Greetings from JacksonHole the home office, thanks to United Airlines canceling my flight. Mechanical difficulties (or mostly-unsold plane, take your pick). Before moving on to relevant matters, shouldn’t United be responsible for refunding not only my United ticket there (which it did), but also my return ticket on a different carrier? If not legally, then at least morally? At least I got a lovely travel voucher that could probably get me from Boston to Providence… Oh well, moving on:
* Last week, buyout pros were talking about Sallie Mae in the same breath as Harman International (i.e., dead deal). Now, the comparison may be closer to Home Depot Supply (i.e., living deal, lower price).
J.C. Flowers announced yesterday that its consortium has submitted a revised proposal to Sallie Mae’s board of directors, which would lower the up-front payment from $60 per share to $50 per share. It would also include warrants that could ultimately make up the difference — $7 per share if Sallie Mae hits certain performance targets, or a full $10 per share if it significantly exceeds them.
In its letter to the Sallie Mae board, J.C. Flowers said: “Our proposal offers full and fair value to the Sallie Mae shareholders in light of the changes that have occurred since the signing of our agreement, and a significant premium to the company’s likely unaffected share price based on historical trading ranges and current market conditions. It also includes an extraordinary level of funding for the Sallie Mae business, which provides substantial value to Sallie Mae shareholders who will now be participating directly in the success of the company through their ownership of the warrants.”
Shareholders initially seemed to agree, as Sallie Mae (NYSE: SLM) rose over $51 per share in early-afternoon trading. Then it went back down below $50 per share, before closing on $50.09 per share. And to keep the mild roller-coaster going, it is trading back down below $50 so far this morning. For context, the stock traded as high as $58 per share just a few months ago.
None of these most recent fluctuations are terribly severe, but likely reflect two concerns: (A) Does the earn-out arrangement create a disincentive for Flowers to hit certain targets? (B) Even if not, the leverage structure likely means that Flowers would need to improve Sallie Mae’s equity value by far more than 20%, before shareholders get their own 20%/$10 per share. In other words, heads Flowers wins – tails, Flowers wins.
For its part, Sallie Mae is not yet budging on its public insistence that Flowers and its partners honor their original offer. But, like with Home Depot, expect that stubbornness to subside.
* Steve Young called in on Friday to clarify the record that I have so badly bungled. He reconfirmed that he will not be part of Sorenson Capital Partners II, which is currently being raised with a $300 million target. But Young also said that he and a fellow Sorenson partner plan to form a “larger” private equity fund. He declined to provide further details, including if the new effort would still carry the Sorenson brand. “I’m definitely staying in private equity,” he said.
On the plus side of bungling, I've gotten to speak to both a Super Bowl and Stanley Cup winner in the past week. Come on Schill... I still want to hear from the horse's mouth about VC funding for 38 Studios...
* A bunch of interesting stuff this morning from peHUB First Read.
* peHUB breaks news on VC fundings for Internet video infrastructure companies Move Networks and Acinion.
* Are you still not a premium subscriber to peHUB? Not only do you get access to the full peHUB and PE Week Wire search archive, but you also get your very own username and password. What a deal...
* Finally, a number of you have written in to request a Blackberry-friendly version of PE Week Wire. We've heard you, and are trying to figure out how to make it work (from a biz perspective -- the tech is easy). Expect a question about it in our Annual Reader Survey, which is coming soon...
