PE Week Wire, Feb. 8, 2007

Just a couple notes before I drive down to New York for a series of fun-filled meetings with the corporate overlords…

Equity Office shareholders yesterday overwhelmingly approved the $55.50 per share buyout offer from The Blackstone Group, thus cementing the largest-ever LBO at around $39 billion (including around $16 billion in assumed debt). I wrote a few days ago that Blackstone might be better off losing the deal if it were able to collect the ridiculous $720 million breakup fee it negotiated – and lots of Blackstone LPs wrote me in agreement – but then Vornado bailed and left Blackstone as the de facto winner.

So do I now stand corrected, considering that: (A) Blackstone was not required to raise its bid beyond Vornado’s $56 per share; and (B) Blackstone reportedly already has agreed to sell around $7 billion of Equity Office’s New York City properties. Or how about the fact that Blackstone is putting in less than $4 billion of its own dollars and reportedly has “agreed” to pay itself a hubris acquisition fee worth around $200 million?

The answer is “probably” (how’s that for taking a stand?). The reason for my hedge is that it ultimately depends on whether or not Blackstone ever really thought it could acquire Equity Office for its original bid. If so, then this deal is not the best use of Blackstone’s money. It would have done better to transact a series of smaller buyouts with more Blackstone-like return expectations. But the fact is that Blackstone kept responding to each Vornado raise as if it were holding pocket aces. In other words, its real return expectations were based upon a price much closer to $55.50 per share than to $48.50 per share.

*** Constellation Ventures is back in market with a third fund, and already has scored at least $90 million in commitments from LPs like GKM, New York Common Retirement Fund and longtime backer Bear Stearns ($50m cornerstone nut). Its ultimate target is between $200 million and $250 million.

So why do I mention this here instead of below in the fund news section? Well, first because it’s a scoop. More important, however, is the utter improbability of Constellation not only raising a third fund, but actually getting LP traction. Less than a year ago, the firm seemed to be on the ropes due to the departures of managing directors like Dennis Miller (to Spark Capital) and Virginia Turezyn (to American Capital Strategies) – which left Cliff Friedman as the only senior investor on staff. Yes Cliff was Bear Stearns’ designated king of the Constellation hill — don’t think that didn’t play into some of the personnel issues – but LPs were openly skeptical about salvaging the 2000-vintage portfolio with just a couple of junior folks to help him. And that’s saying a lot, because Constellation did not have too many sophisticated LPs.

But such skepticism has since been put aside, as Constellation has indeed turned its fund around. Sources say that recent liquidity events like a huge sale of Savvis Inc. shares likely will help the firm return between 1.5x and 2x its capital to LPs, which is outstanding performance for a 2000-vintage fund…

New at peHUB.com

• iRhythm Technologies is a stealth-mode Valley startup that is developing a next-generation cardiac-rhythm monitoring device. It has scored a $12.5 million Series A commitment from Mohr Davidow Ventures and Synergy Venture Partners.

• Is India overheated? Alex wants to know.

• New job openings in the Careers section. Some people have been asking me about the mechanics of posting jobs at their own firms. If you also want to post, just drop me a note. The process is very easy, and very cheap.

And, as always, news and analysis throughout the day…

Top Three

General Atlantic has withdrawn a $36 per share buyout offer for EGL Inc. (Nasdaq: EAGL), a Houston–based freight forwarding company. The offer had been made in partnership with company CEO James Crane, and would have valued EGL at approximately $1.2 billion. In a statement, EGL said that General Atlantic’s withdrawal was “due to an expected shortfall in EGL’s fourth quarter 2006 results, as compared to amounts previously anticipated by analysts and by General Atlantic.” www.eaglegl.com

Immatics Biotechnologies GmbH, a Tuebingen, Germany-based developer of immunotherapies for cancer treatment, has raised €40 in second-round funding. Dietmar Hopp, the National Technology Enterprises Co. and KfW were joined by return backers 3i Group and Wellington Partners. www.immatics.com

