PE Week Wire — Friday, February 4

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Random Ramblings

A few notes as we head into Super Bowl Weekend (a.k.a. “go cry in your cheesesteak” weekend):

* The jet that crashed Wednesday at Teterboro Airport had been chartered by private equity firm Kelso & Co., but all five Kelso employees on board are miraculously ok (save for some very frayed nerves). The firm isn’t releasing passenger names, but says that none required hospitalization. For those who don’t know, the plane apparently aborted takeoff at the last minute (although it’s unclear if that was a voluntary or involuntary decision), skidded off the runway, barreled through a metal fence and then across a six-lane highway, before finally forcing its way into a warehouse. A co-pilot broke his leg, and several people on the ground were injured (including one man in critical condition). The National Transportation Safety Board is investigating.

* PE Week‘s Connie Loizos is reporting that the Epinions lawsuit may have had unintended consequences for plaintiff Naval Ravikant. Seems Naval just lost his partnership position at Dot Edu Ventures, which was perhaps trying to shield itself from uncomfortable questions during its current fund-raising drive. Money quote from Dot Edu managing partner Asha Jadej: “We were at a point where we felt there were multiple factors, including the suit, which helped us all decide that this might be a good time to part ways.”

* SOTU: I changed my mind. nothing much more to say. Except this: If Bush gets partially privatized social security accounts through the Senate, it will be his greatest political achievement to date (even more than selling a ridiculous war). The Democrats seem unusually united, although they have done a terrible job articulating the reasons for their opposition (paging sleepy Harry Reid and frozen-faced Nancy Pelosi).

* Speaking of politics, I got the following email this week: “Now what are you going to do, since your Party is about to be run by a madman?” My first reaction was that this was in reference to my upcoming Super Bowl party, and I took offense. Then I figured out he was referring to Howard Dean. My answer: Perfect man for the job (true heir to Clinton-Centrist philosophy, despite his misapplied far-left label), and would have made a better candidate than Kerry had Dems not foolishly closed ranks. Yes, I truly believe that.

* And a final piece of feedback that somehow fell through the cracks. David Gould, the first person kicked off The Apprentice — and a senior associate with NY-based Merlin BioMed Private Equity – wrote in to explain his participation, and his bewilderment at why Ivana participated in the second season: “The only rationale for joining a reality show involves being in a transitional period. I had just finished my MBA at Stern (following four years in private equity at Dresdner), was applying for jobs in mid-2003, and thought ‘why not?’ I joined Merlin BioMed in the fall of 2003 (post-filming, prior to airing), but couldn’t imagine taking a leave of absence from anything remotely interesting for television’s sake. Then again, I can’t imagine why anyone would apply for The Apprentice after having had the benefit seeing a season….I believe most of the contestants are simply exhibitionists in one way or another.”

* Lets go Pats.

FairPoint Communications Inc., a Charlotte, N.C.-based provider of telecom services, priced 25 million common shares at $18.50 per share (lower end of $18-$20 range), for a total IPO take of approximately $462.5 million. Major shareholders include Thomas H. Lee Partners and Kelso Equity Partners.

Kayne Anderson Capital Advisors has closed its third energy-focused private equity fund with $550 million in capital commitments.

Click Commerce Inc. (Nasdaq: CKCM) has acquired substantially all the operating assets of ChannelWave Inc.‘s channel management and service automation solutions businesses. The deal was valued at approximately $5.3 million, including $1 million in cash. ChannelWave has raised over $60 million in venture funding from firms like ABS Capital Partners, Mobius Venture Capital, Lazard Technology Partners and Ironside Ventures.

InnerWireless Inc., a Richardson, Texas-based developer of a unified wireless distribution platform, has raised $11 million in Series C funding. Johnson Controls Inc. (NYSE: JCI) participated on the deal, alongside return backers Sevin Rosen Funds, Rho Ventures, Massey Burch Capital Corp., Technology Associates Management Co. and Genesis Campus.

Corvil, a Dublin, Ireland-based provider of IP traffic control and management solutions, has raised 15 million euros in Series C funding from return backers Apax Partners, Cisco Systems and ACT Venture Capital. The company has raised 30 million euros in total venture funding since its April 2000 inception.

Saunders Karp & Megrue has acquired Comark Inc., a Canadian mall-based apparel retailer with 303 stores. No financial terms were disclosed. Company management, including President Dick Schulte, will remain in place.

Arlington Capital Partners has acquired four FM radio stations in Long Island: WEHM (92.7, progressive rock), WBEA (101.7, hip-hop), WBAZ (102.5, light adult contemporary) and WHBE (96.7, Bloomberg Radio). The quartet will be managed by recently-formed Long Island Radio LLC, which will operate as a wholly-owned subsidiary of Arlington portfolio company Cherry Creek Radio.

Bally Total Fitness Holding Corp. (NYSE: BFT) has retained The Blackstone Group to assist in the company’s turnaround strategy. A press report last month suggested that Bally was considering a 40% sale of the company for $125 million to a consortium of Tennenbaum Capital Partners, Apollo Management and Texas Pacific Group.

