PE Week Wire, Jan. 26, 2007

I argued on Tuesday that the private equity boom will fade if public shareholder opposition to “under-priced” deals continues to intensify. Since then: Cornell Corrections shareholders have rejected a bid from Veritas Capital; Countrywide shareholders nixed a management buyout backed by 3i Group and Blackstone Group upped its offer for Equity Office by over 11 percent. The Boston Globe’s Steve Syre chimed in yesterday, with a few more examples and this key line: “It’s tempting to blame private equity buyers for getting too many good deals but they aren’t the ones at the table to represent the interests of public stockholders.”

* The latest Forbes Midas List is out, with Mike Moritz again taking the top spot (fyi: he’s involved in the A123 Systems deal mentioned yesterday). This list is always great fun, but also should be taken with a giant grain of salt. Why, because (unless something changed) Forbes focuses on exit value — acquisition price or stock price after first day of trading — without giving consideration to how much VC was initially invested or at what valuation. Also, Forbes does not quantify how involved the VC was with his/her portfolio companies or even how active the investor is in today’s market. For example, you could theoretically make the list even if your last deal was made in 2003. But here is its entire package, and pay particular attention to this piece asking wher! e the women VCs are (just 5% of the Midas List is female).

* Matt Marshall gets scoopy over at VentureBeat, with word that Alsop Louie has closed its inaugural fund and that Leapfrog Ventures is preparing to wind down.

* DealBook has been keeping a Davos diary.

* Sean Parker seems to have done his first deal on behalf of The Founders Fund.

* AsktheVC tries answering a question about How to Deal with an Alcoholic Business Partner.

Where is the World? For those who care, I’ll be trekking to Beaver Creek, Colorado for VC in the Rockies next month, and plan to be sitting in on a panel discussion (more info later). Let me know if you plan on attending (looks like a great time). Also, I’ll be speaking at the kick-off dinner for the Harvard Biz School’s VC and PE Conference next Friday night (event is Saturday). Last, but certainly not least, I’ll be participating in the Great Debates at this April’s Buyouts Symposium East in New York….

Top Three

Investor AB and Morgan Stanley have agreed to buy Swedish surgical glove maker Moelnlycke Health Care AB from Apax Partners for Euro 2.85 billion. Losing bidders reportedly included Blackstone Group and Clayton Dubilier & Rice.

Siemens has agreed to acquire UGS Corp. for approximately $3.5 billion (including assumed debt), from Bain Capital, Silver Lake Partners and Warburg Pincus. UGS is a Plano, Texas-based maker of product lifecycle management software for industrial manufacturers.

GSR Ventures has closed its second fund with $200 million in capital commitments, as first reported yesterday at peHUB. Limited partners include Horsley Bridge. The Menlo Park, Calif.-based firm focuses on tech companies with substantial operations in China, and has been affiliated with Mayfield Fund since inception. One change for Fund II, however, is that Mayfield now is a general partner in addition to just a limited partner – with Mayfield’s Kevin Fong to serve as a GSR managing director and Mayfield’s James Beck to serve as GSR’s chief financial officer.

VC Deals

AcuFocus Inc., an Irvine, Calif.-based maker of ocular implants to treat presbyopia, has raised $18 million in Series D funding from Bausch & Lomb. The deal was announced earlier this month without a price-tag, and also includes an option whereby B&L would purchase AcuFocus. The company previously had raised over $38 million in VC funding from firms like Versant Ventures, Three Arch Partners, SV Life Sciences, Pequot Capital, Carlyle Venture Partners and Accuitive Medical Ventures.

MIOX Corp., an Albuquerque, N.M.-based maker of water purification products for public water treatment systems, has raised $14.5 million in second-round funding. Sierra Ventures led the deal, and was joined by Tao Capital, New Mexico Community Capital and return backer Flywheel Ventures.

Exalead, a France-based search company, has raised Euro 12 million from existing shareholder Qualis, according to alarm:clock., a New Hope, Pa.-based social networking site for teenagers, has raised $4.1 million in Series A funding from U.S. Venture Partners and First Round Capital.

IronKey Inc., a Los Altos, Calif.-based provider of secure portable computing solutions, has raised around $2.6 million in Series A-2 funding led by Leapfrog Ventures.

CleverSet, a Seattle-based provider of merchandise recommendations services, has raised $2 million in new angel funding. It has raised a total of $3.8 million.

