Am I the only one who’s beginning to think it’s in Blackstone’s best interest to lose the Equity Office deal? It has now raised its bid to $55.50 per share, which is 14.4% higher than its initial offer. So assume for a moment that Blackstone was originally expecting a 25% ROI from the deal – which is based on no inside info, just supposition for the sake of argument. That would be an exit at $60.63 per share (I know it’s not quite so apples-to-apples easy, but please keep indulging me). That same exit would not be just a 9% ROI based on the revised bid price.
It is certainly true that 9% on such a mega-deal is huge from a cash-on-cash perspective, but Blackstone’s track record indicates that it could find better places to put its money. Moreover, the breakup fee now stands at a whopping $720 million. Since Blackstone splits fees 50/50, that would be $350 million for the firm and $350 million for LPs (assuming around $20m in out-of-pocket expenses).
We can certainly argue over whether an LBO firm deserves that kind of capital for just doing its job (i.e., bidding with its LPs’ money) – and I’ll probably do that later today online – but the best option might now might be to take the free cash and plug the fund capital into new deals with better return expectations.
*** Last week we reported that Tim Draper was among the angels who invested $1.1 million in s*x toy company Jimmy Jane. But Tim wasn’t alone. It turns out that another three or four of DFJ’s eight other managing directors also chipped into what they view as a steady, niche retail opportunity. But before prudish limited partners pull up their LPAs, please note that DFJ itself has not made a commitment – as it’s not the sort of tech play that fits into the firm’s portfolio strategy. Instead, each commitment comes from the managing directors’ individual bank accounts.
*** Today’s new fund alert involves Symmetric Partners, which has secured over $85 million in capital commitments from groups like Goldman Sachs, Lucent and the University of North Carolina. The Boston-based firm plans to target lower middle-market companies in North America, and is marketing its inaugural vehicle with a $200 million target and a $300 million hard cap.
Its principals are Daniel Doyle and Rob Walsh, who years ago worked together at Summit Partners. Doyle later moved on to co-founder Shawmut Capital Partners, which seems to be winding down (particularly given that Symmetric is operating out of Shawmut CP’s offices). Walsh left much more recently. Firm management also includes Bill McMahon in an operating partner sort of role. He is the former COO of KB Toys and CEO of Decorative Concepts, who also had a very short stint with Heritage Partners and a longer one as a go-to operator with Bain Capital.
*** Accel Partners yesterday partnered up with the addition of Rich Wong, former senior vice president and general manager of Openwave. I asked Accel’s Peter Wagner is Wong’s hiring was done to fill a partnership void left by last year’s defection of Peter Fenton to Benchmark, but he said it was not. “Rich just happened to be available now,” Wagner said. “Had he been available earlier, we would have hired him then.”
It’s also worth noting that Wagner and Wong first became acquainted as friendly adversaries in the late 1990s. Wagner had led Accel’s investment in North Point Communications, and was serving on its board. Wong meanwhile was chief marketing officer for North Point rival Covad Communications…
*** Quiz Time: Can you name the middle-market buyout shop that last week suffered multiple senior defections? Hint: It’s been trying to raise its third fund for a (very) long time.
*** Was KKR’s $700 million PIPE infusion into Sun Microsystems a baby-step toward an eventual take-private offer for the entire company? Wael Aburida, managing director of tech I-banking at Nollenberger Capital Partners, says “maybe” in the latest issue of Buyouts (sub required): “It’s a good way for KKR to start evaluating whether it makes sense to take [Sun] private and how to extract value from it,” he says.
The folks over a Red Herring, however, disagree – pointing out a “standstill agreement that bars nine-month-old KKR Private Equity Investors, the publicly traded arm of KKR, from acquiring more than 5 percent of Sun shares through the close of the deal in 2014.” It’s unclear, however, if that agreement also is applicable to KKR’s private funds. If not, then it’s basically insignificant.
*** In the least surprising political development of 2007, former New York City mayor Rudy Giuliani has filed papers for a presidential run. Anyone interested in seeing him live should register for Buyouts Symposium East on April 16-18 in New York, where he’ll be one of three keynote speakers.
