News briefs, June 11, 2007

IT buyouts going strong

Buyout firms fancied tech companies, such as Avaya Inc. and Palm Inc., in separate deals announced last week.

Elevation Partners agreed to acquire a 25% stake in Palm in exchange for a $325 million equity investment. Partners Fred Anderson and Roger McNamee will join the Palm board. The deal is part of Palm’s larger recapitalization, which also includes $400 million in debt. The company plans to use the equity and debt to help finance a $9 per share cash distribution for Palm shareholders.

Meanwhile, TPG and Silver Lake Partners agreed tp buy network equipment manufacturer Avaya in a $8.2 billion cash buyout. The Avaya deals comes a few weeks after wireless phone company Alltel Corp. announced its $24.7 billion buyout by TPG and Goldman Sachs Group Inc.’s GS Capital Partners.

BCE acquisition talks heat up

BCE Inc.

, Canada’s largest telephone company, said last week that it has begun talks with a new private equity group about a possible take private buyout.

The group includes Providence Equity Partners and Teachers’ Private Capital.

BCE said it was still in talks with Cerberus Capital Management and a group of Canadian investors that includes the Hospitals of Ontario Pension Fund.

The Canada Pension Plan Investment Board is leading a third group of bidders, which also includes New York buyout firm Kohlberg Kravis Roberts & Co.

The company expects to finish a strategic review of its buyout offers by Sept. 30. Separately, company shareholders last week agreed to rename the company Bell Canada as part of a five-year rebranding effort.

Starent leads IPO parade

VC-backed companies continue to launch IPOs. Among the leading newly issued companies is Starent Networks Corp., a Tewksbury, Mass.-based provider of mobile multimedia infrastructure solutions. The company, which raised $126.4 million in its IPO, priced 10.5 million common shares at $12 per share, with a subsequent market cap of $749 million. It will trade on the Nasdaq under ticker symbol STAR.

Starent had raised about $95 million in total VC funding since its 2000 inception from such firms as Matrix Partners (20.1% pre-IPO stake), North Bridge Venture Partners (20.1%), Highland Capital Partners (18.4%), Focus Ventures (6%) and the T-Mobile Venture Fund.

Another new issue is Jazz Pharmaceuticals Inc., a Palo Alto, Calif.-based drug development and commercialization company focused on neurology and psychiatry. It priced 6 million common shares, at $18 per share, for an IPO take of about $108 million.

The company had originally planned to price at between $24 and $26 per share, and then lowered its range to between $20 and $21 per share. Its initial market capitalization is about $441 million.

Jazz had raised about $265 million in VC funding since its 2003 inception from Kohlberg Kravis Roberts & Co. (46.24% pre-IPO stake), Thoma Cressey Equity Partners (10.72%), Beecken Petty O’Keefe & Co. (7.15%), Prospect Venture Partners (6.65%), Versant Ventures (6.65%), Golden Gate Capital (5.36%), Lehman Brothers (5.13%), Adams Street Partners, EGS Healthcare Capital Partners and Oak Hill Capital.