Brainsonic, a Paris, France-based provider of rich media content production and corporate WebTV portals, has raised an undisclosed amount of funding from Axa Private Equity.

Buyout Deals

Countrywide PLC shareholders have rejected a Gbp971 million management buyout offer sponsored by 3i Group. Countrywide is a U.K. property and financial services company.

Arlington Capital Partners has agreed to sponsor a management buyout of Cambridge Major Laboratories Inc., a Germantown, Wis.-based chemistry outsourcing partner to pharmaceutical and biotech companies. No financial terms have been disclosed. CML president and CEO Michael Major told peHUB yesterday that current management will remain in place, and that the deal was done in order to help the company grow. Arlington did not return request for comment.

Sterling Investment Partners has acquired a majority position in New York-based grocer Fairway Markets. LBO Wire reports that the deal values Fairway at more than $137 million, with an $87 million credit facility arranged by CapitalSource. Others lenders included BlackRock Kelso Capital,Citigroup, Dymas Capital Management, Golub Capital and JPMorgan Chase.

PE Exits

Courtside Acquisition Corp. (AMEX: CRB) has agreed to acquire American Community Newspapers LLC from Spire Capital Partners, Wachovia Capital Partners and members of CAN’s senior management. The deal is valued at $165 million, plus up to $25 million in possible earnouts. ACN is a group of 73 publications, comprised of 60 weekly suburban newspapers, three daily newspapers and 10 niche publications, and operates in Minneapolis/St Paul, Dallas/Ft. Worth and suburban Washington DC.

Electra Private Equity has put Capital Safety on the block for between $400 million and $500 million, according to The Financial Times. Close Brothers will help manage the sale. Capital Safety is manufacturer of safety harnesses and other related equipment for construction workers.

GTCR has completed its sale of Cellnet, an Alpharetta, Ga.-based provider of automated meter reading technologies for utility companies, to Bayard Group for approximately $705 million. GTCR partnered with Cellnet CEO Mike Zito to purchase the company in 2004.

Littlejohn & Co. has agreed to sell Diamond Innovations Inc. to Sandvik Tooling (LSE: SDF). No financial terms were disclosed. Diamond Innovations a Worthington, Ohio-based maker of synthetic diamond and cubic boron nitride products for industrial applications like machining, oil and gas drilling, grinding, rock drilling and wire drawing. It is the former superabrasives division of GE.

MRV Communications Inc. (Nasdaq: MRVC) has agreed to acquire Fiberxon Inc., a Santa Clara, Calif.-based supplier of transceivers for metro, access and PON applications. The cash and stock deal is valued at approximately $131 million. Fiberxon has raised $30 million in VC funding from Apax Partners, Greylock Partners and Jafco.

Firms & Funds

RREEF Alternative Investments, the alternative investments business of Deutsche Bank’s Asset Management division, has agreed to acquire a minority stake in Aldus Equity, an alternative asset management and advisory boutique specializing in customized private equity investing. No financial terms were disclosed. Aldus has over $3 billion in assets, including more than $600 million in new mandates won since October 2006. The deal is expected to close within the next few months.

Abingworth, a UK-based venture capital firm focused on life sciences, is raising its fifth fund with a Gbp300 million target, according to a regulatory filing. It already has secured around Gbp100 million in capital commitments, and is using MVision as its placement agent.

The Los Angeles Fire & Police Pension system has approved a $10 million commitment to Providence Equity Partners VI and a $10 million commitment to Sankaty Credit Opportunities III. The system is advised by Portfolio Advisors.

The Pennsylvania State Employees’ Retirement System will soon issue an alternative equity consultant RFP, according to LBO Wire. The system’s current contract with Cambridge Associates expires in April 2008.

GormanThayer LLC has launched as an advisory firm for small and mid-market companies seeking to raise capital. Its principals are Mark Gorman and Brian Thayer, who both were most recently with Attalus Capital and, before that, with Hamilton Lane Advisors.

Human Resources

BlueRun Ventures has expanded its Israel team, by adding Meirav Har-Noy as a principal and Pinchas Ziv as a venture technologist. Har-Noy previously was with Apax Partners Israel and, before that, worked at Intel Capital. Ziv previously was in the corporate technology group of Flextronics.

Edward Scott has left Baker Capital, where he had been a founding partner.

Bruce Scherr, chairman and CEO of Informa Economics, has joined Metalmark Capital in an advisory role. He will help the firm extend its presence in the agriculture and natural resources sectors.