EverPower Renewables Corp., a New York-based developer of utility-grade wind energy projects, has received a $55 million private equity commitment from Good Energies. The deal will help EverPower further developer its existing portfolio of wind construction projects, and expand its pipeline of new projects. Company management will retain a majority ownership position. www.everpower.com
CVC Asia Pacific and CVC Capital Partners have sold their controlling interest in Australia and New Zealand healthcare company DCA Agedcare Group to BUPA for approximately Au$1.23 billion. http://www.cvc.com/
Constant Contact Inc., a Waltham, Mass.-based provider of direct marketing email software, raised $107.2 million via its IPO. The company priced 6.7 million common shares at $16 per share (above $12-$14 range), which gave it an initial market cap of approximately $433 million. It will trade on the Nasdaq under ticker symbol CTCT, while CIBC World Markets and Thomas Weisel Partners served as co-lead underwriters. Constant Contact had raised $38.8 million in VC funding from Morgan Stanley Dean Witter Venture Partners (21.87% pre-IPO stake), Commonwealth Capital Ventures (15.35%), Hudson Venture Partners (14.16%), Greylock Partners (14.16%), Longworth Venture Partners (9.79%), Saturn Capital and VeriSign. www.constantcontact.com
Shoptron, a San Luis Obispo, Calif.-based ecommerce solution for branded manufacturers, has raised $6 million in Series B funding. Kern Whelan Capital led the deal, and was joined by return backer Rivenrock Capital. http://www.shopatron.com/
The Rubicon Project, a Los Angeles-based provider of an Internet advertising platform, has raised $4 million in Series A funding from Clearstone Venture Partners. It also secured $2 million of venture debt from Square1 Bank. http://www.rubiconproject.com/
Sportbuzz Ltd., a UK-based operator of the Sportingo.com sports content network, has raised $3.2 million from Ingenious Media Active Capital Ltd. In other Sportbuzz news, the company recently acquired CaughtOffside.com, a UK-based soccer blog. http://www.sportingo.com/
Comet Solutions, an Albuquerque, N.M.-based provider of early simulation software for product development, has raised $2 million in the final tranche of its Series A funding. Backers include Flywheel Ventures, Fort Washington Capital Partners Group, ITU Ventures and New Mexico Angels. http://www.cometsolutions.com/
Punchbowl Software Inc., a Natick, Mass.-based developer of an event-planning website, has raised an undisclosed amount of seed funding. Intel Capital led the deal, and was joined by eCoast Angels and other individual angels in Silicon Valley and Boston. http://www.mypunchbowl.com/
Clear Water Compliance Services, a Lynnwood, Wash.-based provider of systems for purifying storm water runoff from construction and industrial sites, has raised $25 million from Plainfield Asset Management. The deal includes both preferred equity and a senior secured facility. Cascadia Capital advised CWCS on the deal. www.clearwatercomplianceservices.com
Reply.com, a Ramon, Calif.-based provider of provider of online consumer services in the automotive and real estate verticals, has raised $4.5 million in venture debt fu! nding from ATEL Ventures. The company previously raised around $23 million in VC funding from Scale Venture Partners, Outlook Ventures and CS Capital Partners. http://www.reply.com/
Advanced Communications Technologies Inc. (OTC BB: ADVC), a New York-based reverse logistics company for consumer electronics, has raised an undisclosed amount of funding from H.I.G. Capital. Concurrent with the transaction, ACT has completed its acquisition of Vance Baldwin Electronics, an OWM parts distributor with operations in southern Florida and suburban Atlanta. http://www.higcapital.com/ http://www.advancedcomtech.net/
Apollo Management has agreed to make a private equity investment in California Products Corp., and its wholly-owned subsidiary Fiberlock Technologies. No financial terms were disclosed. California Products is an Andover, Mass.-based maker of architectural coatings. http://www.calprocorp.com/
Court Square Capital Partners has completed its $504 million acquisition of CompuCom Systems, a Dallas-based provider of outsourced IT services. Court Square also has acquired the managed services business of Vanguard Managed Solutions from Platinum Equity, and will merge it into CompuCom. http://www.compucom.com/
European Capital has acquired a 40% stake in DevGlass, a French manufacturer and distributor of dual-pane insulated glass for windows. DevGlass chairman and CEO Olivier Rambeau will hold the remaining 60 percent. www.ecas.com
Kotak Mahindra Bank and Newbridge Capital will not bid on a 26% stake in Industrial Finance Corp. of India, according to Dow Jones. Remaining suitors include GE Capital, Blackstone Group, Natixis, Cargill Financial Services Corp. and Infrastructure Development Finance Corp.
