PE Week Wire: Wed., May 2, 2007

Greetings from the LaGuardia Marriott, where I have a lovely view of dumpsters and airport terminals. Just two notes before I hop a shuttle back to Beantown…

*** For the first time in a long time, the day’s big financial story has nothing to do with private equity. That story, of course, is Rupert Murdoch’s $5 billion (opening) bid for Dow Jones. But could it have something to do with private equity? Could there be rival bidder?

The smart money says “no,” given that Murdoch’s offering already is more than 16x Dow Jones’ projected 2007 EBITDA. Sure it’s possible that a strategic might stick its nose in – think Bloomberg, Reuters or Thomson – but voluntarily entering a bidding war with News Corp. is like entering a marathon against a Kenyon champion. You might be able to stick around for a while, but eventually you’ll tire. In other words, probably not worth trying.

Private equity firms could certainly afford the deal — $5 billion has become chump change – but they would run into that glaring multiple problem. Murdoch doesn’t mind overpaying because Dow Jones is of strategic value to him (Fox Biz Channel), whereas private equity firms would be stuck with an overpriced stand-alone asset. Unless…

What if a private equity firm did a sponsored spinout of NBC from General Electric, and acquired Dow Jones as part of the deal? I know it’s a long-shot, but so are many of the best private equity transactions…

*** Is Fred Anderson the financial equivalent of George Tennet? For the uninitiated, Anderson is the former Apple CFO who currently is a managing director with Elevation Partners. He recently agreed to pay back the SEC a few million dollars to settle an options backdating suit (without admitting guilt), and then made a public statement that accused Steve Jobs of having been aware of – and having promised to take care of – the options grant in question.

Assume everything Anderson said in his statement was accurate. Similarly, assume everything Tennet has been saying is accurate (save for some specific dates, it seems). In both cases, you have men who feel they were thrown under the bus by their superiors – and have responded by attempting to return the favor. They both assume a modicum of responsibility, but say the real problem is that the person above them didn’t pay enough attention. But they steadfastly ignore the real point: It was their job to make the key issues heard and to act if said issues were being ignored. In other words, either fix it or resign publicly. The buck can stop at multiple stations along the track.

Top Three

Citi has agreed to acquire Bisys Group Inc. (NYSE: BSG) for $1.45 billion. Bisys shareholders would receive $11.85 per share in cash, plus a $0.15 special dividend. Citi said that it would retain Bisys’ investment services division, which includes its fund services and alternative investment services businesses. It plans to sell the Bisys retirement and insurance services division to J.C. Flowers & Co.

Tibco Software Inc. (Nasdaq: TIBX) has agreed to acquire Spotfire Inc., a Somerville, Mass.-based provider of business intelligence software, for $195 million in cash. Spotfire has raised approximately $40 million in total VC funding since its 1996 inception, from firms like Atlas Venture, InnovationsKapital, DLJ Merchant Banking Partners, In-Q-Tel, Pequot Capital, Quantum Partners, Sprout Group and Soros Private Equity.

Institutional Shareholder Services is advising Clear Channel shareholders to reject a $19.4 billion buyout offer from Bain Capital and Thomas H. Lee Partners. It called the offer “not compelling enough,” even though the private equity firms recently increased their offer from $37.60 per share to $39 per share. ISS is the second proxy firm this week to advise against the deal, following Egan-Jones Proxy Services.

VC Deals

Segetis Inc., a Plymouth, Minn.-based renewable (“green”) chemical company, announced that it has raised $15 million in Series A funding from Khosla Ventures. PE Week Wire first reported on the deal back in February.

Aprius Inc., a Sunnyvale, Calif.-based startup in the high-speed computer interconnect market, has raised $11 million in Series A funding. Lightspeed Venture Partners and New Enterprise Associates co-led the deal. The company was founded last summer by three former Intel employees who also co-founded optical transceiver company LightLogic (acquired by Intel in 2001).

