peHUB Wire: Thursday, April 29, 2010

Well, it’s official: Palm will not go bust. And Elevation Partners can formally remove that paper bag from its head.

The troubled PDA maker yesterday agreed to be acquired by HP for $1.2 billion, or $5.70 per share. That’s a 23% premium to Palm’s closing price pre-announcement, and a 54% premium to where Palm was trading when I wrote about Elevation’s investment late last month.

As a quick refresher, here is how Elevation’s investments in Palm broke out:

• 2007: $325m Series B convertible preferred shares ($8.50 conversion price)

• 2008: $51m Series C convertible preferred shares ($3.25 conversion price). This deal was originally $100m, but Palm exercised its right to buy back $49m. It also included 3.6m warrants at a $3.25 strike price.

• 3/09: $49m of common stock (8.2m shares at $6 per share). This was a rollover of the proceeds from Palm’s buyback of Series C convertible shares.

• 9/09: $35m of common stock (2.2m shares at $16.25 per share)

That works out to $460 million in total investment. If the $5.70 per share acquisition price sticks, Elevation’s payout would be $485 million.

Not a homerun — and maybe not even a single — but certainly a save. Elevation had lots of downside protection with the convertible preferred structure, but a bankruptcy or asset liquidation would have further aggravated LPs who never wanted Elevation spending more than 25% of its fund on one company in the first place.

Now, at least there is a bit of a positive story to tell when Elevation goes out to raise its second fund (which it will, based on the forward-looking compensation structures of several new staffers). And if Elevation had a hand in the HP sale, all the better (I have no idea)…

*** HP chairman and CEO Mark Hurd wasn’t on the conference call late yesterday afternoon. Seems he had previously agreed to appear at a Silver Lake Partners LP meeting…

*** Apple yesterday agreed to buy iPhone assistant maker Siri Inc., for a price I’m told was in the ballpark of $200 million. Worth emphasizing that the initial technology for Siri was developed by nonprofit R&D group SRI International, and then Siri was spun out with a total of $24 million in VC funding from Menlo Ventures, Morgenthaler Ventures and SRI.

SRI’s research was part of the CALO Project, a giant artificial intelligence effort. Expect additional CALO-related technologies to be commercialized, and for Menlo and Morgethaler to be among the private backers. Particularly Morgenthaler, which previously scored an SRI-related win with Nuance Communications.

*** Shameless plug: Follow me on Twitter @danprimack

*** Today is the last day to let me know if you want to play on the peHUB softball team at Fenway. We’re still a few players short of a full team. One idea: Have your firm buy one or two spots on the team, then run it as an internal raffle. Yes, all contributions are tax-deductible. Email me if interested…

Top Three

HP has agreed to buy troubled PDA maker Palm for $1.2 billion, or $5.70 per share. The price represents a 23% premium to yesterday’s closing price for Palm stock, and would result in a $25 million cash-on-cash return for Elevation Partners, which has invested a total of $460 million into Palm.

Apple has acquired Siri Inc., maker of an iPhone assistant, for approximately $200 million. Siri had raised $24 million in VC funding from Menlo Ventures, Morgenthaler Ventures and former parent company SRI International.

Alpha and Omega Semiconductor Ltd! ., a Sunnyvale, Calif.-based chipmaker, raised around $91.6 million in its IPO. The company role nearly 5.09 million common shares at $18 per share ($17-$19 range), which gave it an initial market cap of approximately $397.5 million. The company will trade on the Nasdaq under ticker symbol AOSL, while Deutsche Bank Securities and Piper Jaffray served as co-lead underwriters. It reports over $138 million in 2009 revenue, compared to $99 million in 2008 revenue. Shareholders include Sequoia Capital (16.1% pre-IPO stake), Pacific Venture Partners (3.4%) and Hantech International Venture Capital (2.7%).

VC Deals, a Washington, D.C.-based social discovery and cataloging network, has raised $14 million in Series C funding. Lightspeed Venture Partners led the round, and was joined by return backers U.S. Venture Partners, Grotech Ventures and Revolution LLC. The company previously raised $30 million, including a $25 million Series B round last month.

Mojiva Inc., a New York-based mobile advertising network, has raised $7 million in Series B funding. UV Partners led the round, and was joined by return backer Bertelsmann Digital Media Investments. The company previously raised $3 million.

Oncos Therapeutics, a Finland-based developer of cancer therapeutics by use of oncolytic viruses, has raised €4 million in VC funding from HealthCap.