Accuray Inc., a Sunnyvale, Calif.-based developer of a robotic radio-surgery system, priced 16 million common shares at $18 per share, for an IPO take of approximately $288 million. It originally filed to price 13.3 million shares at between $14-$16 per share, but later raised the price range to $17-$18 per share. It will trade on the Nasdaq under ticker symbol ARAY, while JPMorgan and UBS served as co-lead underwriters. Shareholders include BVI International Investment and Maubeni Corp. www.accuray.com

VC Deals

Immatics Biotechnologies GmbH, a Tuebingen, Germany-based developer of immunotherapies for cancer treatment, has raised €40 in second-round funding. Dietmar Hopp, the National Technology Enterprises Co. and KfW were joined by return backers 3i Group and Wellington Partners. www.immatics.com

MAKO Surgical Corp., a Ft. Lauderdale, Fla.-based developer of a guidance system that aids in surgery for early-stage osteoarthritis of the knee, has raised $30 million in Series C funding. Tudor Investment Corp. led the deal, and was joined by Ziegler Meditech Equity Partners and return backers The Exxel Group, MDS Capital, Aperture Venture Partners, Ivy Healthcare Capital and Sycamore Ventures. www.makosurgical.com

Axiom Microdevices Inc., an Irvine, Calif.-based provider of metal oxide semiconductor power amplifiers, has raised $25 million in Series C funding. Tallwood Venture Capital led the deal, and was joined by fellow return backers U.S. Venture Partners, Anthem Venture Partners and VentureTech Alliance. www.axiom-micro.com

Vantage Oncology Inc., an El Segundo, Calif.-based owner and operator of radiation oncology centers, has raised $22.5 million in Series D funding, according to a regulatory filing. Camden Partners was joined by return backers New Enterprise Associates, Conning Capital Partners, Versant Ventures and Salix Ventures. www.vantageoncology.com

SkyBitz Inc., a Sterling, Va.-based provider of satellite-based asset tracking and information management services, has raised $10 million in Series D funding. CIBC Capital Partners led the deal, and was joined by return backers AIG Highstar Capital, Inverness Capital Partners, ITV and Motorola Ventures. The company has raised over $40 million in total VC funding since 2000. www.skybitz.com

LaGarde, a Kansas City-based provider of an ecommerce platform, has raised $6 million in Series A funding from Shasta Ventures. www.storefront.net

BINDBiosciences Inc., a Waltham, Mass.-based biotech startup, has raised $2.5 million in Series A funding, according to a regulatory filing. Backers include Flagship Ventures and Polaris Venture Partners, while the company is run by former TransForm Pharmaceuticals president Paul Goldenheim.

SolBeam Inc., a Laguna Niguel, Calif.-based developer of solar concentration concentration solutions, has raised $500,000 in seed funding from NGEN Partners, according to a regulatory filing. A VentureWire report puts NGEN’s total commitment to SolBeam at closer to $1 million.

Buyout Deals

Bain Capital has agreed to acquire listed South African retailer Edgars Consolidated Stores Ltd. (Edcon) for approximately $3.5 billion. The deal is still subject to shareholder and regulatory approvals, and would represent a 51.3% premium to Edcon’s closing price on October 16, which is when the company disclosed discussions with private equity firms. If completed, it would be the largest-ever leveraged buyout of a South African company. www.baincapital.com

Cerberus Capital Management has agreed to acquire seven television stations from CBS Corp. (NYSE: CBS) for $185 million. The deal includes stations in Austin, Salt Lake City, Providence and West Palm Beach, and is subject to FCC approval. Cerberus was advised on the deal by CobbCorp and Wachovia Capital Markets. www.cerberuscapital.com www.cbscorporation.com

Apollo Management has completed its $12.50 per share acquisition of Jacuzzi Brands Inc. (NYSE: JJZ). The total transaction was valued at $1.25 billion, including the assumption of $260 million in outstanding debt. Lazard Frères & Co. advised Jacuzzi Brands on the deal, which was originally announced last October. Jacuzzi Brands is a West Palm Beach, Fla.-based manufacturer and distributor of branded bath and plumbing products for the residential, commercial and institutional markets. www.jacuzzibrands.com

Goldman Sachs and Sanyo Electric have agreed to sell their combined 50% stake in Japanese lender Sanyo Electric Credit Co. to G.E. Capital for approximately $372 million, according to Reuters. Other interested bidders had been reported to include Shinsei Bank.