EQT Partners has agreed to acquire Sanitec Corp. from BC Partners for an undisclosed amount. Sanitec is a Finland-based manufacturer of bathroom ceramics and related products.

Threshold Pharmaceuticals Inc., a Redwood City, Calif.-based biotech company focused on small molecule therapeutics, priced 5.3 million common shares at $7 per share, for an IPO take of $37.1 million. The company originally filed to price at between $14-$16 per share, before reducing the proposed range to a still-unreachable $8-$10 per share. The company had raised around $50 million in VC funding since its 2001 inception, from firms like Morgenthaler Ventures, Pequot Capital Management, ProQuest Investments, Sofinnova Ventures, Three Arch Partners and Sutter Hill Ventures.

American Reprographics Co., a Glendale, Calif.-based provider of B2B document management services to the architectural, engineering and construction industries, priced 13.35 million common shares at $13 per share (below $14-$16 range), for an IPO take of approximately $173.55 million. Private equity firm Code Hennessy & Simmons owned a 47.7% pre-IPO stake in American Reprographics, due to its participation in a February 2000 recapitalization.

Icagen Inc., Durham, N.C.-based drug company focused on orally-administered small molecule drugs, priced 5 million common shares at $8 per share, for an IPO take of approximately $40 million. The company had filed to price at between $10 and $12 per share, but later amended the proposal to $8 per share. Significant shareholders include Alta Partners, Venrock Associates, Abbot Laboratories, JPMorgan Partners, HBM BioVentures, Medical Science Partners, QFinance and China Development Industrial Bank.

Targacept Inc., a Winston Salem, N.C.-based drug company focused on the central nervous system, has set its proposed IPO terms to 6.25 million shares being offered at between $11 and $13 per share. The company has raised over $120 million in total VC funding since its 1997 inception, from firms like Nomura Phase4 Ventures, New Enterprise Associates, EuclidSR Partners, Nomura, Oxford Bioscience Partners, R.J. Reynolds Tobacco Holdings, Burrill & Co. and Advent International.

Intercell AG, an Austrian developer of vaccines to protect against infectious diseases, plans to float on the Vienna Stock Exchange later this month, according to Reuters. The company is hoping to raise between 60 and 80 million euros, and has signed Goldman Sachs as its book-runner. Company shareholders include AlpInvest, Apax Partners, MPM Capital, Techno-Venture Management and Nomura.

Allsec Technologies Ltd., an India-based business process outsourcing (BPO) company, is planning to float its common stock on an Indian exchange. It has received venture funding from the Kotak Mahindra Venture Capital Fund and Eurindia Ltd.

GetActive Software Inc., a Berkeley, Calif. provider of enterprise relationship management products, has acquired the Internet Solutions Group of Issue Dynamics Inc. for an undisclosed amount. GetActive Software has received venture capital funding from El Dorado Ventures, Pacific Partners and Band of Angels.

ProQuest Business Solutions, a subsidiary of ProQuest Co. (NYSE: PQE), has agreed to acquire Syncata Corp., an El Segundo, Calif.-based business consulting and systems integration firm for automotive and automotive finance companies. No financial terms were disclosed. Syncata is backed by JPMorgan Partners and ABS Capital Partners.

Ft. Washington Investment Advisors and Peppertree Partners have signed a 15-year joint agreement to administer The Ohio Capital Fund, a proposed $100 million fund-of-funds that would invest in funds that promise to invest at least half their capital with Ohio-based companies. The contract was awarded by the Ohio Venture Capital Authority.

Fifth Street Capital has held a $68 million first close on its second mezzanine fund, which is being marketed with a maximum cap of $200 million.

Schroder Ventures US, a New York-based private equity firm focused on the middle-market business services sector, has changed its name to SV Investment Partners. The move was made to reflect independence from Schroders PLC.

Chip Kaye, co-president of Warburg Pincus, has joined the board of Jarden Corp. (NYSE: JAH). Warburg Pincus last year bought $300 million worth of Jarden common stock, as part of a $350 million PIPE deal that also included Catterton Partners.

John Cochran, Matt Rho and Kathleen Jordan Stowe all have been promoted from associate to vice president of SV Investment Partners.

Thursday, February 3

Tale of Two Companies

DexCom Inc. and Songbird Hearing Inc. are both medical device companies of convenience, offering customers cheaper and/or more efficient ways to manage already-manageable problems. For DexCom, it means a more continuous, reliable and comfortable way for diabetics to monitor blood glucose levels (i.e., no more finger pricks). For Songbird, it means disposable hearing aids, particularly for those who had resisted traditional devices due to either affordability or aesthetic concerns. Both noble goals, with nearly $200 million in combined venture capital backing.