Fixmo Inc., a Toronto-based mobile software utility startup, has raised an undisclosed amount of new VC funding from iNovia Capital. It previously announced C$2 million from Rho Ventures Canada and Extreme Venture Partners., a social sharing site for academic researchers, has raised $1.6 million in Series A funding, according to TechCrunch. Spark Ventures led the round, and was joine d by individual angels.

Klout, a provider of social web influencer analytics, has raised $1.5 million in Series A funding. Backers include ff Asset Management, Allan Morgan, Zelkova Ventures and Nova Spivak.

Assured Labor Inc., a Boston-based developer of an online and mobile marketplace for jobs in the emerging markets, has raised $1 million in seed funding. The capital will be used, in part, to expand the company’s Latin American offering. Backers includeNexus Venture Partners, Kima Ventures, Michael Van Swaaij (former CEO and chairman of Skype) and Fabrice Grinda (CEO of

Mitra Biotech Pvt Ltd., an India-based dev! eloper of an analytical diagnostic platform for personalized cancer treatment, has raised an undisclosed amount of VC funding from Accel Partners.

Realton Corp., a Beijing-based developer of diode-pumped laser systems that treat enlarged prostates, has raised an undisclosed amount of Series B funding. OrbiMed Advisors and China Healthcare Partnership co-led the round, and were joined by return backer CSV Capital Partners.

Buyouts Deals

Actis and Indian conglomerate Tata Group are partnering on a bid for $2 billion of road projects in India over the next five years. Italian toll road operator Atlantia also is part of the consortium.

Aurora Capital Group has agreed to buy four steel service center facilities from Northern Steel Group, a unit of Russia’s Severstal. No financial terms were disclosed for the deal, which is expected to close later this quarter.

BWAY Holding Co. (NYSE: BWY), a North American supplier of general line rigid containers, announced that its “go-shop” period has expired without any rival offers to an existing $20 per share takeover agreement with Madison Dearborn Capital Partners. The deal values BWAY at approximately $915 million (including assumed debt). Bank of America Merrill Lynch and Deutsche Bank Securities will provide leveraged financing.

Dubai International Capital urged lenders of German aluminum company Almatis not to rush to bankruptcy as it seeks a refinancing of its debt.

KKR has a cquired a 49.9% stake in European helicopter operator Grupo Inaer from Industrialinvest, which will retain a 50.1% position. The deal gives Grupo Inear an enterprise value of €700 million.

OMERS has emerged as the favorite to buy port and shipping agent Inchcape Shipping Services, according to the FT. Seller Istithmar is seeking more than $700 million.

Triton, a European buyout firm, has received more time to negotiate a deal to buy insolvent German department store chain Karstadt. Triton is the troubled company’s only bidder, and is asking for additional concessions from workers and landlords.

PE-Backed IPOs

Convio Inc., an Austin, Texas-based provider of online constituent relationship management solutions for nonprofit organizations, raised $46.2 million in its IPO. The company priced 5.13 million common shares at $9 per share, compared to a $10-$12 per share offering range. It has an initial market cap of approximately $146.5 million, and will trade on the Nasdaq under ticker symbol CNVO. Piper Jaffray and Thomas Weisel Partners served as co-lead underwriters. The company raised over $47 million in VC funding, from firms like Granite Ventures (20.1% pre-IPO stake), Austin Ventures (15.7%), El Dorado Ventures (9.2%), Adams Street Partners (8.9%), Silverton Partners (5.2%), Pacific Partners (2.8% and Rembrandt Ventures (2.7%).

PE-Backed M&A

Hilco Consumer Capital and Crystal Capital have sold Tommy Armour Golf business to the Sports Authority, a portfolio company of Leonard Green & Partners. No financial terms were disclosed.

Firms & Funds

C.P. Eaton Partners, a Connecticut-based fund placement firm, has launched a dedicated practice for raising renminbi-denominated funds. It will be led by new hire Eric Gu, who will serve as a Shanghai-based vice president. Gu previously was with the China National Social Security Fund.

J.P. Morgan Worldwide Securities Services has agreed to acquire the private equity administration services business of Schroders PLC, which has $6.2 billion in committed capital under administration. No financial terms were disclosed.

Nextech Ventures, a Zurich-based firm focused on opportunities in the oncology space, has held a €26 million first close on its third fund, according to VentureWire. No fund target was reported. The firm also has added Matyas Vegh, former CEO of The Genetics Co., as a partner.

Human Resources

H. Cabot Lodge has been named president of W.P. Carey & Co’s UK subsidiary, and head of European investments. He previously was managing partner of CL Prop LLC, a real estate advisory and corporate net lease management firm.