I hereby declare this space to be a MicroHoo-free zone. It just doesn’t have much to do with private equity – unless MS drowns its sorrows by binging on VC-backed companies – and you’ll have little difficulty finding coverage elsewhere. So, rather than discussing a deal that isn’t, let’s discuss one that is:
Bristol-Myers Squibb on Friday agreed to sell its ConvaTec unit for $4.1 billion to Avista Capital Partners and Nordic Capital, with fully-committed leveraged financing led by JPMorgan. Let me repeat that without the particulars: There is a new multi-billion dollar leveraged buyout that includes a: (1) U.S. target; (2) U.S. financial sponsor; (3) Loan commitment from Wall Street with no atypical material conditions. It’s like a magnificent middle finger to the credit crunch.
It’s also the largest leveraged buyout announced since Carlyle Group agreed on Manor Care last July, according to Thomson Reuters.
So does this herald the return of mega-buyouts? Probably not, or at least not yet.
ConvaTec makes therapeutic products for wound care and ostomy care (ostomies are surgically-created openings for the discharge of body wastes). In other words, it’s an attractive loan candidate because
ConvaTec is a particularly attractive loan candidate because it has high cash-flows and low cyclicality. The unit makes therapeutic products for wound care and ostomy care (ostomies are surgically-created openings for the discharge of body wastes), and is considered to be a “best-in-class” sort of shop. It also had a motivated seller in Bristol-Myers Squibb, which has been trying to divest itself of most non-pharma assets. For example, it sold its medical imaging unit to Avista earlier this year for $525 million.
“I think the banks saw a very stable company,” says Kristoffer Melinder, a partner with Nordic Capital.
Tom Dean of Avista adds: “Both our firm and Nordic have a history of doing leveraged healthcare deals, and I think that helped make [lenders] more comfortable.”
As a side-note, Avista and Nordic were represented on the deal by Bear Stearns. It might be the last time anyone ever writes those words… Bristol-Myers was advised by Citi and Morgan Stanley.
*** Linens ‘n Things files for Chapter 11 bankruptcy protection.
*** peHUB First Read, including Wallstrip on oil & gas prices.
Top Three
Bristol-Myers Squibb Co. (NYSE: BMY) has agreed to sell its ConvaTec business to Nordic Capital and Avista Capital Partners for $4.1 billion. ConvaTec provides wound therapeutics and ostomy care products. JPMorgan is serving as lead lender.
Range Fuels Inc., a Broomfield, Colo.-based developer of cellulosic ethanol production technology, has expanded its Series B round, according to a regulatory filing. The company originally announced that it had raised $100 million, but a regulatory filing indicates that the round has now expanded to $166 million (with $158m called down). Morgan Stanley Capital Group is the only investor on the filing that was not in the original release. Hedge fund Passport Capital led the round, while other backers include BlueMountain, Khosla Ventures, Leaf Clean Energy Co. and Pacific Corporate Group. Advanced Equity and Morgan Stanley served as placement agents. (VentureBeat found this one first). www.rangefuels.com
Paul Capital has closed its ninth secondaries fund with $1.65 billion in capital commitments.
VC Deals
Zounds Inc., a Mesa, Ariz.-based hearing-aid maker, has raised $41 million in Series B funding, according to a regulatory filing. Return backers include Signature Capital and the TWJ Opportunity Fund. www.zoundshearing.com
Seattle Medical Technologies, a Seattle-based medical device company focused on diabetes, has called down $21 million of a $35 million Series B round, according to a regulatory filing. Canaan Partners and Skyline Venture Partners were joined by return backers Frazier Healthcare Ventures and Three Arch Partners. SMT was founded by serial medical entrepreneur Clif Alferness.
1Verge Inc., a Beijing-based Internet company formed by former Sohu.com president Victor Koo, has raised $25 million in Series C funding, according to a regulatory filing. Backers include Fallaron Capital, Chengwei Ventures, Brookside Capital and Sutter Hill Ventures.
Appfolio Inc., a Goleta, Calif.-based online provider of property management solutions, has raised $22 million in Series B funding. BV Capital led the round, and was joined by Cisco, the Investment Group of Santa Barbara and individual angels. www.appfolio.com
MarketLive, a Foster City, Calif.-based provider of ecommerce software and services, has raised $20 million in Series E funding. Jafco Ventures and Northgate Capital were joined by return backers Sequoia Capital, Sigma Partners and Globespan Capital Partners. The company has now raised over 447 million in total VC funding since late 2003.
MachineryLink Inc., a Kansas City-based provider of progressive combine leasing products North American farmers, has raised $18.4 million in Series B funding. The round was co-led by individuals Oakleigh Thorne, Glen Taylor and Jack Blumenstein. Return backers included October Capital, Adams Street Partners, River Cities Capital Funds and Alpha Capital Partners.
