PE Week Wire — Friday 1/2

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Kinetic Concepts Inc., a San Antonio-based medical technology company focused on wound care and therapeutic surfaces, has filed to raise up to $460 million via an initial public offering on the NYSE under proposed ticker symbol KCI. Company shareholders include Fremont Partners, Blum Capital Partners, DLJ Merchant Banking and Goldman Sachs.

ViaCell Inc., a Boston-based provider of umbilical cord blood stem cell preservation services, has received a $20 million strategic investment from Amgen Inc. (Nasdaq: AMGN). In related news, ViaCell has withdrawn its registration papers for an initial public offering.

Netegrity Inc. (Nasdaq: NETE) has acquired Business Layers Inc., a Rochelle Park, N.J.-based provider of e-provisioning software. The deal is worth a total of $42.5 million, with $15 million to be paid in cash while the remaining $27.5 million will be paid in Netegrity common stock. Business Layers has raised approximately $49 million in venture capital funding since its 1999 inception. Its investors have included Ascent Venture Partners, Canaan Partners, Formula Ventures, Garage Technology Partners, Gemini Capital, Israel Seed Partners, New Canaan Investments and Novell Ventures.

Novak, Biddle Venture Partners has held a $51.67 million first close on its fourth venture capital fund, according to a filing with the Securities & Exchange Commission. The Bethesda, Md.-based firm is looking to raise up to $150 million.

Code Hennessy & Simmons LLC has agreed to acquire Gundle/SLT Environment Inc. (NYSE: GUNDLE), a Houston-based provider of geosynthetic lining solutions, products and services. Under terms of the agreement, all publicly-traded shares of GSE stock will be converted at the rate of $18.50 per share, after which Code Hennessey will wholly own the company. Certain GSE executives will enter into new employment contracts with upon completion of the acquisition.

The Daily Telegraph is reporting that UK-based private equity shop Candover is considering the sale of its 60% stake in London exhibition halls Earls Court and Olympia. The deal could be worth up to £225 million (approx. $446 million).

The Wall Street Journal is reporting that troubled Italian food conglomerate Parmalat SpA is considering a sale of its North American bakery business. Prospective suitors for the Battle Creek, Mich.-based unit are said to include Kraft, Kellogg, Cypress Group; Hicks, Muse, Tate & Furst Inc. and JPMorgan Partners.


The Securities and Exchange Commission (SEC) has filed fraud charges against Parmalat SpA, on behalf of investors who were blindsided when the Italian food conglomerate recently filed for bankruptcy. In a separate move, Italian prosecutors convinced a judge to keep former Parmalat CEO Caliston Tanzi behind bars, rather than he house arrest that Tanzi’s attorneys were requesting. All of this is related to bogus financial statements allegedly filed by Parmalat, which is now being dubbed “Europe’s Enron.” Among the charges are that Parmalat claimed to have a multi-billion dollar account at Bank of America that regulators say did not exist, while the company also allegedly lied about its actual debt position to potential U.S. investors earlier this year. The cat was first let of the bag when an unnamed private equity firm (reported to be The Blackstone Group) met with Parmalat officials earlier this month about a prospective leveraged buyout of the company, and was let in on the corporate secret. It is unclear whether or not the unnamed private equity firm contacted the SEC prior to Parmalat’s bankruptcy filing.

The Carlyle Group has disbanded its exploratory venture capital operation. The Japan-based buyout team remains in place, with some of the displaced VC pros moving over to the firm’s remaining Japan-based buyout operation.

Unitive Electronics Inc., a Research Triangle Park-based provider of semiconductor wafer processing and packaging technologies, has raised $6.6 million in new preferred stock funding and a term loan of $6 million. The entire package is being led by existing Unitive investor GE Technology Finance.

Thomas Rebar and Amit Avnet have both joined the board of directors of INSCI Corp. (OTC BB: INSS), a Westborough, Mass.-based provider of enterprise content management solutions. Rebar is a partner with SCP Private Equity Partners, while Avnet is a finance and management professional with the firm.

William Grabe, a general partner of General Atlantic Partners, has joined the board of directors of Patni Computer Systems, a Mumbai, India-based IT consultancy and software solutions provider. GA Partners invested in Patni last year.


New Enterprise Associates has held a $996.38 million first close on its eleventh venture capital fund.