Each company also made a major announcement recently, but that is where the similarities end. DexCom unveiled plans for a $70 million IPO, and detailed how it has bifurcated its product line. Not only is the company continuing to work on an implantable glucose sensor that could be used by patients for up to one year (small out-patient surgey), but it also has developed a three-day device implantable by patients themselves in the privacy of their own home. Both sensors transmit information to a cell-phone-sized receiver, and would be a major improvement for millions of diabetes sufferers. It isn’t the holy grail – a completely non-invasive sensor automatically linked to an insulin pump – but it is a strong step in the right direction.

Songbird, on the other hand, announced that it has pulled all of its over-the-counter products. This means no more adjustable hearing aids off the shelves at Wal-Mart, nor TV ads asking folks to order them via phone. In addition, company president Srdjan Loncar says that the professional product (i.e., sold by audiologists) also is being discontinued in the U.S., although it will continue to be sold in Europe. And this doesn’t even include the fact that CEO Tom Gardner left last November.

All of these developments come two years after the company revamped its marketing plan, and raised an additional $25 million from longtime backers like Prism Venture Partners and BA Venture Partners (Oak Investment Partners also has a position in the company, but didn’t really participate in that deal beyond rolling over some bridge financing). Neither Prism nor BA is talking (“contractual restrictions”), and Loncar only will say that the company received strategic funding late last year (not from a VC or private equity firm), and is reworking its strategy (again). He would not comment on why Songbird isn’t hiring a new CEO, or on the specific role of new non-executive chairman Gary Einhhorn (who didn’t return calls seeking comment).

I’ve covered both of these companies for several years, because they offered the best of entrepreneurship: Looking at an old problem from an innovative angle. I’m hopeful that Songbird has signed some sort of major corporate synergy deal (rather than a dirt-cheap buyout), which would help it eventually enjoy the type of success DexCom should experience on the public markets. But I’m also realistic, which means that this probably is a case of winning one and losing one.

SOTU: Running very late, so we’ll deal with the speech tomorrow. My immediate reaction was that it emphatically straddled the line between substance and vague banality. No more so than in the social security section, where the only definitive idea was partially privatized accounts. Everything else was just a variety of ideas that are “on the table.” Perhaps someone should have been asked to look at the table ahead of time, pick a few items of interest and serve them. But, again, more on this tomorrow.

Dust Networks Inc., a Berkeley, Calif.-based provider of low-power wireless mesh networking systems, has raised $22 million in Series B funding led by Crescendo Ventures. Other participants included Cargill Ventures and return backers Foundation Capital and Institutional Venture Partners.

Valeant Pharmaceuticals International (NYSE: VRX) has agreed to acquire Xcel Pharmaceuticals Inc., a San Diego-based drug company focused on neurological products. The deal is valued at approximately $280 million, including retirement of $44 million in Xcel debt. Valeant will pay either $280 million in cash, or a combination of $230 million in cash and $50 million in common stock. Xcel has raised over $118 million in total VC funding from investors like Ferrer Freeman & Co., New Enterprise Associates and Domain Associates.

Industry Kapital, a Swedish private equity firm, has closed its fifth fund with 825 million euros ($1.07 billion).

Red Bend Software, a Framingham, Mass.-based provider of firmware-over-the-air update technology for mobile phones, has raised $10 million in Series D funding. Greylock led the deal, and was joined by return backers Carmel Ventures, Pitango Venture Capital, Poalim Ventures and Infinity. The company has raised $23 million in total venture funding since its October 2000 inception.

GenoLogics Life Sciences Software Inc., a British Columbia, Canada-based provider of an open bio-informatics platform, has raised US$5 million in Series A funding. OVP Venture Partners and Yaletown Venture Partners co-led the deal, and were joined by Working Opportunity Fund and GrowthWorks Capital.

Mobilitec Inc., a San Mateo, Calif.-based provider of mobile content delivery software, has raised $12.1 million in Series C funding led by Canaan Partners. Other participants included Duchossois Technology Ventures and return backers AIG Orion and Lucent Venture Partners.

Callio Technologies, a Canadian provider of information security compliance solutions, has raised Cdn$1.25 million from MSBi Capital and Societe Innovatech du sud du Quebec.

Cavis Microcaps GmbH, a German biotech group focused on encapsulation technology, has raised 5 million euros in first-round funding. Invesntages Venture Capital Investment will provide 3 million euros, with BASF Venture Capital providing the remaining 2 million euros.

Texas Pacific Group reportedly has raised its bid for publicly-traded British Vita PLC, a UK-based furniture foam manufacturer, after an earlier offer was rejected. The revised deal is valued at GBP 624 million, or 335 pence per share.

Cinven and CVC Capital Partners reportedly have been topped in their efforts to buy UK port operator Mersey Docks & Harbour Co. The new leading bidder is Peel Ports Ltd., which is offering approximately $1.5 billion.

Nordic Capital has received EU approval for its proposed acquisition of a majority stake in Swedish car parts company Plastal AB, from an ownership group led by Gilde Investment Management. No financial terms have been disclosed.

Strathdon Investments PLC has acquired a 49% stake in Nova Weigh UK Ltd., a UK-based provider of process weighing services, for GBP 0.15 million. The firm plans to invest an additional GBP 0.35 million of debt for working capital over the next 12 months.

