Exit watch, March 12, 2007

VCs take a bath on Disney spinoff

Movie Gallery Inc.

(Nasdaq: MOVI), the nation’s second-largest movie rental chain behind Blockbuster, has agreed to acquire MovieBeam Inc., a Burbank, Calif.-based provider of on-demand movie services.

The exact purchase price was not disclosed, but Movie Gallery said that it expects the total cost of acquiring and operating MovieBeam in 2007 would not exceed $10 million.

MovieBeam was created by The Walt Disney Co. and launched in 2003 in several test cities to deliver movies to a set-top box over unused portions of the broadcast spectrum. The trial was shut down by Disney in 2005. MovieBeam was then spun-off and re-launched in February 2006 with $52.5 million in funding from Mayfield Fund, Norwest Venture Partners, Intel Capital, Cisco Systems, VantagePoint Venture Partners and ABC.

Broadview buys InfoHighway

Broadview Networks Holdings Inc.

, a Rye Brook, N.Y.-based provider of integrated communications and managed security services, has agreed to acquire InfoHighway Communications, a New York-based provider of hosted and managed communications solutions for business customers in the Mid-Atlantic and Northeastern United States. No financial terms were disclosed. InfoHighway backers include Apollo Real Estate Advisors, LLR Partners, Liberty Venture Partners, Spectrum Equity Investors and Trimaran Capital Partners.

Northwest startup iConclude sold for $53M

Opsware Inc.

(Nasdaq: OPSW) announced last week that it has agreed to acquire iConclude Co., a Bellevue, Wash.-based provider of IT process automation software. The deal is valued at about $53 million, including $30 million in cash and 3.39 million shares of Opsware common stock. In addition, iConclude’s $7 million worth of existing cash will be distributed to stockholders at closing in the form of a dividend. Since 2005, iConclude had raised $12 million in VC funding from such firms as Cronus Ventures, Greylock Partners, Madrona Venture Group and Shasta Ventures. Sunnyvale, Calif.-based Opsware was co-founded by Marc Andreessen, a co-founder of Netscape Communications.

Eli Lilly acquires Hypnion

Eli Lilly & Co.

has agreed to acquire Hypnion, a Lexington, Mass.-based drug company focused on sleep disorders. No financial terms were disclosed for the deal, which is expected to close later this quarter. Hypnion has raised about $88 million in VC funding since its 2000 inception from such firms as Advanced Technology Ventures, Coastview Capital, Flagship Ventures, Forward Ventures, GIMV, Jafco Ventures, Mintz Levin, MPM Capital and Oxford Bioscience Partners.