CCMP Capital Asia, Permira and Texas Pacific Group are prepping bids to acquire a majority stake in consumer electronics company Victor Co. of Japan (VCJ) from Matsushita Electric Industrial, according to the Wall Street Journal.

Creo Capital Partners has acquired a majority stake in Lintelle Engineering Inc., a Scotts Valley, Calif.-based design, engineering and manufacturing firm. No financial terms were disclosed, except that Lintelle founder Bill Turner will retain a “significant minority” stake. www.creocapitalpartners.com

PE-Backed IPOs

National CineMedia Inc., a Centennial, Colo.-based distributor of in-theater advertising, priced 38 million common shares at $21 per share ($18-$20 range), for an IPO take of approximately $798 million. It will trade on the Nasdaq under ticker symbol NCMI, while Credit Suisse, JPMorgan, Lehman Brothers and Morgan Stanley served as co-lead underwriters. Shareholders include Madison Dearborn Partners, The Anschutz Co., Cinemark and Regal Cinemas. www.ncm.com

Switch and Data, a Tampa, Fla.-based provider of Internet exchange infrastructure, priced 11.67 million common shares at $17 per share ($14-$16 range), for an IPO take of approximately $198.39 million. It will trade on the Nasdaq under ticker symbol SDXC, while Deutsche Banc Securities and Jefferies & Co. served as co-lead underwriters. Switch and Data shareholders include CapStreet Group, Seaport Capital Partners and Tudor Ventures. www.switchanddata.com

Mellanox Technologies Inc., a Santa Clara, Calif.-based provider of interconnect solutions for servers, storage and infrastructure equipment, priced 6 million common shares at $17 per share, for an IPO take of approximately $102 million. It originally planned to price at between $12-$14 per share, and later upped its range to $14-$16 per share. It will trade on the Nasdaq under ticker symbol MLNX, while Credit Suisse and JPMorgan served as co-lead underwriters. The company has raised $89.34 million in VC funding since its 1999 inception, from firms like Intel Capital, Sequoia Capital, U.S. Venture Partners, Jerusalem Global Ventures and Walden Israel. www.mellanox.com

3SBio Inc., a Shanghai, China-based developer of protein-based drugs, priced 7.7 million American depository shares at $16 per share ($12-$14 range), for an IPO take of approximately $123.2 million. It will trade on the Nasdaq under ticker symbol SSRX, while UBS served as lead underwriter. Shareholders include Walden International.

BioLineRx Ltd., an Jerusalem-based drug company, has priced 28.69 million common shares at $1.74 per share, for an IPO take of approximately $50 million. It will trade on the Tel Aviv Stock Exchange under ticker symbol BLRX, while Clal Finance Underwriting and Leader Capital Markets served as co-lead underwriters. IPO buyers included existing BioLineRx shareholders Teva Pharmaceuticals, Giza Venture Capital, Pitango Venture Capital and Hadasit. The company previously had rai! sed around $32 million in total VC funding. www.biolinerx.com

TechTarget Inc., a Needham, Mass.-based provider of online IT content, has filed for a $75 million IPO. It plans to trade on the Nasdaq under ticker symbol TTGG, with Morgan Stanley and Lehman Brothers serving as co-lead underwriters. Shareholders include Technology Crossover Ventures (32.34% pre-IPO stake) and Polaris Venture Partners (28.41%). www.techtarget.com