Proctor & Gamble (NYSE: PG) has hired Blackstone Group to advise on a possible sale of some of its brands, according to The Wall Street Journal. Possible divestitures include Duracell batteries, Pringles potato chips and Folgers and Millstone coffee brands. http://www.pg.com/
Wedbush Capital Partners has led a recapitalization of Criterion Supply Inc., a provider of floor-covering products and services to the multi-family housing industry in the Western United States. No financial terms were disclosed. Criterion CEO Cary Jackson also provided equity, while KeyBank provided leveraged financing. http://www.wedbushcapital.com/ http://www.criterionsupply.com/
MNTech Co. Ltd., a Korean manufacturer of optical films, has raised $60 million through an IPO on the Kosdaq market. Shareholders include Walden International, Hyundai Venture Investment Corp. and Kibo Technology Advancing Capital Corp. www.mntech.co.kr
Longtop Financial Technologies Ltd., a Xiamen, China-based provider of IT services for the financial services market in China, has filed for a $200 million IPO. It plans to trade on the NYSE under ticker symbol LFT, with Goldman Sachs (Asia) serving as lead underwriters. Shareholders include Tiger Global Private Investment Partners.
CVR Energy Inc., a Sugar Land, Texas-based producer of ammonia and urea-ammonia nitrate, has set its IPO terms to 18.5 million common shares being offered at between $18 and $20 per share. It would have an initial market cap of approximately $1.63 billion, were it to price at the high end of its range. The number of shares offered represents an increase from CVR’s prior filing, in which it planned to offer 15.5 million shares. It plans to trade on the NYSE under ticker symbol CVI, while Goldman Sachs and Deutsche Bank are serving as co-lead underwriters. Shareholders include Goldman Sachs and Kelso & Company.
Maxcom Telecommunications, a Mexican telecom services provider for residences and SMEs, has set its IPO terms to around 9.7 million American depository shares being offered at between $15.50 and $17.50 per share. It plans to trade on both the Mexico Stock Exchange and an undetermined U.S. exchange, with Morgan Stanley serving as lead underwriter. Shareholders include Banc of America Equity Partners.
CompBenefits Corp., a Roswell, Ga.-based provider of dental and vision benefit plans, withdrew registration papers for a $150 million IPO. The move came after the company was acquired by Humana Inc. (NYSE: HUM) for $360 million in cash. CompBenefits shareholders had included TA Associates (24.05%), GTCR (19.25%), Nautic Partners (11.49%) and Wolverine Investment (10.42%). http://www.humana.com/ www.compbenefits.com
Hubbell Inc. has acquired PCore Electric Company Inc. from DeltaPoint Capital, HSBC Capital and PCore management. No financial terms were disclosed. PCore is a LeRoy, N.Y.-based provider of high-voltage condenser bushings and related components and services to high-power transformer manufacturers. Houlihan Lokey Howard & Zukin advised the sellers. http://www.pcoreelectric.com/
Microsoft has acquired Jellyfish.com, a Madison, Wis.-based comparison shopping website. No financial terms were disclosed. Jellyfish had raised around $6 million in VC funding from firms like Kegonsa Capital Partners and Clyde Street Investments. http://www.microsoft.com/ www.jellyfish.com
HomeAway Inc., an Austin, Texas-based operator of an online vacation rentals website, has acquired Owners Direct Holiday Rentals, the second-largest vacation rental website in the UK. No financial terms were disclosed, although existing HomeAway shareholder American Capital Strategies said that it had recently invested an additional $11.5 million into the company. Other HomeAway shareholders include Austin Ventures, Redpoint Ventures, Institutional Venture Partners and Trident Capital. http://www.homeaway.com/ http://www.ownersdirect.co.uk/