Favrille Inc., a San Diego-based drug company focused on immunotherapies for cancer and other immune system diseases, priced six million common shares at $7 per share, for an IPO take of approximately $42 million. It originally filed to price its shares at $12-$14, but later lowered the range to $8-$9 per share, and then again to $7-$8 per share. Company backers include Alloy Corp., De Novo Ventures, Forward Ventures, Sanderling Venture Partners and William Blair Capital Partners.

Icagen Inc., Durham, N.C.-based drug company focused on orally-administered small molecule drugs, has amended its proposed IPO terms to five million common shares at $8 per share. It previously filed for a $10-$12 offering range. Significant shareholders include Alta Partners, Venrock Associates, Abbot Laboratories, JPMorgan Partners, HBM BioVentures, Medical Science Partners, QFinance and China Development Industrial Bank. Ltd., a Brazil-based online retailer, plans to float ordinary shares on the Sao Paulo exchange. Company shareholders include Goldman Sachs, T.H. Lee Putnam Ventures and GP Investimentos.

EMC Corp. (NYSE: EMC) has completed its $260 million cash acquisition of System Management Arts Inc. (a.k.a. Smarts), a White Plains, N.Y.-based provider of event automation and real-time network systems management software. Smarts had raised approximately $24 million in total VC funding from firms like Bessemer Venture Partners and Soros Fund Management.

Openwave Systems Inc. (Nasdaq: OPWV) has acquired Cilys, a Canadian wireless telecom software infrastructure vendor. The deal is valued at US$10 million, including approximately $5 million in cash and approximately $5 million worth of Openwave stock. Cilys had raised VC funding from BDC Venture Capital, CDP Capital-Technology Ventures, Desjardins Venture Capital and Innovatech Quebec.

Autotronic Controls Corp. (a.k.a. MSD Ignition), a portfolio company of Gryphon Investors, has acquired Superchips Inc., a Sanford, Fla.-based maker of performance programmers and chips for late-model production cars and trucks. No financial terms were disclosed.

User-Friendly Phone Book LLC, a portfolio company of VS&A Communications Partners, has acquired the Bartlesville, Oklahoma directory of Southwest Directory Publishing Inc. No financial terms were disclosed. The directory will next be published and distributed in October, with an estimated circulation of 40,000.

Expansion Capital Partners, a San Francisco-based VC firm focused on clean-tech companies, has held a first close on its second fund, with over $20 million in capital commitments. The fund is being marketed with a $50 million target capitalization.

VenGrowth Capital Partners has held a first closing on a new Cdn$40 million mezzanine fund. Limited partners include The Business Development Bank of Canada, BMO Nesbitt Equity Partners and The Canadian Medical Protective Association.

Vincenzo Morelli has joined Texas Pacific Group as a partner in charge of operations for the firm’s European portfolio companies, effective March 1. He most recently served as a managing director with turnaround and interim management firm Alvarez & Marsal.

Peter Claudy, a general partner with M/C Venture Partners, has joined the board of Mpower Holding Corp. (AMEX: MPE), the parent company of broadband provider Mpower Communications Corp.

Oleg Kaganovich, a onetime venture capitalist with Sun Microsystems‘ corporate VC group, has been named CEO of the Sacramento Area Regional Technology Alliance. He has served as the group’s COO over the past year.

Wednesday, February 2

Broken Record

It seems I overestimated my white blood cells by about 24 hours, which means that today’s PE Week Wire is again without much wit, wisdom or whining (actually, scratch that last part). But, so that you don’t feel cheated, here are a few addendums to some of this morning’s many news items:

Top story today involves a multi-billion dollar exit for DLJ Merchant Banking Partners, the CSFB affiliate that may, or may not, be spinning out of its parent bank. That question is expected to be resolved in the next few days, but it continues to amaze me that CSFB didn’t get all its ducks in a row before making the original spinout announcement (which involved the spinout managing all existing DLJ MB funds). If the principals hadn’t all signed on, why broadcast the strategy? Bad PR move, particularly for a public company that should know better. On the flipside, the group of former DLJ Merchant Banking pros now known as Diamond Castle Holdings (Larry Schloss, et all) sent out books for their inaugural fund two weeks ago.

San Francisco-based Burrill & Co. has hired former WI Harper Group and Walden International pro Jonathan Wang to serve as general manager of a new effort focused on strategic partnering and investing opportunities related to Greater China. The life sciences merchant bank/VC firm hopes that this Eastern expansion goes better than its efforts further south, where it still has not received enough LP interest to close a $100 million Australia fund (according to a recent PE Week interview with Steve Burrill). On the other hand, Burrill & Co. expects to hold a $120 million first close on its third life sciences venture fund by the end of March (total target: $300M-$500M).

