peHUB Wire: Monday, June 7, 2010

Early greetings, as I’ve got a morning meeting in Boston and an afternoon meeting in New York (I’d fire my scheduler if he wasn’t always staring back at me from mirrors). Let’s kick off your Monday:

*** People typically react in one of three ways after we publish something they’d rather keep secret: (1) No comment; (2) Confirm and spin; and (3) Deny, deny, deny.

But now there is a fourth path: Deny loudly via an official statement to other news outlets (who accept it as gospel), and then admit the truth nearly one year later.

The culprit here is Zappos CEO Tony Hsieh. When his company agreed last July to be acquired by Amazon, peHUB reported the following:

“The decision to sell hot online shoe retailer Zappos to was more in line with the interests of Sequoia Capital than the company’s CEO, according to two sources close to the company… [Sequoia’s] Moritz and Zappos CEO Tony Hsieh came into conflict about the company’s future. Moritz, the sources say, wanted Zappos to sell while Hsieh wanted to remain independent.”

Hsieh responded swiftly with a statement that read, in part:

“The articles and rumors of Sequoia forcing us to sell are simply not accurate. Nobody was forced to sell to Amazon. The Zappos board was united in believing that joining forces with Amazon would be in the best long term interests of our employees, customers, shareholders, and other stakeholders. The Amazon deal got us the best of all worlds: we can continue to run independently and grow the Zappos brand and culture, our small and larger investors are getting rewarded for all their contributions to Zappos over the last decade, and we don’t have to deal with the headache and overhead of running a public company.”

To be clear, we had never reported that Sequoia “forced” anyone to sell (as Alex explained at the time). We said there was a disagreement and that Sequoia’s initial preferences ultimately won out. But that distinction didn’t much matter, and a bunch of folks publicly accepted the party line (including the NYT, WSJ and some notable VC bloggers).

So imagine my surprise this morning, to read an article by Hseih titled: Why I Sold Zappos. In it, he basically confirms everything we had reported (plus some stuff we had held back, after being unable to double-source). Here’s an excerpt:

“But then Amazon came calling again:

As before, our plan was to stay independent and eventually go public.

But our board of directors had other ideas. Although I’d financed much of Zappos myself during its early days, we’d eventually raised tens of millions of dollars from outside investors, including $48 million from Sequoia Capital…

By early 2009, we were at a stalemate. Because of a complicated legal structure, I effectively controlled the majority of the common shares, so that the board couldn’t force a sale of the company. But on the five-person board, only two of us — Alfred Lin, our CFO and COO, and myself — were completely committed to Zappos’s culture. This made it likely that if the economy didn’t improve, the board would fire me and hire a new CEO who was concerned only with maximizing profits. The threat was never made overtly, but I could tell that was the direction things were going…

I left Seattle pretty sure that Amazon would be a better partner for Zappos than our current board of directors.”

It’s great that Tony has finally decided to tell the story behind the story. My only regrets are that he waited so long, and chose to implicitly smear us in the process.

*** Big news from the LP world, as we’ve learned that the $74 billion Washington State Investment Board has chosen Hamilton Lane as its new private equity consultant. The pension system has around $13.5 billion in private equity assets, and had spent the past five years using Capital Dynamics (which, in turn, had taken over for Pacific Corporate Group).

In! a statement sent over this morning, Capital Dynamics said two things of interest: (1) That it has been “encouraged” by WSIB to remain active in portfolio and risk management assignments, and (2) “We all recognize that no public institution can ignore significant potential for cost savings in the current environment.”

That last one is code for: Hamilton Lane offered to charge WSIB much less than we did… More on this later today at peHUB.

Top Three

Grifols (Madrid: GRLS) has agreed to buy Talecris Biotherapeutics (Nasdaq: TLCR), a maker of plasma-based protein therapies, for $3.4 billion (plus $600m in assumed debt). Talecris was formed in 2005 when Cerberus Capital Management and Ampersand Ventures bought the blood products unit of Bayer AG for $590 million. It went public last October.

