PE Week Wire: Mon., May 14, 2007

This morning’s big news is that Cerberus has agreed to buy Chrysler (or at least most of Chrysler) for approximately $7.4 billion. Of equal import, the deal has gotten the Good Autoworkers seal of approval from the UAW, so any sort of post-agreement battle is highly unlikely. Three very quick observations, before sending you elsewhere:

1. This is not even remotely the largest-ever buyout, but it will be the most discussed in the past decade. Chrysler is an iconic company, which means every move Cerberus makes will be dissected and used to paint the overall LBO market as either good or evil. For at least a while, Cerberus has become more consequential than Blackstone.

2. This is a real old-fashioned a buyout. Single sponsor buying a troubled industrial company, with most of its investment going toward working capital.

3. I wonder how many times Cerberus pros have thought to themselves: “Are we sure we want to buy into a company that Wilbur Ross declined to even look at?”

*** David Turner has resigned as CEO and CIO of WestLB Mellon Asset Management, even though the group is in the midst of raising its fourth fund-of-funds. His successor will be Ravi Vish, who has been a general partner with the group since 2005. Read more on this exclusive story here.

*** In an interesting coincidence, I’m participating in a PE/VC fundraising symposium this Thursday that it being chaired by… David Turner. My piece comes at 3pm, and is a keynote interview with Charlie van Horne of Abbott Capital Management. We’ll talk about things like how you should explain a major personnel shakeup while on your road-show. More info here.

*** Insider trading has become the ugly stepchild of take-private buyouts, as small-market scammers have infiltrated the big kids table. Nobody involved will admit their wrongdoing, of course, but the breadcrumbs can often be found in the options trading market, where unusual activity may well reflect that some deal info was leaked by a sponsor, banker, attorney, secretary, etc. If you’re looking to keep tabs on options activity (paging Chris Cox), take a look at this feature from Schaffers Research. It shows the heaviest call and put activity from the prior day, and lets you do a bit of sorting by average one-month volume.

*** David Toll on how LBO firms got under the SEIU’s skin.

*** Charles Beeler of El Dorado Ventures onThree Myths and One Reality of Early-Stage Investing in the 21st Century.

*** AskTheVC is about to tackle Compensation Packages at VC-backed companies. Going to be required reading…

*** Two new blogs to point you toward. Steve Syre of The Boston Globe has launched The Boston Capital Blog, whileAdam Lashinsky of Fortune blogs from the opposite coast.

Top Three

DaimlerChrysler has agreed to sell an 80.1% stake in Chrysler to private equity firm Cerberus for approximately $7.8 billion. DaimlerChrysler only will receive $1.3 billion in capital from the deal, with the remainder coming in the form of working capital that Cerberus would pump into Chrysler. It will retain a 19.9% ownership position. Daimler bought Chrysler in 1998 for around $35 billion.

Tesla Motors Inc., a San Carlos, Calif.-based maker of electric cars, has raised $45 million in Series D funding. Technology Partners and Elon Musk co-led the deal, and were joined by Capricorn Investment Group and return backers Vantage Point Venture Partners, Draper Fisher Jurvetson, JP Morgan Bay Area Equity Fund, Valor Equity Partners and Compass Venture Partners. Tesla had raised a $40 million Series C round last summer.

Genpact Ltd. (f.k.a. Gecis Global), a Bermuda-based global business process outsourcing company, has filed for a $600 million IPO. It plans to trade on the NYSE under ticker symbol G, with Morgan Stanley, Citi and JPMorgan serving as co-lead underwriters. General Atlantic and Oak Hill Capital Partners acquired a 62.63% stake in Gepact from General Electric in 2005, for approximately $500 million (including $375 million in equity).

VC Deals

Advanced Power AG, a Swiss developer of conventional power generation stations across

Europe and North America, has raised €31.5 million in first-round funding from 3i Group.

eProject, a Seattle-based developer of collaborative project and portfolio management software, has raised $12 million in Series B funding. Bay Partners led the deal, and was joined by return backer Kennet Partners.

Power Challenge AB, a Sweden-based publisher of online multiplayer sports games, has raised $8 million in first-round funding from Benchmark Capital.

ScanScout Inc., a Cambridge, Mass.-based developer of software for inserting contextual advertising into Internet video, has raised $7 million in second-round funding. General Catalyst Partners led the deal, and was joined by return backers First Round Capital and angel Ron Conway.

Buyout Deals

EGL Inc. (Nasdaq: EAGL) has received increased buyout bids from both of its private equity suitors. The current high offer is $46 per share from Apollo Management, which trumps a revised $45 per share offer from a group that includes EGL CEO Jim Crane, Centerbridge Partners and The Woodbridge Co.

Arbor Investments has completed its acquisition of Sam’s Wines and Spirits, a Chicago-based wine and beverage retailer. No financial terms were disclosed for the deal, which was done in partnership with the founding family.

Spell Capital Partners has acquired a majority stake in Arctic Fox LLC, a Delano, Minn.–based provider of components to the heavy-duty trucking and off-highway equipment markets.

Sun Capital Partners has completed its acquisition of Morristown, Tenn.-based furniture maker Berkline/BenchCraft Holdings Inc. from Code Hennessy & Simmons.

Valentino Fashion Group SpA, a listed Italian fashion house whose brands include Hugo Boss, said that it has been approached by several private equity firms about a possible buyout. Various reports suggest that interested suitors include The Carlyle Group, Apax Partners and Permira. Valentino’s stock rose on the news, with its current market cap at approximately $3.5 billion.