Most of this morning’s press reports on the Adelphia auction discuss “entire company” bids from Time Warner/Comcast and KKR/Providence Equity Partners. A few also mention that Patriot Media & Communications is one of several smaller cable companies vying for one or more geographic clusters of Adelphia systems. These more detailed reports, however, suggest that Patriot is a portfolio company of Spectrum Equity Investors, Bain Capital and Silver Lake Partners. This seems to be a semantic mix-up. The company’s prime equity sponsor is just Spectrum, but its Adelphia foray also has backing from Bain and Silver Lake.

DLJ Merchant Banking Partners and AIG Highstar Capital have agreed to sell American Ref-Fuel Holdings Corp. to Danielson Holding Corp. (AMEX: Danielson). The transaction is valued at $1.94 billion, with Danielson paying $740 million in cash for the equity and assuming approximately $1.2 billion of consolidated net debt. American Ref-Fuel is a Montvale, N.J.-based waste-to-energy company serving the Northeastern U.S.

GlassHouse Technologies Inc., a Framingham, Mass.-based provider of storage services and consulting, has raised $20 million in Series D funding. Paladin Capital Group led the deal through its Homeland Security Fund, with return backers including Kodiak Venture Partners, Sigma Partners, GrandBanks Capital and Globespan Capital Partners. The company has raised approximately $35 million in total venture funding since its August 2001 inception, including a $7.1 million Series C infusion in late 2003 at a post-money valuation of $26.1 million.

DexCom Inc., a San Diego-based developer of implantable glucose sensors for diabetics, has filed to raise $70 million via an IPO of common stock on the Nasdaq under proposed ticker symbol DXCM. The company has raised around $75 million in total VC funding since its 1998 inception, including a $22.5 million Series D infusion late last year. Significant shareholders include St. Paul Venture Capital, Canaan Partners, Warburg Pincus, RWI Group and The Kaufman Fund.

Gamma Enterprise Technologies Inc., a Woodland Hills, Calif.-based provider of SAP data management solutions, has raised $6.2 million in first-round funding from Palomar Ventures and ArrowPath Venture Capital.

Cambrios Technologies Corp., a Mountain View, Calif.-based provider of bio-directed materials for the electronics industry, has held a $9 million first close on a guaranteed $12 million Series B round. In-Q-Tel, Harris & Harris Group and Headland Ventures were joined by return backers Alloy Ventures, Arch Venture Partners, Avalon Ventures, Lux Capital and Oxford Bioscience Partners.

Harvest Partners has invested an undisclosed amount of expansion capital into Cycle Gear Inc., a Benicia, Calif.-based retailer of motorcycle and ATV riding gear, parts and accessories. No financial terms were disclosed.

Safe ID Solutions AG, a Germany-based provider of travel document production security for both governmental and private-sector organizations, has raised 7 million euros in first-round funding from Atlas Venture and Wellington Partners.

AssetMetrix Inc., an Ottawa, Canada-based provider of on-demand decision support for IT management, has raised Cdn$3 million in venture funding from Best Funds of Toronto.

KKR and Providence Equity Partners, as expected, submitted a bid to acquire Adelphia Communications Corp. They will apparently fight it out with a rival offer from Comcast and Time Warner, although Patriot Media & Communications is one of several smaller cable companies vying for a small geographic cluster of Adelphia systems. Patriot is backed by Spectrum Equity Investors, and is being joined in at least one of its bids by Bain Capital and Silver Lake Partners.

Carlyle/Riverstone and FPL Energy, a subsidiary of FPL Group Inc. (NYSE: FPL), have teamed up to acquire a majority interest in five 30-megawatt solar energy generating system assets in the Mojave Desert. FPL Energy will operate the plants and hold a 45% ownership interest in the projects, while Carlyle/Riverstone will own a 49% interest, with the remainder being held by a group of limited partners. All of the power generated from the projects is sold to Southern California Edison under long-term contracts. No financial terms of the transaction were disclosed.

Ruhgas AG is expecting bids of up to 1 billion euros for its Ruhgas Industries metering business, according to Reuters. Interested private equity firms are reported to include Carlyle Group, Blackstone Group, Texas Pacific Group and CVC. Deutsche Bank is managing the auction.

The European Union Commission has referred Blackstone Group‘s proposed $1.07 billion acquisition of UK nursing home property owner NHP PLC to British regulators. The body ruled that the deal could have UK, but not EU-wide, competition implications.

JH Partners and Berkshire Partners are leading a dividend recap of portfolio company MD Beauty Inc., a San Francisco-based marketer of health, beauty and cosmetic products. The $222 million credit facility is being syndicated by BNP Paribas, with the private equity firms receiving approximately $100.8 million.

Carter & Carter Ltd., a UK-based consultant for the car manufacturing industry, floated over 22.95 million shares on the London Stock Exchange at 235 pence per share. The company had been backed by Bridgepoint.

Alpha Natural Resources Inc., an Abingdon, Va.-based coal producer, has set its proposed IPO terms to 29.5 million common shares being offered at between $16 and $18 per share. The company is majority-owned by private equity firm First Reserve Corp.