SquareOne Inc., a Campbell, Calif.-based maker of cardiovascular stents, has raised $7.5 million in Series C funding, according to a regulatory filing. Three Arch Partners led the deal, and was joined by Onset Ventures and Finistere Ventures.

ProVina Inc., a San Jose, Calif.-based developer of a home winemaking system, has raised $4 million in first-round funding led by VantagePoint Venture Partners.

Buyout Deals

Coates Hire, a listed Australian machinery rental company, said that it has been approached by private equity suitors. The company’s shares rose to their highest level in five years on the news, with Coates Hire saying that it has retained Macquarie Bank as its advisor. The private equity firms’ identities were not disclosed, although the Australian Financial Review suggests that both Ironbridge Capital and CCMP Capital Asia might have interest.

The Weatherly Group has agreed to acquire Fitz, Vogt & Associates, a Walpole, N.H.–based foodservice management company. No financial terms were disclosed for the deal, which comes as company founder Carl Fitz retires.

LS Power Equity Partners has completed its acquisition of six U.S. natural gas fired plants from Mirant Corp. (NYSE: MIR) for approximately $1.41 billion.

Onex Healthcare Holdings, a subsidiary of Onex Corp. (TSX: OCX), has completed its acquisition of the Health Group of Eastman Kodak Co. (NYSE: EK). The deal included $2.35 billion in cash at closing, plus up to $200 million in possible milestone payments. Kodak’s Health Group provides molecular imaging systems, medical and dental imaging, including digital x-ray capture, medical printers and x-ray film.

Baird Capital Partners has led an acquisition of The Mayline Group, a Sheboygan, Wis.-based maker and distributor of office furniture, from and affiliate of the Barancik Group. No financial terms were disclosed for the deal, which also included participation from BMO Mezzanine Fund, Hexigon Investments and company management.

Citigroup Venture Capital International has agreed to acquire 30% of Turkish department store Boyner Magazacilik and 50% of Turkish fashion retailer Beymen for a an aggregate purchase price of $188.7 million.

Karp Reilly has acquired a majority position in restaurant chain Z’Tejas Inc., according to LBO Wire. The deal is reported to be valued at between $25 million and $35 million. Kapr Reilly was formed earlier this year by former Apax Partners pros Allan Karp and Chris Reilly.

PPL Corp. (NYSE: PPLC) has put its telecom unit on the auction block, saying it is not core to its power generation and distribution business.

Pac-West Telecomm Inc., a Stockton, Calif.-based converged communications company, has laid off 48% of its workforce (94 employees) and filed for Chapter 11 bankruptcy protection. The company was delisted from the Nasdaq last fall, and lists shareholders like SCP Private Equity Partners (9.7%) and William Blair Capital Partners (9.7%). As part of the bankruptcy filing, Pac-West has agreed to an $18.5 million financing deal with Columbia Ventures Corp.

PE-Backed IPOs

Eurand NV, a Dutch drug company whose lead product treats exocrine pancreatic insufficiency, has filed for a $152.95 million IPO. It plans to offer seven million ordinary shares at between $17 and $19 per share, and trade on the Nasdaq under ticker symbol EURX. Deutsche Bank Securities and Lehman Brothers are serving as co-lead underwriters. Eurand was formed in 1999, when Warburg Pincus acquired the drug delivery business of American Hone Products Corp. (now Wyeth). It reported 2006 revenue of approximately $109 million.

TriMas Corp., a Bloomfield Hills, Mich.-based manufacturer of engineered products, set its proposed IPO terms to 11 million common shares being offered at between $11 And $13 per share. It plans to trade on the NYSE under ticker symbol TRS, with Goldman Sachs and Merrill Lynch serving as co-lead underwriters. TriMas operated as an independent company beginning in 1987, but was acquired in 1998 by Metaldyne Corp. (then known as MascoTech Inc.). In November 2000, Matladyne was acquired by an investor group led by Heartland Industrial Partners, which later spun the company out on its own. The current shareholder structure includes Heartland with a 72.7% pre-IPO stake, Masco Corp. with 11.82% and Credit Suisse with 5.71 percent.

