PE Week Wire: Wed., Oct. 31, 2007

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*** If Charlie Rangel plans to use private equity profits as a patch for AMT, what happens if returns come in below his expectations? Perhaps subsidies for big buyouts? Or would that just put us back in the same red? So confusing…

Top Three

Cerberus Capital Management has withdrawn its $6.2 billion offer to acquire BPO and IT services provider Affiliated Computer Services Inc. (NYSE: ACS), according to The Wall Street Journal. Cerberus sent an apologetic letter to the ACS board late yesterday, citing “poor conditions in the debt market.”

AEA Investors has agreed to sell Burt’s Bees Inc., a Durham, N.C.-based maker of personal care products like lip balm, to Clorox Co. (NYSE: CLX). The deal is valued at $925 million, net of an additional $25 million payment for anticipated tax benefits.

Shasta Ventures has closed its second fund with $250 million in capital commitments. The Menlo Park, Calif.-based firm focuses on early-stage technology companies, and had raised a $210 million debut fund in 2005.

VC Deals

Harmony Information Systems Inc., a Reston, Va.–based provider of software solutions for the health and human services sector, has raised $28 million in private equity and debt funding. Existing Harmony backers JMI Equity and Updata Partners co-led the equity tranche, while Orix Venture Finance and Comerica Bank provided the debt.

Optimal Technologies International Inc., a San Francisco-based provider of solutions to help power utilities, businesses and consumers maximize their energy usage, has raised $25 million in private funding from Goldman Sachs. The deal includes a $13 million up-front payment, and up to another $12 million in earn-outs.

BDNA Corp., a Mountain View, Calif.–based provider of global technology inventory solutions, has raised $20 million in fourth-round funding. Rising Tide led the deal, and was joined by return backers like Crescendo Ventures, Flagship Ventures, Motorola Ventures and Flagship Ventures.

Intelligent Hospital Systems, a Winnipeg, Canada-based medical device maker focused on automated solutions for the hospital environment, has raised $7.6 million in private equity and debt funding. BDC Venture Capital led the deal with a $3 million investment, and was joined by Western Life Sciences Venture Fund and Wellington West Capital.

4Info Inc., a Palo Alto, Calif.-based mobile search company, has raised an undisclosed amount of VC funding from Peacock Equity, a $250 million venture capital fund formed earlier this year from GE and NBC Universal. As part of the deal, 4Info will become NBC Universal’s preferred mobile SMS advertising partner. 4Info previously had raised around $28 million from Draper Fisher Jurvetson, U.S. Venture Partners, Sand Hill Capital and Gannett Co.

Semtek Innovative Solutions Corp., a San Diego-based provider of a point-of-sale device hardware component that eliminates the need for payment card data to be used or stored within merchant’s payment systems, has raised an undisclosed amount of Series A funding. RRE Ventures and Venrock co-led the deal, and were joined by VeriFone Holdings Inc.

Buyout Deals

GMT Communications Partners has completed its acquisition of UK outdoor advertising business Primesight Ltd. from British media company SMG. The deal was valued at £62 million, with Hawkpoint Partners advising SMG. Primesight’s products include advertising display panels on major roads and display panels at locations such as cinemas, health clubs and retail outlets. SMG will use proceeds from the sale to pay down debt.

Hermes Private Equity has acquired Beck & Pollitzer for £55 million from Bank of Scotland Integrated Finance. Beck & Pollitzer is a UK-based engineering services company that specializes in the installation and relocation of industrial plant and machinery and associated services.

Midwest Airlines (AMEX: MEH) shareholders have approved a $17 per share buyout offer from TPG. The total deal would be valued at $450 million.

The Pritzker Group has acquired Carters-Waters, a distributor of construction materials and tools to commercial, highway, municipal and multi-family builders in Missouri, Kansas and Southern Illinois.

Stone Point Capital and Fairfax Financial Holdings Ltd. (TSX: FFH) have agreed to acquire Canadian insurance company Cunningham Lindsey Group Inc. (TSX: LIN). Stone Point will pay Cdn$80 million for a 51% interest, while Fairfax will pay Cdn$30 million for around a 45% position. The remainder will be acquired by Cunningham Lindsey management.

Swander Pace Capital has sold Eagle Pack Holdings to private investment firm Berwind Corp. No financial terms were disclosed. Eagle Pack is a Mishawaka, Ind.–based maker of premium natural/holistic dog and cat food. www.eaglepack.com

PE-Backed IPOs

Metals USA holdings Corp., a metals service center operator owned by Apollo Management Group, has withdrawn registration for a $200 million IPO. No explanation was give. Metals USA had planned to trade on the NYSE, with Goldman Sachs, CIBC and Credit Suisse serving as underwriters.

Merrion Pharmaceuticals Ltd., a Dublin, Ireland-based developer of oral-dosage forms of drugs with poor bioavailability, has cut its IPO price range from $10-$12 per share to $6-$7 per share. It still plans to offer four million American depository shares, and to trade on both the Nasdaq and IEX under ticker symbol MERR. Punk, Ziegel & Co. is serving as lead underwriter. Shareholders include Growcorp Ltd. and Elan Corp. www.merrionpharma.com

PE Exits

EMC Corp. (NYSE: EMC) has acquired Voyence Inc., a Richardson, Texas-based provider of network configuration and change management solutions. No financial terms were disclosed. Voyence had raised nearly $53 million in total VC funding since 2000, from firms like HO2 Partners, BancBoston Ventures, Canaan Partners, HP, InterWest PartnersSevin Rosen Funds and StarTech Early Ventures.

Battelle has agreed to acquire the assets of Ventaira Pharmaceuticals Inc., a Columbus, Ohio-based developer of an inhaled drug delivery system and reformed drugs for the system. The deal is also serving as a shutdown for Ventaira, which has now ceased its clinical development and device development work. No financial terms were disclosed. Ventaira had raised over $47 million in VC funding since 2003, from firms like TL Ventures, PA Early Stage, Battelle Ventures, Merlin Biosciences, Fletcher Spaght Associates and Reservoir Venture Partners.

QuEST, a Bangalore–based provider of outsourced engineering services and manufacturing, has bought back all of its shares that had been held by Carlyle Asia Ventures II. Carlyle had invested $6 million in the company four years ago. No terms of the buyback were disclosed.

PE-Backed M&A

Nycomed AS, a Danish drug company, has agreed to acquire Bradley Pharmaceuticals Inc. (NYSE: BDY) for $20 per share. The total equity purchase price would be $346 million, with a close expected by Q1 2008. Nordic Capital holds a 51% stake in Nycomed, with other shareholders including DLJ Merchant Banking Partners, Blackstone Group and AlpInvest.

Western Express has acquired fellow truckload carrier Smithway Motor Xpress of Fort Dodge, Iowa. The deal was supported by $40 million in subordinated debt from Key Principal Partners.

Zipcar has agreed to merge with fellow car sharing company Flexcar. No financial terms were disclosed. The combined company will be known as Zipcar, with Zipcar CEO Scott Griffith running the show. Zipcar has raised around $38 million in VC funding from firms like Benchmark Capital, Greylock and Globespan Capital Partners.

Human Resources

HarbourVest Partners has made seven promotions: Jeffrey Keay and Christopher Walker were named Principals; Laura Thaxter was named Senior Vice President; and Valérie Handal, John Nelson, Sandra Pasquale and Michael Pugatch were promoted to Vice President.