Cendant Corp. (NYSE: JCD) has amended the terms of a proposed IPO for its Wright Express subsidiary, despite last week’s NY Post report that the unit might instead be sold to interested private equity firms. The latest filing shows Wright offering 40 million common shares at between $19 and $21 per share.

Favrille Inc., a San Diego-based drug company focused on immunotherapies for cancer and other immune system diseases, has reduced its proposed IPO offering price range for the second straight day. The company originally cut its $12-$14 per share range to $8-$9 per share, and now has reduced it to $7-$8 per share. It still plans to sell 6 million shares. Company backers include Alloy Corp., De Novo Ventures, Forward Ventures, Sanderling Venture Partners and William Blair Capital Partners.

Cortina Systems Inc. has acquired fabless semiconductor company Azanda Network Devices Inc. for an undisclosed amount. The combined company will be based in Sunnyvale, Calif., and will offer traffic management and ATM segmentation and reassembly products. Cortina has raised over $55 million in VC funding from firms like Morgenthaler Ventures, El Dorado Ventures, Invesco Private Capital, Redpoint Ventures, Kodiak Venture Partners and Hotung Capital Management. Azanda has raised over $50 million in VC funding from firms like Bessemer Venture Partners, Commonwealth Capital Ventures, Highland Capital Partners, Goldman Sachs, Newbury Ventures and Parker Price Venture Capital.

ALM Properties Inc., a New York-based media company focused on the business and legal communities, has acquired the assets of Insight Information Co., a Toronto, Canada-based conference producer. No financial terms were disclosed. ALM was founded by U.S. Equity Partners, a private equity fund sponsored by Wasserstein & Co.

York Pharma PLC, an AIM-listed drug company, has acquired Molecular Skincare Ltd., a UK-based developer of dermatological products. The deal is valued at approximately GBP 5.5 million in stock. Molecular Skin Care is a Sheffield University spinout that has raised venture funding from Avlar BioVentures, Cambridge Research & Innovation Ltd., Catalyst Biomedical and Sitka Ltd.

InfoUSA Inc. (Nasdaq: IUSA) ha acquired @Once, a provider of retention-based email technology headquartered in Portland, Oregon. No financial terms were disclosed. @Once had raised over $16 million in venture funding from firms like OVP Venture Partners.

IBM has agreed to acquire Equitant, a provider of outsourced order-to-cash process management solutions, with offices in Dublin, Ireland and Stamford, Conn. No financial terms were disclosed. Equitant has received venture funding from Accretive Venture Partners.

Coach Holiday Group (owner of Wallace Arnold) and Shearings – both European coach holiday companies — have agreed to merge in a GBP 200 million deal. 3i Group is an existing shareholder in CHG, and will maintain a 67.8% interest in the combined entity. Company management will hold the remaining 32.2%, with existing Shearings shareholder Bridgepoint exiting via the merger.

Century Park Advisors, a Los Angeles-based firm focused on recaps and acquisitions of smaller mid-market companies, has closed its second fund at $265 million.

Salem Schuchman has left Apax Partners, where he served as a New York-based partner focused on leveraged transactions. No further information has been disclosed.

Jonathan Wang has joined Burrill & Co. as general manager for Greater China. His responsibilities will include building and leading a group focused on strategic partnering and investing opportunities related to Greater China. He most recently served as a managing director with WI Harper Group and, before that, was with Walden International.

William Clark has been recommended to be director of New Jersey’s Division of Investment, where he currently serves as deputy director. If confirmed, he would replace Peter Langerman, who announced his resignation earlier this month. The system manages approximately $70 billion in public employee pension assets, and last year agreed to begin participating in the private equity asset class.

Claes de Neergaard has resigned from the board of Finland-based CapMan Oy, effective immediately. He recently had been named president of Swedish venture firm Industrifonden.

Peter Boni, an operating partner with Advent International, has been named non-executive chairman of IntraLinks Inc., a New York-based provider of digital workspaces for the financial services and pharmaceutical industries. He replaces Milton Pappas, a general partner with EuclidSR, who will remain on the IntraLinks board of directors.

Tuesday, February 1

Temporary Lucidity (Part II)

After three days of flu-induced napping (save for the occasional email and phone call), I am finally just suffering from a severe cold. This means that I am back at work today (albeit at half-speed), and will begin writing actual columns again tomorrow.

In the meantime, the final 2004 tally for U.S.-based VC fundraising was $17.71 billion for 169 funds. I know this differs slightly from the “official” numbers from Thomson VE and the NVCA, which came out to around $17.65 billion for 170 funds. Why the discrepancy? Just a slight difference of opinion on whether or not a couple of funds should count as VC. Also, the official figure is net, whereas the $17.71 billion is gross (net factors in fund size cuts during the year, gross does not). Either way, a huge increase over 2003, which saw $11.5 billion gross and $10.59 billion net. Expect a similarly brisk pace during the beginning of 2005, with an overall increase or decrease largely dependent on the timing of several large VC firms slated to begin requesting LP commitments late in the year. If they hold Q4 closes, then 2005 could actually top 2004.