Kraft Foods Inc. (NYSE: KFT) has sold its Fruit2O water and Veryfine juice brands to Sunny Delight Beverages Co., a portfolio company of J.W. Childs Associates. No financial terms were disclosed for the deal, but Kraft said that the brands had $135 million in combined 2006 sales. Childs acquired Sunny Delight in 2004 from Proctor & Gamble. http://www.jwchilds.com/
La-Z-Boy Inc. (NYSE: LZB) has completed the sale of its Clayton Marcus subsidiary to Rowe Fine Furniture Inc., a portfolio company of Sun Capital Partners. No financial terms were disclosed. Clayton Marcus is a Hickory, N.C.-based maker of mid-to-high priced upholstered furniture. http://www.claytonmarcus.com/
Market Strategies International, a Livonia, Mich.–based market research firm backed by Veronis Suhler Stevenson, has acquired Flake-Wilkerson Market Insights, a Little Rock, Ark.-based market research firm specializing in large scale customer satisfaction and loyalty assessments. No financial terms were disclosed. http://www.marketstrategies.com/ http://www.fw-mi.com/
Orion ICG, a Raleigh, N.C.-based military recruiting and consulting firm, has acquired Cumberland Therapy Services Inc., a Lawrenceville, N.J.-based provider of healthcare therapists and other professionals to state and local government facilities. No financial terms were disclosed. Orion is a portfolio company of Centre Partners. http://www.orioninternational.com/
Select Medical Corp., a Mechanicsburg, Pa.-based operator of specialty hospitals, has agreed to acquire CORA Health Services Inc., a Lima, Ohio–based outpatient medical rehabilitation company. The deal is valued at approximately $46 million, and is expected to close later this quarter. Select Medical is a portfolio company of Welsh Carson Anderson & Stowe and Thoma Cressey Bravo. http://www.selectmedicalcorp.com/ http://www.corehealth.com/
Serentis Inc., a UK drug startup formed by former Arakis Ltd. executives, has acquired Surface Therapeutics Ltd., a developer of treatments for dermatological diseases. No financial terms were disclosed. Serentis recently raised £10.3 million in Series A funding from firms like Novo AS, MVM Life Science Partners and Apposite Capital. http://www.serentis-pharma.com/
Zayo Bandwidth, a Louisville, Colo.-based regional provider of fiber-based network services, has acquired Indiana FiberWorks, operator of a fiber network that connects 21 of Indiana’s 25 largest cities. No financial terms were disclosed. Zayo recently secured access to $225 million in private equity funding, from firms like Columbia Capital, M/C Venture Partners, Oak Investment Partners, Battery Ventures and Centennial Ventures. http://www.zayo.com/ http://www.ifw.com/
Firms & Funds
Gilde Healthcare Partners has closed its second venture capital fund with €150 million in capital commitments. The fund will focus on European healthcare companies, from seed-stage through pre-IPO opportunities. http://www.gildehealthcare.nl/
Peter Cornell has agreed to join Terra Firma as managing director of stakeholder relations. He previously was a managing partner of Clifford Chance. http://www.terrafirma.com/
Braam Verster has joined Palamon Capital Partners as a vice president. He previously was with McKinsey & Co. as an associate principal in the firm’s London-based private equity practice. http://www.palamon.com/
Mark Jacobstein has joined Charles River Ventures as an entrepreneur-in-residence, focused on the digital media and consumer mobile spaces. He previously was executive vice president of corporate development and marketing with Loopt, a social mapping startup backed by Sequoia Capital and New Enterprise Associates. Before that, he was a founding member and president of publishing for mobile gaming company Digital Chocolate. http://www.crv.com/
Louis van Pletsen has joined Denham Capital as a managing director in charge of Denham’s new London office. He previously was with Nomura International as a managing director of global markets, and head of the international energy group.
ORIX Venture Finance has promoted Huck O’Connor to managing director. He joined the firm in 2005 to help establish the firm’s Washington D.C. office. www.orixventurefianance.com
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