This year’s event also will feature our first Buyouts Awards Dinner, which will be about 10% awards and 90% booze and schmooze. Nominations already have been submitted for most of the awards, but we’d like a few more Buyout Pro of the Year noms. If you’ve got one, please let us know…
*** And, as always, check out all the new stuff we’ve got posted at peHUB.com. Also some pretty good intense reader conversations going on here and here…
Top Three
Force10 Networks Inc., a San Jose, Calif.-based provider of network routing and switching equipment, has raised $64 million in additional Series F funding, according to a regulatory filing (get filing here). The company held a $50 million first close on the deal last August with a reported post-money valuation of approximately $455 million. The round’s total target is listed as $113 million. Force10 has now raised nearly $400 million from firms like Advanced Equities, Crosslink Capital, New Enterprise Associates, Meritech Capital Partners, U.S. Venture Partners, Pacesetter Capital and Worldview Technology Partners. www.force10networks.com
DLJ Merchant Banking Partners has sold Wastequip Inc., a Beachwood, Ohio-based waste transportation equipment maker, to Odyssey Investment Partners for $616 million. It had acquired the company from CIVC Partners in 2005 for an undisclosed amount, but said in a statement that the deal represents a 3.1x cash-on-cash return. www.wastequity.com
Akamai Technologies Inc. (Nasdaq: AKAM) has agreed to acquire Netli Inc., a Palo Alto, Calif.-based provider of application delivery network services, for approximatley $178 million worth of Akamai stock.Netli has raised around $46.5 million in total VC funding since its 2000 inception, including an $18 million Series D round in early 2006 at a post-money valuation of approximately $83 million. Shareholders include Alta Partners, Bessemer Venture Partners, BlueRun Ventures, Leapfrog Ventures, Morgenthaler Ventures, Reed Elsevier Ventures and Granite Global Ventures. www.akamai.com www.netli.com
VC Deals
Teliris, a New York-based provider of interactive tele-presence solutions (think advanced videoconferencing), has raised $40 million in Series A funding co-led by Columbia Capital and Fidelity Ventures. The deal provides Columbia and Fidelity with a majority ownership position. www.teliris.com
TriCipher, a San Mateo, Calif.-based provider of authentication security solutions for protecting online channels against fraud and identity theft, has raised $15 million in Series C funding. RBC Technology Ventures led the deal, and was joined by return backers Arrowpath Venture Partners, Intel Capital, Trident Capital, Wasatch Venture Fund and Zions SBIC. The deal also includes a debt facility provided by Comerica. www.tricipher.com
Colibria, a Norway–based provider of mobile instant messaging solutions, has raised €10 million in new VC funding from Northzone Ventures, Verdane Capital and Ferd Venture. www.colibria.com
SolarWinds, an Austin, Texas-based provider of network management software for the SMB/SME market, has raised $7.5 million in new funding from Austin Ventures. The company previously had raised funding from Bain Capital Ventures and Insight Venture Partners. www.solarwinds.net
Quickoffice Inc., a Plano, Texas-based provider of office document software for mobile devices, has raised $7 million in Series D funding. Mayfield led the deal, and was joined by Access Industries, Advantage Capital Partners, Shepherd Ventures and Shea Ventures. In addition, the company has added former PalmSouce CEO Patrick McVeigh to its board of directors. Quickoffice has raised $26 million since 2005. www.quickoffice.com
TechniScan Medical Systems Inc., a Salt Lake City-based developer of ultrasound technology for breast imaging, has raised $6.4 million in Series D funding. Green and Gold Holdings led the deal, according to VentureWire. www.techniscanmedicalsystems.com
Gigya Ltd., an Israel-based developer of software that inserts multimedia into emails, has raised $4 million in first-rounding from Benchmark Capital, according to Globes Online. The company’s website also lists First Round Capital as an investor. www.gigya.com
Plazes AG, a Zurich-based mobile social navigation startup, has raised €2.7 million in first-round funding from Doughty Hanson Technology Ventures. It previously had raised angel capital from such individuals as Esther Dyson, Marc Andreessen and Martin Varsavsky. www.plazes.com
Oxford Genome Sciences Ltd., a UK-based personalized medicine company primarily focused on oncology, has raised an undisclosed amount of second-round funding. Catapult Growth Fund led the deal, and was joined by return backers South East Growth Fund and Oxford Capital Partners. www.oxfordgenomesciences.com
Buyout Deals
Avista Capital Partners has acquired Phillips Investment Resources LLC, a Rockville, Md.-based provider of subscription-based investment advice, from Phillips International Inc. No financial terms were disclosed. Phillips International was advised on the sale by The Jordan, Edmiston Group. www.avistacap.com www.phillips.com
Arbor Private Investments has acquired National Provisions Inc., a Miami, Fla.-based provider of branded deli meats. No financial terms were disclosed. It is Arbor’s first deal out of its second buyout fund. www.arborpic.com
Tom Hicks and George Gillett have agreed to acquire soccer club Liverpool FC for Gbp174 million. The deal was struck after rival bidder Dubai International Capital dropped out of the bidding. Hicks already owns the Texas Rangers (baseball) and Dallas Stats (ice hockey), while Gillett owns the Montreal Canadiens (ice hockey) and used to run both the Miami Dolphins and Harlem Globetrotters.