PE-Backed M&A

Dockwise and Sealift have agreed to merge, in order to form a single maritime company focused on the heavy transportation market. No financial terms were disclosed. The merger has been approved by 3i Group, the largest Dockwise shareholder, and Bermuda-based Frontline, the largest shareholder in Oslo-listed Sealift.

Local Insight Media LLC, a provider of print directories and Internet-based local search services in Alaska and the Caribbean, has agreed to acquire Hawaiian Telcom Yellow Pages. No financial terms were disclosed for the deal, which includes a 50-year publishing agreement in which Insight will serve as the exclusive, official publisher of print and online directories for Hawaiian Telcom. Local Insight Media was originally formed by Welsh, Carson, Anderson & Stowe with a focus on the Alaskan and Caribbean markets, and later merged with CBD Media LLC, publisher of the Cincinnati Bell-branded yellow pages. WCAS holds a majority stake, with former CBD shareholder Spectrum Equity Investors holding a minority position. www.htyello!

The Riverside Company has sold Axiom Automotive Technologies to Transtar Industries Inc., a Cleveland-based portfolio company of Linsalata Capital Partners. No financial terms were disclosed. Axiom is a Pittsburgh-based supplier of original equipment and aftermarket transmission replacement parts.

Select Medical Corp., a Mechanicsburgh, Pa.-based portfolio company of Welsh Carson Anderson & Stowe and Bravo Equity Partners, has completed its acquisition of HealthSouth Corp.’s Outpatient Rehabilitation division for approximately $245 million in cash. The division includes approximately 600 facilities in 35 states that provide rehab for general orthopedic and sports injuries.

PE Exits

CanGro Foods Inc., a Toronto-based portfolio company of Sun Capital Partners and EG Capital Group, has sold its Aylmer and Primo brand soup business to Baxters Canada Inc. No financial terms were disclosed.

Firms & Funds

Velocity Financial Group Inc. has launched as a specialty finance company focused on middle-market and venture-backed technology companies. Its initial capitalization is approximately $400 million, with American Capital Strategies serving as lead sponsor and investor. Velocity was co-founded by former Comdisco executives Frank Cirone and Jan Haas.

PAI Partners is pre-marketing a fifth fund that may target €6 billion, according to LBO Wire. Its current fund was capped two years ago at €2.7 billion. UBS will serve as placement agent.

Human Resources

Stephen Hoffman has joined Skyline Ventures as a managing director. He will help Palo Alto, Calif.-based firm open a Boston office, and previously was a partner with TVM Capital. In other Skyline personnel news, the firm has promoted partners Stephen Sullivan and David Lowe to the position of managing director. Skyline focuses on venture capital opportunities in the life sciences market, including medical devices.

Matt Niehaus has joined the Menlo Park, Calif. Office of Battery Ventures as a partner. He most recently was director of strategic development with Verisign, which in 2005 had acquired a company Niehaus co-founded called R4 Global Solutions. Battery also has hired Satya Patel as a senior associate. Patel most recently was a senior product manager for Google, focused on the AdSense business.

Arlett Tygesen has joined the Bear Stearns Asset Management as a managing director in the Private Funds group. She previously served as the first executive director of the Institutional Limited Partners Association (ILPA).

David Goldberg has joined Benchmark Capital as an entrepreneur-in-residence. He previously was with Yahoo as vice president and general manager of Yahoo Music, and before that was co-founder of Launch Media Inc. (acquired by Yahoo in 2001).

Richard Mason has joined London-based Advent Venture Partners as an executive-in-residence, focused on the life sciences market. He previously was with Cambridge Antibody Technology PLC, as a senior vice president for business development and commercial operations.

Gordon Paterson has joined Deutsche Bank as managing director and head of M&A for Asia-Pacific, excluding Japan. He previously held a similar role with Citigroup.

Michael Joseph has joined D.E. Shaw as head of a unit that provides equity and debt to businesses in the UK and continental Europe. He previously was a managing director of structured finance with Lloyds TSB Bank and, before that, was a director with 3i Group.