PE Week Wire: Tues., May 29, 2007

Late last year, Swift & Co. made national headlines after federal immigration agents conducted a six-state, simultaneous raid on six of the company’s beef and pork processing plants. Around 95% of the arrested workers were charged with some form of immigration violation – either in the U.S. illegally or unable to produce proper documentation — while the remainder were alleged to have taken part in the ID thefts.

At the time, folks like me wondered if it would be just another nail in the coffin for HM Capital, which has not raised a new fund since 2000. But neither Swift nor HM was charged with any crime, and the raid had seemingly little effect on acquisition discussions that had begun several months earlier. Moreover, the talks bore beef – with today’s announcement that HM has agreed to sell Swift to J&F Participações SA, which controls Latin America’s largest beef processing company JBS SA.

The deal values Swift at approximately $1.4 billion, including $225 million in cash and the assumption of $1.2 billion in debt. This represents a 2x return for HM Capital, based on its initial $200 million equity investment and a prior dividend recap of just over $170 million. Not huge money given the five-year investment, but nonetheless impressive given the beef market’s recent travails. It also is worth noting that HM partner Edward Herring tells me that the original purchase price was approximately $1.1 billion, rather than previously reported figures of between $1.4 billion and $1.5 billion. He says the discrepancy is based on false assumptions that ConAgra had included its cattle-feeding division in the initial sale.

I also asked Herring about another fundraising attempt, but he demurred. That usually means all systems go…

*** Peter Adderton told me Friday that he remains CEO of Amp’d Mobile, despite blog reports to the contrary. He does, however, also acknowledge that the VC-heavy company is in the midst of conversations regarding its future strategic direction. Read more here.

*** J.W. Childs lost a pair of top execs last week, when president Dana Schmaltz and partner Ted Yun announced their resignations. The moves follow last year’s departure of co-founding partner Steven Segal, and really seems to put the firm’s future in the hands of 65-year-old John Childs.

The Boston-based firm pre-marketed its fourth fund last year with a $2.5 billion target, but postponed the effort after limited partners said they wanted to see additional liquidity events. Some of those deals have since occurred – or are occurring, like last week’s agreement to sell Sheridan Healthcare to Hellman & Friedman – and some news outlets have suggested that the decision to resume fundraising is just a formality. My understanding, however, is that Childs has not yet made up his mind.

Chances are that he’ll progress – more than one person has remarked to me that’s “he’s not a quitter” – but he’ll first have to decide on new hires or promotions to replace Schmaltz and Yun (who seem to be leaving on relatively good terms). J.W. Childs only has two remaining “partners,” with a large roster of “operating partners” and principals who could be asked to move up the hierarchy for a new fund. Again, the smart money is on a fourth fund. But nothing is set in stone yet.

*** North Bridge Venture Partners is planning to be the next Boston-area firm to open an office in Silicon Valley. The satellite will be staffed by existing NBVP partner Paul Santinelli and newbie Basil Horangic, who just left his general partner position with Austin Ventures.

North Bridge Venture Partners is planning to open an office in Silicon Valley, which would be the Waltham, Mass.-based firm’s first satellite since its 1994 formation.

In an email announcing his move, Horangic said he sourced on of his first deals for NBVP founder Ed Anderson, and that he has “always admired the success and stellar reputation of the firm [Anderson] and his partners have built on the East Coast.” He adds that the Silicon Valley office – known as North Bridge West – will be active in Silicon Valley, the Pacific Northwest, the Rockies and Texas.

*** Marco DeMiroz of Selby Ventures joins the Vox Populi. His debut post discusses portfolio company Attributor, in the largest context of online content copyright protection.

Top Three

Silver Lake Partners may lead a buyout offer for telecom equipment maker Avaya, (NYSE: AV) according to The Wall Street Journal. Avaya has a market capitalization of approximately $6.18 billion. Other private equity firms also are considering offers, as is Nortel Networks. Read more here.

HM Capital Partners has agreed to sell beef and pork processor Swift & Co. to J&F Participações SA, which controls Latin America’s largest beef processing company JBS SA. The deal gives Swift an enterprise value of approximately $1.4 billion, and includes $225 million in cash and the assumption of around $1.2 billion in Swift debt. It is expected to close in mid-July. HM Capital, in partnership with Booth Creek Management, acquired Swift — then known as ConAgra Meats Co. — from ConAgra Foods, Inc. in September 2002.

Clean Energy Fuels Corp., a Seal Beach, Calif.-based provider of natural gas as an alternative fuel for vehicle fleets, priced 10 million shares at $12 per share ($13-$17 range), for an IPO take of approximately $120 million. It will to trade on the Nasdaq under ticker symbol CLNE, while WR Hambrecht & Co. and Simmons & Co. served as co-lead underwriters. Perseus held a 19.5% pre-IPO position, while Boone Pickens was listed as majority shareholder. Both sold a percentage of their shares as part of the IPO. www.cleanenergyfuels.comZ

VC Deals

Talima Therapeutics Inc., a Santa Clara, Calif.-based developer of micro-implant technology for site-specific drug delivery, has raised $19 million in second-round funding. U.S. Venture Partners and Latterell Venture Partners co-led the deal, and were joined by return backers De Novo Ventures and Palo Alto Healthcare. Talima raised a $2 million Series A round in 2005 at a $5 million post-money valuation.