PE-Backed IPOs

CCS Medical Holdings Inc. (a.ka. Chronic Care Solutions), a Clearwater, Fla.-based medical supply management company, has filed for a $172.5 million IPO. It plans to trade on the Nasdaq under ticker symbol CCSM, with Lehman Brothers and Goldman Sachs serving as co-lead underwriters. Warburg Pincus acquired the company in 2005.

LDK Solar Co. Ltd., a China-based maker of multicrystalline solar wafers, has filed for a $400 million IPO. It plans to trade on the NYSE under ticker symbol LDK, with Morgan Stanley and UBS serving as co-lead underwriters. Shareholders include Jafco Asia.

Mercadolibre Inc., a Buenos Aires, Argentina-based online trading platform for Latin America, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol MELI, with Merrill Lynch and JPMorgan serving as co-lead underwriters. The company raised $54.3 million over two rounds of VC funding in 1999 and 2000, from firms like JPMorgan Partners, Flatiron Partners, Hicks Muse Tate & Furst, Goldman Sachs, Capital Riesgo Internet and GE Capital. Mercadolibre also lists eBay as a significant shareholder, deriving from a strategic partnership signed in 2001.

Targanta Therapeutics Inc., a Cambridge, Mass.-based developer of antibacterial agents, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol TARG, with Credit Suisse serving as lead underwriter. The company has raised $85 million in total VC funding since its 1997 inception, including a $70 million Series C round earlier this year. Shareholders include Brookside Capital Partners (15.2% pre-IPO position), InterMune Inc. (15.2%), Skyline Ventures (13.2%), VenGrowth (11.8%), OrbiMed Advisors (11.1%), T2C2 (7.3%), Canadian Medical Discoveries Fund (7.1%), Seaflower Ventures (7%) and Radius Ventures (6.1%).

PE-Backed M&A

HomeAway Inc., an Austin, Texas-based operator of an online vacation rentals website, has acquired, a Chicago-based provider of online vacation rental listings. No financial terms were disclosed. HomeAway has raised over $100 million in VC funding from firms like Austin Ventures, Redpoint Ventures, American Capital, Institutional Venture Partners and Trident Capital. VacationRentals had raised Series A funding from vSpring Capital.

Primedia Inc. (NYSE: PRIM) has agreed to sell its 70-title Enthusiast Media division to Source Interlink Cos. for approximately $1.2 billion. Primedia is controlled by KKR, while Source Interlink is controlled by Yucaipa Cos.

Firth Rixon Ltd., a Sheffield, UK–based provider of specialty medical products, has acquired Future Tech, a machiner of large aerospace components. No financial terms were disclosed. Firth Rixon is majority-owned by The Carlyle Group.

Varel Holdings Inc., a maker of drill bits for the oil & gas and mining industries, has acquired Pendemak Industries Ltd., Canadian distributor of Varel oil field drill bits for the past 26 years. The only financial terms disclosed were that Varel minority shareholder American Capital Strategies provided $16 million in the form of a senior unirate loan. Apollo Investment Corp. also provided unirate notes. Varel’s majority shareholder remains KRG Capital Partners.

PE Exits

Alcatel-Lucent (NYSE: ALU) has agreed to acquire NetDevices Inc., a Sunnyvale, Calif.-based maker of services gateway products for enterprise branch networks. No financial terms were disclosed. NetDevices has raised around $48 million in VC funding since its 2003 formation, from firms like Artiman Ventures, Columbia Capital, ComVentures and JumpStartUp Advisors.

SAP AG (NYSE: SAP) has agreed to acquire MaXware AS, a Trondheim, Norway-based developer of identity management software. No financial terms were disclosed. MaXware raised $5 million in late 2005 from Verdane Capital and Viking Venture Management.

SAP AG (NYSE: SAP) has agreed to acquire Wicom Communications Ltd., an Espoo, Finland–based provider of IP telephony software. No financial terms were disclosed. Wicom raised €13 million in 2001 from 3i Group, Accenture Technology Ventures and Stratos Ventures.

Medical Staffing Network Holdings Inc. (NYSE: MRN) has agreed to acquire InteliStaf Holdings Inc. from The Carlyle Group for $92 million in cash. InteliStaf is an Oakbrook Terrace, Ill.-based healthcare staffing company. Carlyle acquired a majority stake in 2000, and bought out minority shareholder RehabCare Group last year.

Prestbury has agreed to acquire a portfolio of 21 private hospitals across the UK from Capio AB, a portfolio company of Apax Partners and Nordic Capital. The portfolio is valued at £686 million, with the properties to be leased back to the UK parent on new 30-year leases with annual fixed uplifts at an initial rent of £39.5 million.

Firms & Funds

CMA Partners has launched as a capital markets advisory for companies, venture capital firms and private equity firms. It is run by former Nasdaq vice chairman David Weild IV.

JPMorgan has launched a private equity fund services business in the UK, which will focus on both Europe and the Middle East. It will offer fund administrations services, including investor tracking, fund accounting, tax support services and investor reporting. It also will provide portfolio administration services to limited partners.

Human Resources

Chris Gammons has agreed to join Citigroup as a managing director covering Asia’s private equity firms. He previously was with Deutsche Bank.

Leonard Foreman, former CFO of The New York Times Co., has agreed to join Veronis Suhler Stevenson’s board of advisors. VSS is a media-focused private equity firm.

Stroock & Stroock & Lavan LLP said that former corporate partners Doron Lipshitz and Patricia Perez and restructuring partners Gerald Bender and Michael Sage have taken jobs with O’Melveny & Myers LLP.

John Sorkin has agreed to join Fried, Frank, Harris, Shriver & Jacobson LLP as a corporate partner in the firm’s New York M&A practice. He previously was a partner in the corporate department of Latham & Watkins LLP.