at least five new charter management groups. The NewSchools Venture Fund effort has raised a total of $66 million, with the new Gates money expected to help launch 20 new charter schools.

Dow Jones is reporting that Advent International and Warburg Pincus have placed a joint bid for Postabank Rt., a Hungarian, state-owned retail bank. It is one of eight existing bids.

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