Apnex Medical Inc., a Minneapolis-based developer of implantable technology to treat obstructive sleep apnea, has raised $16.1 million in Series A funding. Backers include Domain Associates, New Enterprise Associates and Polaris Venture Partners. Apnex is the second spinout from medical device incubator Prospex Medical, which previously formed BridgePoint Medical.

Airband Communications Inc., a Dallas-based fixed wireless company for business customers, has raised $12.5 million in Series C funding. M/C Venture Partners led the deal, and was joined by return backers Sevin Rosen Funds, Crescendo Ventures, Key Venture Partners and Dolphin Equity Partners. Airband has raised over $68 million in total VC funding since its 2000 inception.

BioStorage Technologies Inc., an Indianapolis-based provider of biomaterials storage, sample management and cold chain logistics, has closed its Series A round with a total of $8.32 million. Radius Ventures led the deal, and was joined by Spring Mills Venture Partners, Village Ventures and Twilight Venture Partners.

CTS Media, a Shanghai, China–based provider of in-stream video advertising technology and services, has raised $8 million in Series B funding. Steamboat Ventures led the deal with a $5 million infusion, and was joined by Draper Fisher Jurvetson and return backer Sequoia Capital China.

Xoomsys Inc., a Santa Clara, Calif.-based provider of electronic design automation (EDA) solutions for the chip industry, has raised $8 million in Series B funding. DAG Ventures led the deal, and was joined by return backers Benchmark Capital and Morgenthaler Ventures. Xoomsys raised a $7.1 million Series A round in mid-2005. In other Xoomsys news, the company last month named former Synopsys CTO Raul Camposano as its new chief executive.

World Wide Packets Inc., a Veradale, Wash.-based maker of Ethernet access products, has raised $7.5 million in new VC funding. Return backers included Argo Global Capital, Azure Capital Partners, Entrepia Ventures, Northwest Venture Associates and Madrona Venture Group. The company has raised over $127 million in total VC funding since 2001.

Telepartner, a Reading, UK–based provider of mobile business solutions, has raised $7 million in VC funding. New Venture Partners led the deal, which finances the acquisition of the mobile asset management division of Telecommunications Systems Inc.

Gemini Mobile Technologies, a San Mateo, Calif.-based developer of wireless software infrastructure, has raised $5 million in third-round funding from Japanese backers Access Co. Ltd., Aplix Corp. and Nomura Securities. The deal follows a recent $20 million infusion from Goldman Sachs.

Hot Pot, a Bangkok-based shabu shabu quick-serve restaurant chain, has raised $4.2 million in private equity funding from Aureos South East Asia Fund.

LimeLife Inc., a Menlo Park, Calif.-based consumer software publisher focused on content for women, has raised $3.9 million in venture capital funding from Core Capital Partners. LimeLife previously raised just over $16 million over two rounds of VC funding from Monitor Venture Partners, Rustic Canyon Partners, U.S. Venture Partners and i-Hatch Ventures.

TripOvation Inc., a Menlo Park, Calif.-based online provider of travel merchandise and travel booking, has raised $3 million in Series A funding led by Azure Capital Partners, according to a regulatory filing. The company’s CEO is Kevin Fliess.

Jajah Inc., a Menlo Park, Calif.-based Internet telephone company, said that Deutsche Telekom had co-led a $20 million Series C round announced earlier this month. It is unclear why Deutsche Telekom declined to be named in the initial statement, which said that Intel Capital led, with return backers Sequoia Capital and Globespan Capital Partners also participating.

Buyout Deals

Aeroflex Inc. (Nasdaq: ARXX) has accepted a $14.50 per share buyout offer from Veritas Capital, thus ending a prior $13.50 per share agreement with General Atlantic and Francisco Partners. Aeroflex will be required to pay a $15 million breakup fee, plus up to $7.5 million in Francisco and GA’s out-of-pocket expenses. Aeroflex is a Plainview, N.Y.-based provider of high technology solutions to the aerospace, defense, cellular and broadband communications markets. The Veritas offer values Aeroflex at approximately $1.1 billion.

KKR and CVC Asia Pacific have withdrawn from a consortium that is pursuing Australian retailer Coles Group Ltd. The move comes after two weeks of due diligence, with the consortium continuing to include Bain Capital, Blackstone Group and Carlyle Group and TPG. Coles Group currently has an Au$19 billion buyout offer on the table from Westfarmers Ltd. and Pacific Equity Partners.

Kinderhook Industries has acquired a majority stake in Perrin Manufacturing Co., a City of Industry, Calif.–based maker of plastic injection molded paper towel dispensers for the “away-from home” washroom paper industry. No financial terms were disclosed.

Sun Capital Partners has acquired Edwin Watts Golf Shops LLC, a Fort Walton, Fla.-based retailer of golf equipment, apparel and accessories. No financial terms were disclosed.