Darby Overseas Investments, a wholly-owned subsidiary of Franklin Resources Inc. (NYSE: BEN), has acquired the general partnership of the Dresdner Kleinwort Benson Emerging Europe Fund LP, a $220.6 million private equity fund focused on Central and Eastern Europe. Under terms of the secondary sale, Darby will assume management of the existing portfolio. No financial terms were disclosed. Major limited partners in the DKB fund include the California Public Employees’ Retirement System (CalPERS) and Dresdner Bank AG.

SmartLink Radio Networks Inc., a Billerica, Mass.-based provider of two-way radio networking and interoperability solutions, has raised $15 million in Series B funding. Key Venture Partners led the deal, and was joined by return backers General Catalyst Partners and Highland Capital Partners.

Doughty Hanson & Co., a UK-based private equity firm, has closed its fourth fund with 1.59 billion euros (approx. $2.07 billion) in commitments, including 87 million euros from the general partner. The firm originally targeted 3 billion euros, but later scaled back its expectations to a still-unreachable 2 billion euros. Participating limited partners include Partners Group, HarbourVest Partners, J.P. Morgan Asset Management, the University of Texas Investment Management Co., the State of Michigan Retirement System, Morley Fund Management, Ilmarinen Insurance and Verizon Investment Management.

Voxify Inc., an Alameda, Calif.-based provider of automated agents for call centers, has raised $10 million in second-round funding. Sigma Partners led the deal, and was joined by return backers El Dorado Ventures and Palomar Ventures.

VIEO Inc., an Austin, Texas-based provider of application service-level management solutions, has raised $15 million in new venture funding. RRE Ventures led the deal, and was joined by return backers Rho Ventures and Invesco.

Axya Medical Inc., a Beverly, Mass.-based medical device company focused on wound closure, has raised $5.5 million in Series B-1 funding. Investors included The Vertical Group and return backer CrossBow Equity Partners.

Talisma Corp., a Bellevue, Wash.-based provider of customer lifecycle management solutions, has raised over $7.07 million in its fourth round of Series AA funding. raised $5 million in new funding led by existing backer Oak Investment Partners.

Trimaran Capital Partners has committed $40 million to launch Brite Media Group LLC, an acquisition platform focused on alternative media businesses. Bruce Friedman, chairman and CEO of Brite Media, also will be a significant backer via Pacific Merchant Capital. In related news, Brite Media has formed an initial partnership with BriteVision Media LLC, a producer and distributor of coffee sleeve advertising.

Advent International has acquired 61% of Proservvi, a Brazil-based provider of back-office services to financial institutions. No financial terms were disclosed. Proservvi CEO Emilio Cominato will continue to lead the company.

Saunders Karp & Megrue has completed a recapitalization of Manchester, Conn.-based Bob’s Discount Furniture, in partnership with company management. No financial terms were disclosed. Citigroup Global Markets served as exclusive financial advisor to Bob’s Discount Furniture, in connection with the recap.

Catterton Partners has acquired the branded and private-label cookie businesses of Parmalat Bakery & Dairy Inc.‘s North American Bakery Group. The company will be renamed Archway & Mother’s Cookie Company Inc., with Insight Holdings working with Catterton to oversee company operations. No financial terms were disclosed.

Merrill Lynch may invest upwards of $241 million into Chinese air conditioning company Chigo Group, according to Reuters. Discussions are said to still be in the preliminary stages.

Favrille Inc., a San Diego-based drug company focused on immunotherapies for cancer and other immune system diseases, has reduced its proposed IPO offering price range from $12-$14 per share, to $8-$9 per common share. Company shareholders include Alloy Corp., De Novo Ventures, Forward Ventures, Sanderling Venture Partners and William Blair Capital Partners. Inc., a Beijing-based Internet search engine for Mainland China, hopes to raise around $200 million via an IPO on a U.S. exchange later this year, according to Reuters. The company has received venture funding from such firms as Google, DFJ ePlanet Ventures, Bridger Management, China Equity, China Value, Venture TDF, Integrity Partners and Peninsula Capital.

Accuride Corp., an Evansville, Ind.-based maker of trailer and heavy-duty truck wheels, has completed its acquisition of Transportation Technologies Inc. (TTI), a Chicago-based maker of truck components and subassemblies. No pricing terms were disclosed. Trimaran Capital Partners had controlled TTI, while Accuride continues to feature Kohlberg, Kravis, Roberts & Co. as its majority shareholder. Accuride shareholders now own 65% of the combined entity’s common stock, while TTI shareholders hold the remaining 35 percent. Accuride continues to be in registration for a $290 million IPO.

Epic Technologies LLC, a portfolio company of CIVC Partners, has acquired the electronic manufacturing center business of Siemens Energy & Automation Inc. for an undisclosed amount. The deal includes a facility in Johnson City, Tenn., which Siemens acquired in 1991 from Texas Instruments, and a South Lebanon, Ohio facility Siemens purchased from Eaton Corp. in 2000.