Biodel Inc., a Danbury, Conn.-based drug improvement company focused on endocrine disorders like diabetes and osteoporosis, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol BIOD, with Banc of America Securities serving as lead underwriter. The company raised $21 million in Series B funding last summer, and lists shareholders like Great Point Partners (17.4% pre-IPO stake), OrbiMed Advisors (17.4%) and Vivo Ventures (15%). www.biodelinc.com

NeurogesX Inc., a San Carlos, Calif.-based developer of pain management therapies, has filed for a $69 million IPO. It plans to trade on the Nasdaq under ticker symbol NGSX, with Morgan Stanley serving as lead underwriter. The company has raised around $95 million in total VC funding since its 1998 inception, from firms like Arch Venture Partners (24.7% pre-IPO stake), Alta Partners (18.6%), Walden International (14.3%), Montreaux Equity Partners (10.2%) and Global Lifescience Ventures (6.5%). www.neurogesx.com

Optimer Pharmaceuticals Inc., a San Diego-based developer of anti-infective products, has decreased its proposed IPO price range from $12-$14 per share to $8-$9 per share. It still plans to offer 5.25 million common shares, and trade on the Nasdaq under ticker symbol OPTR. Piper Jaffray and Jefferies & Co. are serving as co-lead underwriters. It has raised $67.7 million in VC funding from firms like ProQuest Investments, Formose Healthcare Investments and BB Biotech. www.optimerpharma.com

PE-Backed M&A

NXP Semiconductors BV of The Netherlands has agreed to acquire the mobile phone equipment business of Austin, Texas-based Silicon Laboratories Inc. (Nasdaq: SLAB). The deal is valued at $285 million, plus a possible $65 million earn-out based on performance over the next three years. NXP is the former semiconductor division of Royal Philips Electronics, which was acquired for over $8 billion last year by KKR, AlpInvest, Apax Partners, Bain Capital, Partners Group and Silver Lake Partners. www.nxp.com www.silabs.com

Mattress Firm, a mattress retailer recently acquired by J.W. Childs Associates, has agreed to buy Bedtime Mattress Co., a Las Vegas-based mattress retailer with 15 locations. No financial terms were disclosed for the deal, which is expected to close within the next 45 days. Once completed, the deal will bring Houston-based Mattress Firm’s total store count to nearly 370 stores across 20 states. www.mattressfirm.com

PE Exits

Halyard Capital has completed its sale of Dallas-based community newspaper publisher American Consolidated Media to Macquarie Media Group for $80 million. www.halyard.com

Firms & Funds

Insight Venture Partners, a New York-based firm focused on late-stage tech deals, is targeting $1.2 billion for its sixth fund, according to VentureWire. Fund-raising is slated to wrap up by the end of March, although it’s unclear if the firm will be able to close at such a heady pace. Its fifth fund closed with $675 million in 2005. www.insightpartners.com

Human Resources

William Donaldson, former SEC chairman, has joined Perella Weinberg Partners as chairman of the firm’s advisory council. www.pwpartners.com

James Abbott has joined Seward & Kissel LLP as a partner in the firm’s corporate finance department, where he will help lead its business transactions group. He previously was co-chair of the corporate department at Carter Ledyard & Milburn LLP. www.sewkis.com

Mark Kent has joined Sigma Designs (Nasdaq: SIGM) as chief financial officer. From 2001 through 2004, Kent served as CFO or interim CFO for Oak Investment Partners portfolio companies like Talisma Corp., Knowledge Networks and Securant Technologies. www.sigmadesigns.com

GSC Group has promoted David Goret to senior managing director. He previously was a managing director, and serves as the firm’s general counsel and chief compliance officer. www.gsc.com

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Correction: Yesterday’s issue incorrectly stated the VC funding history of Ecutel Systems, which has agreed to be acquired by Smith Micro Software Inc. for $8 million in cash. The correct info is that Ecutel has raised $5.5M in Preferred Equity from CNF Investments and McDonnell Associates.