Altaris Capital Partners has acquired Intermed Holdings Ltd. (a.k.a. Penlon), a UK-based manufacturer of anesthesia equipment, from August Equity. No financial terms were disclosed. August originally acquired InterMed from 3i Group in December 2002.

APN (Aus: APN) shareholders have rejected a buyout offer from Independent News & Media, Providence Equity Partners and The Carlyle Group. The deal had valued the Australian media company at approximately Au$3 billion, and required 75% shareholders approval – excluding holdings by Independent, which is APN’s largest shareholder with a 38.5% position. The key no vote came from Perpetual Investments, which holds an 11.7% stake.

CVC Capital Partners and PAI Partners are in disagreement on how to divide control of Spanish tobacco group Altadis, if their €12.8 billion buyout offer is accepted. La Gaceta de los Negocios reported that the firms also have not yet reached agreement on how to react to a potential counter bid – with CVC being prepared to improve the offer, while PAI is understood to be more reluctant.

Towergate, a UK-based insurance group, is holding out for a buyout offer of at least £3 billion, according to The Financial Times. It has already been approached about a possible deal by such firms as Blackstone Group, Candover, Charterhouse and TA Associates.

PE-Backed IPOs

LDK Solar Co. Ltd., a China-based maker of multicrystalline solar wafers, is the only company scheduled to price an IPO on U.S. exchanges this week. It plans to raise around $400 million, and trade on the NYSE under ticker symbol LDK. Morgan Stanley and UBS are serving as co-lead underwriters. Shareholders include Jafco Asia.

EnteroMedics Inc., a St. Paul, Minn.–based developer of medical devices for the treatment of obesity and gastrointestinal disorders, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol ETRM, with JPMorgan and Morgan Stanley serving as co-lead underwriters. EnteroMedics has raised around $65 million in total VC funding since its 2002 inception, from firms like MPM Capital (30.9% pre-IPO stake), Bay City Capital (20.4%), Aberdare Ventures (13.2%), InterWest Partners (12%), Onset Ventures (7.7%) and Charter Life Sciences (5.6%) and he Mayo Foundation for Medical Education and Research.

Aegerion Pharmaceuticals Inc., a Bridgewater, N.J.-based drug company focused on cardiovascular and metabolic disease, set its proposed IPO terms to five million common shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol AEGR, with Lehman Brothers serving as lead underwriter. The company raised around $22.5 million in Series A funding in 2005 from firms like Alta Partners, Advent International, Index Ventures, MVM Life Science Partners and Scheer & Co.

PE-Backed M&A

Roadlink USA, a Chicago-based logistics portfolio company of Fenway Partners, has acquired Staffworks, a San Clemente, Calif.-based provider of outsourced warehousing and other third-party logistics. This is Roadlink’s second acquisition in a month, after previously having acquired Phoenix-based World Super Services Inc. Both deals were partially financed via a $219 million senior secured credit facility arranged by GE Antares.

PE Exits

Globeleq, an emerging markets power company owned by CDC Group (managed by Actis), has agreed to sell its operating power businesses in Latin America, North Africa and Asia. The total value is approximately $1 billion. The Latin American assets are being sold to D.S. Constructions Ltd. (India) and Israel Corporation Ltd. The North Africa and Asia businesses — with operations in Egypt, Bangladesh, Sri Lanka and Pakistan — will be sold to Tanjong Energy Holdings (Malaysia) and Aljomaih (Saudi Arabia).

Noble Environmental Power, an Essex, Conn.-based wind power developer majority owned by JPMorgan Partners, has retained Goldman Sachs to review strategic alternatives – including a possible sale. Noble was founded in 2004 in response to public policy initiatives designed to foster the increased use of renewable energy sources.

Warburg Pincus has completed its sale of 10 million shares of TransDigm Group Inc. (NYSE: TDG), via a secondary public offering at $35.25 per share. The deal reduced Warburg Pincus’ ownership position in TransDigm from 69% to around 48.6 percent.

Firms & Funds

Terra Firma has closed its third buyout fund with €5.4 billion in capital commitments, according to LBO Wire.

Human Resources

Hugh Simons has joined Highland Capital Partners as chief operating officer. He previously was a senior partner and CFO of Boston Consulting Group. Part of Simons’ role will be to help drive Highland’s expansion into Asia and Europe.

Bear Stearns has named Paul Abecassis to the new role of chairman of European I-banking. Abecassis has been with the company for 16 years, and most recently served as a senior banker in Europe. Bear Stearns also named Mark Goldstein and Florian Lahnstein as co-heads of European I-banking. Goldstein, who joined Bear Stearns in 1994, will transfer to the London office and serve in the additional role of head of European acquisition finance. Lahnstein joined Bear Stearns in January of this year from UBS to focus on the global technology, media and telecommunications industry, as well as the broader German corporate market.

Alberto Robaina has joined Trimaran Capital Partners as a managing director and general counsel. He previously was general counsel and assistant secretary for the New York City Investment Fund. Trimaran also has added Adam Miller as an analyst. He previously worked in the leveraged finance group of BNP Paribas.