Great Hill Partners has purchased publisher Ziff Davis, and installed former Time Warner executive Vivek Shah as CEO. No financial terms were disclosed. Ziff Davis had emerged from bankruptcy last year, and had been run by its creditors.

LPL Financial, a U.S. brokerage, has filed for a $600 million IPO. Hellman & Friedman and TPG Capital acquired a 60% stake in the company four years ago at an enterprise value of around $2.5 billion. According to the S-1 filing, the two firms now own a combined 72 percent.

VC Deals

Ozmo Devices, a Palo Alto, Calif.-based provider of low-lower WiFi personal area network solutions, has raised $10.8 million in Series D funding. Atlantic Bridge Ventures led the round, and was joined by return backers Granite Ventures and Intel Capital. The company previously raised over $32 million from Granite Intel andTallwood Venture Capital.

Cytheris SA, a French drug startup focused on immune modulation, has raised €12 million in Series D funding. CDC Entreprises led the round, and was joined by return backers Gestion, Caisse de dépôt et Placement du Québec, CDC Innovation, Crédit Agricole Private Equity and Forbion Capital Partners.

Anteryon, a Dutchmaker ofminiature optical modules for mobile phone came! ras and laser projection, has raised an undisclosed amount of new VC funding. Qualcomm Ventures Europeled the round, and was joined by Quest for Growth (Belgium) and return backers BNP Paribas Private Equity and Biggell Finance.

SoGeo, an Amsterdam-based provider of a context aware platform for mobile and Web, has raised €1 million in funding led by BlueBubbleLab.

Buyouts Deals

Atos Origin has pulled itself out of the auction for Royal Bank of Scotland’s payment processing unit (WorldPay), according to La Tribune.

The Carlyle Group has offered to ! buy Giannoni, a French maker of heat exchangers for energy efficient boilers. The fully-financed bid would value Giannoni at €490 million.

GTCR has completed its previously-announced acquisition of Protection One Inc. (Nasdaq: PONE), a Lawrence, Kansas-based provider of electronic security services to the residential, commercial and wholesale markets. Sellers include Quadrangle Group and Monarch Capital Partners. The deal was valued at $828 million, including the refinancing of debt. Protection One stockholders received $15.50 per share, while debt financing was provided by JP Morgan Chase Bank, Barclays Capital and T! CW/Crescent Mezzanine.

Harrah’s Entertainment Inc. has agreed to swap a 15.6% equity stake for around $1.12 billion in outstanding bonds. The participating creditors are Paulson & Co. (9.9% equity stake), Apollo Management and TPG Capital. Apollo and TPG are Harrah’s majority equity stockholders who acquired the bonds via secondary market purchases.

MBK Partners reportedly is in early talks to bid on Lone Star Funds’ 51% stake in Korea Exchange Bank, which is valued at around $3.6 billion.

Nycomed, a Swiss pharma company, is asking its lenders for longer-term covenant relief on some of its €3.7 billion net debt. Nycomed shareholders include Nordic Capital, DLJ Merchant Banking, Coller International Partners and Avista Capital.

Starwood Capital has acquired a 49.9% stake in Hersha Hospitality Management, which manages more than 70 hotels in markets such as New York and Boston. No financial terms were disclosed.

PE-Backed IPOs

Logan’s Roadhouse, a Nashville, Tenn.-based chain of casual restaurants, has filed for a $200 million IPO. It plans to trade on the Nasdaq under ticker symbol LGNS, with Credit Suisse serving as lead underwriter. Shareholders include Bruckmann, Rosser, Sherrill & Co., Black Canyon Capital and Performance Equity Management.

Firms & Funds

Olympus Capital Partners has raised $150 million for its debut fund. The Menlo Park, Calif.-based firm plans to make late-stage and growth equity investments in cleantech and IT companies.

Human Resources

Makram Azar has joined Barclays Capital as head of Middle East investment banking. He had been with KKR as a managing director in charge of operations in the Middle East and North Africa region (MENA).

Kjerstin Barley has joined Square 1 Bank as a managing director and regional manager of I-banking in Silicon Valley. She previously was a senior VP with GE Commercial Finance Media, Communications and Entertainment.