PE Week Wire: Wed., Aug. 29, 2007

We now have a second take-private buyout whose price was reduced due to credit market woes. Actually, it seems to have been the first one.

More than a month before Home Depot Supply became a business page soap opera, Platinum Equity cut its offer for metal processor Ryerson Inc. (NYSE: RYI) from $37.50 per share to $34.50 per share. The move took about $80 million off the top, and was first disclosed yesterday in proxy materials filed with the SEC.

The filing reports that Ryerson originally received three bids on June 11, ranging from $30 per share to Platinum’s high offer of $37.50 per share with a warrant. Platinum later that it would need to receive new Ryerson financials to “reconfirm” its bid, and on July 14 submitted a revised offer of $35.50 per share – minus the warrant, but plus a go-shop provision. This was still the best bid, and all seemed like a go (save for some failed opposition by dissident Ryerson shareholder Harbinger Capital, which yesterday sold its entire 9.6% stake).

But just four days later, Platinum told Ryerson banker UBS that it had not yet received its debt financing commitments, and that its “financing sources had expressed concern about the tender offer structure and the deteriorating state of the debt markets.” One day later, Platinum “informed UBS that it was reducing its offered price per share by $1.00 to $34.50 per share stemming from a significant increase in its debt financing costs and the equity funding requirements imposed by its debt financing sources due to continued deterioration in the debt markets.”

UBS attempted to renegotiate with Platinum on July 23, but the private equity firm would not budge. The final deal was announced at $34.50 per share, on the morning of July 24.

*** Blackstone honcho Steve Schwarzman may be keeping a low profile post-IPO, but has nonetheless nominated him as one of its Top 49 Men of 2007. Is there an award ceremony, will he show? My guess is that if nominated he will not run, and if elected he will not serve… (hat tip: DealBreaker)

*** I’ve been playing around with the idea that we could soon see a boomlet in corporate M&A, thanks to the credit crunch. My tentative thesis is that companies have been hesitant to make certain acquisition inquiries, for fear of being topped by private equity firms that have much cheaper costs of capital. But with that cut-rate capital now on the sidelines, it’s a much fairer playing field.

This is certainly not a perfect notion – particularly for tech companies that borrowed heavily over the past year – but is still worth considering. Thoughts?

*** Stat of the Day: Since July 23, private equity deal value represents less than 10% of all announced M&A deal value (source: Thomson Financial).

*** Earlier this year, I was asked to compile a list of VC firms investing in New England-based life sciences companies. More specifically, I was asked to rank them. Some of you will be thrilled with the results. Some will be bitter. Many could care less. You can download the PDF here, which includes quantitative and qualitative explanations.

Top Three

China has begun selling $79 billion in bonds to finance a state agency that will invest the country’s foreign currency reserves. The fund could end up managing between $200 billion and $400 billion, and already has made a $3 billion investment in The Blackstone Group. Read the full story.

Agendia BV, a Dutch developer of molecular diagnostic services for oncology research, has raised €25 million in fourth-round funding. ING was joined by return backers Van Herk Biotech, Gilde Healthcare Partners and Global Life Science Ventures. The company has not disclosed financial information for its prior funding rounds.

Terra Firma Capital Partners is planning a number of management changes at UK-based record company EMI Group, which it is expected to acquire next month. EMI chief executive Eric Nicoli and CFO Martin Stewart will both step down (Nicoli gets a £2.8 million golden parachute), with Terra Firma managing director Chris Roling taking over as COO and CFO. The CEO role will not be immediately filled. Fellow Terra Firma pro Ashley Unwin will become director of business transformation, with Terra Firma boss Guy Hands running a new supervisory board to which the EMI board would report. Roger Faxton, head of EMI’s music publishing business, will retain his current role and board seat.

VC Deals

Analogix Semiconductor Inc., a Santa Clara, Calif.-based chipmaker, has raised nearly $14 million in Series B-2 funding, according to a regulatory filing. Return backers include DCM, Globespan Capital Partners and Woodside Fund. Analogix previously had raised around $34 million since 2002.

Bluepulse Inc., a San Bruno, Calif.-based provider of a social networking platform for mobile content publishers and developers, has raised $6.06 million in Series A funding from VantagePoint Venture Partners. The round closed back in April.

Damballa Inc., an Atlanta-based developer of Internet security software focused on “bot armies,” has raised $6 million in Series B funding, according to a regulatory filing. InterWest Partners led the deal, and was joined by return backers Noro-Moseley Partners and Sigma Partners. The company raised a $2.5 million Series A round last year.

MedManage Systems Inc., a Bothell, Wash.-based provider of online drug sampling solutions, has secured $5 million of a $10 million Series E round, according to a regulatory filing. Shareholders include Lilly Ventures, Prism VentureWorks, QuestMark Partners and Versant Ventures. MedManage previously had raised around $40 million since 2000.

Propel Biofuels Inc., a Seattle-based developer of biodiesel pumps for existing service stations, has raised $4.75 million in its first institutional funding round, according to VentureWire. Backers include @Ventures and Nth Power.