FedEx Corp. (NYSE: FDX) has agreed to acquire privately-held Kinko’s Inc. for $2.4 billion in cash. The primary seller is buyout shop Clayton, Dublier & Rice, which holds approximately 75% of Kinko’s outstanding shares.

SenitiO Networks Inc., a Rockville, Md.-based provider of communication infrastructure software, has raised $19 million in Series C funding. Return backers included Core Capital Partners, Kodiak Venture Partners, Mid-Atlantic Venture Funds, Telus Corp. and Technology Venture Partners. The company now has raised nearly $45 million in total venture capital funding.

Meritage Hospitality Group Inc. (AMEX: MHG), a Grand Rapids, Mich.-based franchiser of Wendy’s restaurants, has closed on $4.5 million of a $7.5 million private equity offering. In addition, the company has received a $6.3 million financing commitment from GE Capital Franchise Finance and a new $2.6 million credit facility with Standard Federal Bank.

Vitesse Semiconductor Co. (Nasdaq: VTSS) has agreed to acquire Cicada Semiconductor Corp., an Austin, Texas-based provider of DSP-based integrated circuit solutions to developers of high-speed communications systems used in LANs. The deal is worth approximately $66 million in cash, and is expected to close during the first quarter of 2004. Cicada has raised over $37 million in total private equity and debt funding since its 1996 inception, with investments coming from Sevin Rosen Funds, Perot Investments and Silicon Valley Bank.

Rambus Inc. (Nasdaq: RMBS) has completed its previously-announced $13 million acquisition of certain high-speed signaling assets from Velio Communications Inc., a Milipitas, Calif.-based semiconductor provider. Velio (f.k.a. Chip2Chip Inc.) has raised nearly $95 million in venture capital funding since its 1998 inception, including a $40 million Series B deal in 2000 at a post-money valuation of approximately $310 million. Company investors include Global Catalyst Partners, Institutional Venture Partners, Redpoint Ventures, Sequoia Capital and HarbourVest Partners.

The New York New Media Association has ceased operations, due to financial troubles.

The Carlyle Group has disbanded its Japan-based investment team, and will no longer make new investments in the country, according to the Nihon Keizai Shimbun. The report adds that Carlyle Group will maintain its existing investments in the country. The New York-based firm could not be contacted for comment by press time.

The Spokesman-Review is reporting that former Jaguar Ventures chief Phil Sandifur is being accused of sexual harassment by former Jaguar Ventures fund manager Cynthia MacGeagh. The allegations are part of a lawsuit brought by MacGeagh against Metropolitan Metropolitan Mortgage & Securities, which is Jaguar Ventures’ parent company. Met Mortgage has not yet commented on the suit.
Domain Associates has closed its sixth fund with $500 million in committed capital. It is the Princeton, N.J.-based venture capital shop’s largest fund to date.

California Amplifier Inc. (Nasdaq: CAMP) has agreed to acquire Vytek Corp., a San Diego-based provider of hardware and software solutions for wired and wireless data delivery. The deal includes 8.2 million shares of California Amplifier’s common stock, which was valued at $76.8 million when acquisition was announced last Tuesday. As of market close Friday, however, the deal value had jumped to over $113.8 million. Vytek has raised over $47 million in venture funding since its 2000 inception, including a $42 million Series A round at a post-money valuation of $74.1 million. Investors include Charterhouse Group International, CIBC Capital Partners, Frontenac Company, Goldman Sachs, Mission Ventures and Mobius Venture Capital.

Quadrangle Capital Partners has agreed to acquire an 88% equity interest in Protection One Inc., a subsidiary of Westar Energy Inc. (NYSE: WR) that provides monitored security services. The transaction and proceeds from a sale of Protection One senior bonds (face value $26.6 million) includes $120 million in cash payment, plus up to an additional $39.2 million of post-closing cash proceeds for Westar that are contingent upon future tax payments and recoveries on the securities being acquired by Quadrangle. The sale is expected to close during the first quarter of 2004, an is subject to regulatory approval from the Kansas Corporation Commission.