Firefly Energy Inc., a Peoria, Ill.-based developer of lead acid battery technology, has called down nearly $9 million of a $15 million Series C round, according to a regulatory filing. VentureWire reports that Khosla Ventures and Infield Capital came aboard as new investors. The company had previously raised around $16 million from Stark Capital, KB Partners, Caterpillar, the Illinois Finance Authority and Tri-County Venture Capital Fund. www.fireflyenergy.com
Untangle Inc., a San Mateo, Calif.-based provider of network security and safe messaging, has raised $8 million in Series B funding, according to a regulatory filing. Return backers included CMEA Ventures and Rustic Canyon Partners. It had raised a $10.4 million Series A round in mid-2006. www.untangle.com
Bigfoot Networks Inc., an Austin, Texas-based maker of a hardware PC card that reduces in-game lag for video games, has raised $8.75 million in Series B funding, according to a regulatory filing Palomar Ventures and North Bridge Venture Partners were joined by return backer Venio Capital Partners. It had previously raised a $4 million Series A round in 2006. www.bigfootnetworks.com
Novx Systems Inc., an Ontario-based provider of drug screening solutions for use by medical professionals, has raised nearly $7.8 million in third-round funding, according to a regulatory filing. Listed backers include Celtic House Ventures, GF Private Equity and CMEA Ventures. www.novxsystems.com
CrossingAutomation Inc., a Mountain View, Calid.–based maker of automated wafer transfer systems, has expanded its Series A round to around $6 million, according to a regulatory filing. Backers include Intel Capital and Tallwood Venture Capital. www.crossinginc.com
SensorLogic Inc., a Dallas–based provider of asset management and control solutions, has raised $6 million in Series C funding. Return backers include Boston Millennia Partners, Sevin Rosen Funds, Hunt Ventures, STARTech Early Ventures, UPS Strategic Enterprise Fund and Star Ventures. The company has now raised just over $32 million in total VC funding.
Worktopia, a New York-based online booking engine for meeting space in hotels, airport lounges and other venues, has raised nearly $6 million in Series B funding, according to a regulatory filing. Return backers include DFJ Gotham Ventures and Milestone Venture Partners. www.worktopia.com
Histogen Inc., a San Diego-based regenerative medicine startup, has held a $5.35 million first close on its Series A round. Backers include Secure Medical Inc., CellCeuticals Skin Care Inc. and Leonard Lavin (founder of Alberto-Culver Co.).
Plusmo Inc., a Santa Clara, Calif.-based developer of mobile widgets, has raised $4.41 million in Series A funding led by New Enterprise Associates, according to a regulatory filing. www.plusmo.com
The Oceanaire Inc., a Minneapolis-based seafood restaurant operator, has raised $4.25 million in Series D funding led by Clarion Capital, according to a regulatory filing. www.theoceanaire.com
LiveProcess Corp., a Verona, N.J.-based provider of an online application to manage a hospital’s disaster preparedness plans and response, has raised $3.62 million in Series A funding, according to a regulatory filing. No institutional investors were disclosed. www.liveprocess.com
Leostream Corp., a Waltham, Mass.-based hosted desktop connection broker, has raised $3 million in Series A funding led by Meakem Becker Venture Capital, according to a regulatory filing. www.leostream.com
Goodrec Inc., a San Francisco-based Web 2.0 company focused on helping users remember, share and find recommendations, has secured $900,000 of a $1.05 million Series A round, according to a regulatory filing. Backers include SoftTech VC and Chance Technologies Seed. www.goodrec.com
World Golf Tour, a San Francisco-based maker of an online golf game, has raised an undisclosed amount of Series B funding. Panorama Capital led the round, and was joined by return backer Battery Ventures.
Buyout Deals
TPG Capital has agreed to acquire a 25% stake in the coffee operations of Israeli food and beverage company Strauss Group. The deal is valued at $288 million.
Hammond Kennedy Whitney & Co. has acquired S.A. Robotics, a Loveland, Colo.-based provider of robotics for helping to remove radioactive waste, according to LBOO Wire. No financial terms were disclosed. www.sarobotics.com
Sal. Oppenheim will partner with KKR on a bid for a 25% position in German energy and chemicals group Evonik Industries. The stake is valued at around €2 billion, and is being sold by RAG Stifung. Other preferred bidders include Blackstone Group, Bain Capital and CVC Capital Partners.
Colony Capital and Eurazeo have agreed to raise their stakes in listed hotel operator Accor to approximately 20% and 10%, respectively.
PE Exits
Barclays Private Equity is close to acquiring staple financing for its proposed €1 billion sale of French power conversion firm Converteam.
PE-Backed M&A
CST Industries Inc., a Kansas City–based maker of factory-coated metal storage tanks and silos, has acquired Conservatek Industries Inc., a Conroe, Texas-based manufacturer and installer of custom-designed aluminum covers. No financial terms were disclosed. The Sterling Group is CST Industries’ majority shareholder.
United BioSource Corp., a Bethesda, Md.-based provider of evidence-based services and information to the pharma and life sciences markets, has acquired Envision Pharma, a UK-based provider of scientific communication services integration. No financial terms were disclosed, although a United BioSource regulatory filing indicates a price of around $3.74 million. United BioSource has raised $153 million in private equity funding from firms like Grotech Capital Group, J.W. Whitney and Oak Investment Partners.
Firms & Funds
Flexpoint Partners of Chicago is targeting upwards of $1.2 billion for its second fund, according to LBO Wire. This includes a $450 million “overage” fund that would primarily be dedicated to financial deals, whereas part of its general fund would go towards the healthcare sector. Flexpoint raised $225 million for its debut fund in 2005. www.flexpointpartners.com
Houlihan Lokey has acquired the investment banking business of Acris, a financial boutique focused on the retail and consumer goods sectors in Continental Europe. Acris was formed in 2005, and last year advised Electra Partners on its sale of Deutche Woolworth.
Human Resources
Goldman Sachs has begun making cutting staff in its leveraged finance business, according to Reuters. This goes beyond both the 5% cuts Goldman announced last month, and the 1,500 firm-wide cuts related to year-end performance reviews.
JPMorgan Chase & Co. has begun organizing the executive team for its Americas investment banking operation, once the firm’s acquisition of Bear Stearns is complete.
Albert “Rocky” Pimentel has joined McAfee Inc. (NYSE: MFE) as chief operating officer and chief operating officer, effective May 15. He previously was executive vice president and CFO of Glu Mobile. He also is a former partner with venture capital firm Redpoint Ventures.
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