Solexant Corp., a Menlo Park, Calif.-based developer of low-cost photovoltaic cells, has raised $4.3 million in Series A funding, according to a regulatory filing. Backers include Trident Capital, Firelake Capital and X/Seed Capital.

RIPL Corp., a Seattle-based provider of ad-supported music and photo sharing services, has raised $4.25 million in Series B funding from individual angels, according to a regulatory filing. The company had raised a $2 million Series A round earlier in the year.

MeetingSense Software Corp., a San Diego-based provider of meeting productivity software, has raised $3 million in Series A funding from TVC Capital. MeetingSense was previously known as Yon Software.

Factor Technology Group, a San Francisco-based provider of branding and sales data for marketing planning organizations, has raised around $2.96 million in Series A funding led by Peninsula Equity Partners, according to a regulatory filing.

Nanostellar Inc., a Menlo Park, Calif.-based provider of platinum nano-composite catalyst solutions, is raising a $3 million bridge financing round, according to a regulatory filing. The company previously raised around $10 million, from firms like 3i Group, Khosla Ventures, AsiaTech Management Monitor Ventures, Firelake Capital Management, Big Basin Partners and Modu Angel Fund.

Buyout Deals

Citicorp Venture Capital has acquired a control position in Waddington North America Inc., a manufacturer of food-service disposables like take-out containers and plastic cutlery. Norwest Equity Partners and WNA management also participated on the buyside, while the seller was Code Hennessey & Simmons. No financial terms were disclosed.

HM Capital is in talks to acquire UniTek USA LLC, a Blue Bell, Pa.-based provider of project management and support services to the telecom, satellite and government services markets. News of the talks was first reported by LBO Wire.

PE-Backed IPOs

Tensar Corp., an Atlanta-based construction services company, has filed for a $201.25 million IPO. It plans to trade on the NYSE under ticker symbol TXC, with Lehman Brothers, Credit Suisse and Merrill Lynch serving as co-lead underwriters. Tensar shareholders include Arcapita (86.3%), Electra Private Equity (6.3%) and KRG Capital Partners. Tensar offers nontraditional products and technologies for projects like high-performance roadways, earth retention structures, building foundations and erosion control.

PE Exits

The Carlyle Group has sold its 66.64% holding in Personal & Informatik AG, a listed German provider of human resources software and services to small and mid-sized businesses. The shares were sold to 35 institutional investors in Europe and the U.S. through a book-building process managed by Berenberg Bank.

Chrysler LLC has proposed selling or closing two units, according to a The Wall Street Journal article that cites contract talks between Chrysler and the United Auto Workers union. The units are Mopar, which makes auto parts, and Chrysler Transport, which manages deliveries of supplies to the carmaker’s plants. Together, they employ around 1,300 people. Cerberus Capital Management recently acquired an 80% stake in Chrysler, with former parent Daimler retaining 20 percent.

Edwards (f.k.a. BOC Edwards), a UK-based provider of manufacturing solutions for microelectronic devices, has agreed to sell certain assets of its Kachina semiconductor equipment parts cleaning and refurbishment business to Applied Materials Inc. (Nasdaq: AMAT). No financial terms were disclosed. Edwards is a portfolio company of CCMP Capital.

Mediagrif Interactive Technologies Inc., Quebec-based developer of e-business networks, has agreed to acquire ePipeline Inc., a Herndon, Va.-based provider of online research for government contractors. No financial terms were disclosed. ePipeline had raised VC funding from Crossbow Ventures.

NBC Universal has agreed to acquire Sparrowhawk Media from 3i Group and Providence Equity Partners. No financial terms were disclosed, but an earlier Reuters report put the price-tag at $350 million. Sparrowhawk owns the international operations of the Hallmark Channel, and was acquired by 3i and Providence in 2005 for around $242 million. It runs 18 feeds that air across 152 territories, with 60 million subscribers.

PE-Backed M&A

Quest Specialty Chemicals Inc., a chemical acquisition platform of Huron Capital Partners, has purchased the assets of Zolatone Automotive, a Los Angeles-based maker of acrylic sealers and other coatings for the automotive, industrial and marine markets. No financial terms were disclosed.

Firms & Funds

TSM Capital has launched as a private equity firm focused on small luxury brands, according to LBO Wire. The firm is run by former Bloomingdales CEO Marvin Traub, and recently acquired a minority stake in UK fashion house Matthew Williamson Holdings Ltd.

Human Resources

SAP AG has put Nino Marakovic in charge of its SAP Ventures unit, following Lisa Reeves’ recent departure for Vista Ventures. Marakovic has been with SAP Ventures for the past 18 months and, before that, was a partner with meVC.

Gold Hill Capital has promoted Rob Helm and Renee Anders to managing director and VP of finance, respectively. Helm joined the firm in 2004 from Silicon Valley Bank, while Anders came over in 2004 from Ernst &* Young.

Tonka Bay Equity Partners has promoted Shane Slominski to director. He joined the firm as a senior associate in January 2006, and has worked on such deals as Accu-Mold LLC, All-Flex Inc., and Circuit Check Inc.