Saratoga Partners has divested the majority of assets it purchased out of the Divine Inc. bankruptcy sale last May, retaining only Divine Managed Services, which it has renamed Data Return LLC. Assets sold in private sales and through the bankruptcy court to separate buyers include: Divine’s content management products, including Content Server and Participant Server, to Fatwire Corp.; the former Open Market’s Transact product and related intellectual property to Soverain Software LLC; the Northern Light product to Northern Light Technology Holdings, LLC; the Outtask shares back to the company; and the Divine venture capital portfolio to Little Bear Investments LLC.

Wireless Facilities Inc. (Nasdaq: WFII) has agreed to acquire High Technology Solutions Inc., a San Diego-based provider of communications systems engineering and operational outsourcing services to federal government agencies. The deal is worth approcimately $48.75 million, and is expected to close during the first quarter. High Technology Solutions has raised over $19 million in total venture capital funding from investors like GE Equity, Ford Motor Co., Intel Capital and JPMorgan Partners.
Thomas H. Lee Partners has closed its $1.1 billion management buyout of bedding products producer Simmons Co. from Fenway Partners. Fenway Partners originally acquired Simmons in October 1998 from Investcorp for approximately $513 million, and will retain a 10% stake in the company. Goldman Sachs, UBS and Wachovia were the sell-side M&A advisors to Simmons and Fenway. Ropes & Gray LLP advised Simmons and Fenway, while Weil, Gotshal & Manges LLP advised THL in the transaction.

Linguagen Corp., a Cranbury, N.J.-based maker of ingredients used to improve the taste of food, beverages and pharmaceutical products, has raised $2 million in additional Series A funding from S.R. One Ltd. The company had previously announced a $10.2 million first close on the round, with investments from NJTC Venture Fund SBIC, Cargill Ventures, Danisco Venture A/S, DuPont Ventures, Aperture Venture Partners and RK Ventures Group.

Oak Hill Capital Partners has agreed to acquire Duane Reade Inc. (Nasdaq: DRD), a New York-based drug store chain operator. The leveraged buyout is valued at over $700 million, with Duane Read stockholders receiving $17 per share of common stock. Oak Hill and certain members of Duane Read management will provide the deal’s equity, while debt financing will be provided by Banc of America Securities. Bear, Stearns & Co. advised Duane Read on the deal, while Banc of America Securities advised Oak Hill.

Jan zur Hausen has agreed join the life sciences team of DVC Deutsche Venture Capital. He most recently served as a managing director for Mulligan BioCapital in Hamburg, Germany, and previously worked with MPM Capital.

Chen Schor has agreed to join Predix Pharmaceuticals Inc. as its chief business officer, effective on January 15. Schor most recently served as a partner focused on life sciences investing at Yozma Venture Capital Group.

Martin Sutter, managing director at Essex Woodlands Health Ventures, has joined the board of directors of LifeCell Corp. (Nasdaq: LIFECELL).

Jonathan Silverstein, a director at OrbiMed Advisors, has joined the board of directors at DOV Pharmaceutical Inc. (Nasdaq: DOVP). OrbiMed led a privately-negotiated $15 million investment in DOV in July, and currently holds 13.5 percent of the company’s outstanding common stock. NetRatings Inc. (Nasdaq: NTRT) has agreed to acquire a majority interest in RedSheriff, a New York-based provider of site-centric-based Internet audience measurement. Under the terms of the agreement, NetRatings will pay approximately $12 million in cash for the 58% RedSheriff stake currently held by Morgan Grenfell Private Equity. NetRatings anticipates purchasing additional shares and is prepared to acquire 100% of the company.

Peter Nolan, a managing partner of Leonard Green & Partners, has been named an independent director of Activision Inc. (Nasdaq: ATVI).

Sonoco Products Co. (NYSE: SON) has completed the previously announced sale of its High Density Film business to Hilex Poly Co. and DCH Investment Holdings. The deal is worth approximately $119 million, including $81 million in cash plus subordinated notes and preferred nonvoting membership interests.

Aberdeen Asset Management has sold subsidiary Northern Venture Managers to the Northern Ventures management team for up to $5.6 million. UK-based Aberdeen gained control of Northern Venture Managemers just a few months ago, as part of its acquisition of Edinburgh Fund Managers.

The Boston Herald is reporting that Nicholas Sinacori has joined Boston-based development company Diamond & Co., which has been renamed Diamond/Sinacori LLC. Sinacori most recently served as a managing partner with International Capital Partners.

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