Nonni’s Food Company Inc., a portfolio company of Wind Point Capital Partners, has acquired premium cracker producer Old London Foods Inc., including its automated facility in The Bronx, N.Y. and its breadcrumb facilities in Willingboro, N.J. and Knoxville, Tenn. No pricing terms were disclosed. Merrill Lynch led senior debt financing for the deal.

Crystal Partners & Co. LLP, a UK-based provider of asset management and I-banking services, is planning to launch a $300 million fund-of-funds focused on both hedge funds and private equity funds.

Samuel Bodman yesterday was unanimously confirmed by the U.S. Senate as Secretary of Energy. Early in his career, Bodman served as technical director for trailblazing venture capital firm American Research & Development Corp. Most recently, he had served as Deputy Treasury Secretary.

Monday, January 31

Temporary Lucidity

Apologies for the sparseness of this morning’s edition, but I’m getting over a flu that has left me little more than conscious. Tomorrow we’ll hopefully get into 2004 VC fundraising numbers (they’re up by a lot – no big surprise), the strange saga of whether or not DLJ Merchant Banking will spin out of CSFB (what must LPs be thinking this morning?) and the possibility that Apax Partners could become the next Hicks Muse (think globally, act locally).

Intelsat Ltd., a Bermuda-based satellite communications company, has been acquired by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira (collectively known as Zeus Holdings Ltd.). The deal was valued at approximately $5 billion, including $2 billion of existing net debt. Intelsat shareholders received $18.75 per share.

Kohlberg Kravis Roberts & Co. and Providence Equity Partners today are expected to submit a joint bid for Adelphia Communications Corp., which also will receive a joint offer from Time Warner and Comcast. Other private equity firms may join the KKR and Providence offer, or make a separate bid (both either the entire company, or just certain business units). The total deal is expected to be worth upwards of $17.5 billion.

PediaMed Pharmaceuticals Inc., a Florence, Ky.-based drug company focused on pediatric patients, has raised $15 million in Series C funding. Return backers include Essex Woodlands Health Ventures and Blue Chip Capital Co. The company has raised over $29 million in total VC funding since its December 1999 inception.

Surgient Inc., an Austin, Texas-based provider of on-demand applications for test and training lab automation, has raised $10 million in new venture funding. BlueStream Ventures was joined on the deal by return backers Austin Ventures, MFI Austin and Sternhill Partners. The company has raised over $88 million in total VC funding since its 1999 inception, including an $18 million infusion in late 2001 at a post-money valuation of approximately $235 million.

Devicescape Software Inc. (f.k.a. Instant802 Networks), a Brisbane, Calif.-based provider of software for wireless device makers and service providers, has raised $12.2 million in new VC funding. Enterprise Partners Venture Capital and Jafco Ventures joined return backers Kleiner Perkins Caufield & Byers, August Capital and Applied Materials Ventures.

Apoxis SA, a Switzerland-based drug company focused on cancer and auto-immune diseases, has raised 15 million euros in second-round funding. Novo Nordisk was joined on the deal by return backers Banexi Ventures Partners and HealthCap.

Xaffire Inc., a Superior, Colo.-based provider of live Web session capture and playback technologies, has received $3 million in Series C funding from return backer Mobius Venture Capital.

Invistics Corp., a Norcross, Ga.-based provider of manufacturing performance management software, has raised $5 million in second-round funding. Return backers included H.I.G. Ventures, Intersouth Partners and Imlay Investments.

Apax Partners is considering a bid for publicly-traded UK retailer Woolworths Group PLC. The deal could be worth upwards of GBP700 million, and sent Woolworths stock up by more than 20 percent.

The European Union Commission has approved Electra Partners‘ acquisition of ThyssenKrupp Fahrzeugguss, the automotive metal partners unit of ThyssenKrupp AG, for 155 million euros.

Montagu Private Equity is planning a 40 million euros offer for a pair of horse-racing publications – Paris-Turf and Week-End – from France-based Socpresse, according to Les Echos.

Nordic Capital has made a public tender offer for all the shares in Danish playground equipment manufacturer Kompan AS. The bid would value Kompan at approximately $129 million.

LLR Partners of Philadelphia has closed its second fund with $360 million in limited partner commitments. The firm will maintain its focus on middle-market companies primarily based in the Mid-Atlantic region.

Credit Suisse First Boston may be back-tracking on plans to spin out its DLJ Merchant Banking Partners group, according to The Deal.

Tom Rioran has joined Bessemer Venture Partners as an entrepreneur-in-residence in the firm’s Menlo Park, Calif. office. He most recently served as co-founder and CEO of Bessemer-backed semiconductor company Quantum Effect Devices Inc., which was acquired by PMC-Sierra Inc. (Nasdaq: PMCS) in 2003.

Dick Kramlich, co-founder and general partner of New Enterprise Associates, has been elected to the board of Silicon Valley Bancshares.

Click here for last week’s complete PE Week Wire