Sentinel Capital Partners has acquired Mid-West Wholesale Hardware Co., a Kansas City-based wholesaler of commercial door hardware, from Banc of America Equity Partners. No financial terms were disclosed. www.sentinelpartners.com www.midwestwholesale.com
Berkshire Partners has acquired a majority position in medical equipment companies Chatsworth, Calif.-based Masterplan Inc. and Goodlettsville, Tenn.-based ReMedPar Inc. from Three Cities Research and Camden Partners. No financial terms for either deal was disclosed. Bear Stearns and Ares Capital provided leverage.
Code Hennessy & Simmons LLC has acquired an equity position in Mainline Supply Co., a Charlotte, N.C.–based wholesale distributor of underground infrastructure products in the Southeast. No financial terms were disclosed for the deal, which was done in partnership with company management. www.chsonline.com www.mainlinesupply.net
Hampshire Equity Partners has sold Acton Mobile Industries, a Baltimore, Md.-based provider of modular space rental services, to Code Hennessy & Simmons. No financial terms were disclosed. Hampshire acquired its majority stake in Acton in 2003. www.hampep.com www.chsonline.com www.actonmobile.com
PE-Backed IPOs
Hyco International Inc., an Atlanta, Ga.-based maker of custom-designed hydraulic cylinders for use in mobile equipment, has withdrawn registration for a $100 million IPO. No reason was given. The company had planned to trade on the Nasdaq, with Friedman Billings Ramsey and Harris Nesbitt serving as co-lead underwriters. Centre Partners holds a 96.5% position. www.hyco.net
Trident Resources Corp., a Calgary-based natural gas exploration and development company, has canceled a proposed $300 million IPO, citing market conditions. Credit Suisse, Morgan Stanley and TD Securities had been serving as co-lead underwriters. Shareholders include Aurora Energy Partners, Clery Sarl and RFG Private Equity.
PE-Backed M&A
Realm Business Solutions, a Houston, Texas-based provider of software for the commercial real estate lifecycle, has acquired Tree Software and Consulting Inc., a Cherry Hill, N.J.-based real estate software company. No financial terms were disclosed, except that the deal was partially financed by existing Realm backers Insight Venture Partners and Lightyear Capital. www.realm.com www.treesoft.com
PE Exits
Hewlett-Packard Co. (NYSE: HPQ) has agreed to acquire Bristol Technology Inc., a Danbury, Conn.-based provider of technologies that monitor business transactions. No financial terms were disclosed. Bristol has raised over $9.1 million in VC funding from firms like Apax Partners, Connecticut Innovations and Jerusalem Venture Partners. www.hp.com www.bristol.com
Reliance Steel & Aluminum Co. (NYSE: RS) has completed its acquisition of Encore Group, an Edmonton, Alberta-based operator of metals service center companies (Encore Metals, Encore Metals USA Inc., Encore Coils, and Team Tube in Canada). No financial terms were disclosed. Encore was formed in 2004 via a management buyout sponsored by HSBC Canada. Its annual net sales for 2006 were approximately Cdn$259 million. www.rsac.com
Firms & Funds
MissionPoint Capital Partners has closed its inaugural fund with $335 million in capital commitments, according to a regulatory filing. The Norwalk, Conn.-based firm focuses on opportunities in the clean energy sector. Its management includes: Mark Schwartz, former president and CEO of Soros Fund Management and former chairman of Goldman Sachs (Asia); Jesse Fink, co-founder and former COO of priceline.com; and Mark Cirilli, CIO for Fink’s family office Marshall Street Management. www.missionpointcapital.com
Human Resources
Richard Wong has joined Accel Partners as a partner. He previously was SVP/GM of products for Openwave Systems (Nasdaq: OPWV). www.accel.com
George Abraham has joined C.E. Unterberg, Towbin as a managing director, focused on developing relationships with VC funds and their portfolio companies. He co-founded SAS Investors in 2000. www.ceut.com
Ann Quinn has joined SC&H Capital, the M&A practice of management consulting and accounting firm SC&H Group LLC. She previously was managing director for the Maryland Venture Fund. www.scandh.com
Alex Gendzier has joined Jones Day as a New York-based partner in the firm’s capital markets practice. He previously was a partner with King & Spalding LLP. www.jonesday.com
Hampshire Equity Partners has promoted Michael McGovern and Jason Meyer to partner, and also promoted John Lenahan to vice president. www.hampep.com
Liquid Realty Partners has made three hires: Brendan MacDonald as an associate, after having been an associate with Babcock & Brown; John Wai as controller, after having been a senior auditor with PricewaterhouseCoopers; and Bryce Popoff as a senior accountant, after having been a senior fund accountant. www.liquidrealty.com
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