All of today's deal and deal-maker news.
Today’s big deal is that FIS (NYSE: FIS) has agreed to acquire SunGard for approximately $9.2 billion in cash and stock from the consortium of seven private equity firms that acquired SunGard back in 2005 for $11.53 billion. SunGard had filed for an IPO earlier this year, but apparently was running a parallel process.
From the beginning, this deal was a bit of a mess. Media leaks kept forcing the private equity firms (led by Silver Lake) to raise their offer price, resulting in two firms (Carlyle and Thomas H. Lee Partners) to pull out at the very last minute (replaced by Goldman Sachs and Providence Equity Partners, which wrote $500 million checks after just a day or two of independent due diligence).
In the end, however, the participating firms should make money on SunGard (despite the top-line differential).
Here’s how the math works: The original equity outlay was around $3.5 billion. Since then, it paid out more than $700 million in dividends and spun out its disaster recovery unit (the PE firms still hold it). SunGard also sold off its higher education unit for $1.78 billion, but those proceeds were used to pay down debt. Then comes today’s $9.2 billion deal, which I’m told includes around $5.1 billion for shareholders (the result is assumed debt), broken out into $2.3 billion in cash and $2.8 billion in stock.
Taken altogether, that’s $5.8 billion on $3.5 billion, or around a 1.66x cash-on-cash return (not including the remaining value of the disaster recovery unit).
Yes, the IRR gets hammered by the 10-year hold time so far, let alone how long it will take to bleed out of the FIS stock. And we won’t really know the returns until we see where the FIS stock is eventually sold. But the worry back in 2005 (or certainly by 2008) was that many of these overpriced “Golden Age” deals would eventually collapse. This certainly isn’t a good deal by PE standards, but it’s also not the disaster that it could have (and perhaps should have) been…
• New fund alert: CAVU Venture Partners is seeking $100 million for its debut fund, according to a regulatory filing. The New York-based firm’s principals include food and beverage entrepreneurs Rohan Oza (Vitaminwater and Smartwater) and Clayton Christopher (Sweet Leaf Tea, Deep Eddy Vodka). For more on Oza, here’s a Fortune piece from last summer.
• Super secure: Cyber security startup Tanium is raising a new round of VC funding at a valuation of at least $2.5 billion, per reporting from Leena Rao and yours truly. One source even suggests the final figure could top $3 billion. It is unclear if final term sheets have been signed, but Institutional Venture Partners is said to be in the mix as a new investor. The eight year-old company previously raised around $142 million from Andreessen Horowitz, including a $52 million infusion earlier this year. Read more by going here.
Founded in 2007, Tanium has raised a total of a $142 million in funding from Andreessen Horowitz, including a $52 million round earlier this year. As Fortune reported in March, what makes Tanium unique is its ability to detect and fix enterprise security threats quickly.
• Alpha-Bits: My lingering question about the Google/Alphabet restructure is how M&A will work at Alphabet, given that it may seek to buy companies that are non-core to Google (i.e., the next Nest). David Drummond is moving over from Google to serve as Alphabet’s SVP of corporate development, but the company is not providing any other M&A staffing info at this time. For now, it appears that Alphabet is a holding company that can’t pick things up.
• Zirtual: Tomorrow I’ll delve more into the collapse of on-demand virtual assistant startup Zirtual, which now is being acquired for peanuts by Startups.co. For now, however, it looks like a massive failure of leadership by the CEO, and perhaps also by the investors (who either weren’t paying attention, or were snookered). Startup.co boss Wil Schroter tells me that Zirtual should have been a profitable company, but kept building out supply (i.e., hiring assistants) well ahead of demand, thus creating an inevitable cash crunch that could only be solved by a VC round that never arrived. Again, more tomorrow.
• Lengthy clarification: Yesterday we reported that e-commerce startup Jet.com is preparing to raise Series B funding at a valuation of between $2 billion and $3 billion. We also mentioned around a $100 million revenue run rate. On that last point, it should have said gross revenue run rate, and the more exact figure is $135 million ($125m from product sales, another $10m from an affiliate marketing program). But Jet.com isn’t actually planning to make money from sales. Rather it plans to break even on that, while making cash on its $50 per year annual memberships. Consider it more of a Costco model than an Amazon or Wal-Mart model.
Jet is said to currently have 50,000 members who have actually purchased goods through the site, one-third of whom have made multiple purchases. That sounds great, except that almost all of them are on free, three-month trials. The real questions are if Jet can hit its goal of converting between 25% and 30% of the free subscribers to paid subscribers, and how fast its subscriber base continues to grow. Either way, it’s unlikely that new Series B investors would know before they’re asked to submit term sheets.
THE BIG DEAL
• FIS (NYSE: FIS) has agreed to acquire SunGard, a Wayne, Penn.-based provider of financial services software, for $9.2 billion in cash and stock. SunGard (which recently filed for an IPO) was originally taken private in 2005 by a private equity consortium that included Silver Lake, Bain Capital, The Blackstone Group, GS Capital Partners, KKR, Providence Equity Partners and TPG Capital. www.sungard.com
VENTURE CAPITAL DEALS
• Ovid Therapeutics Inc., a New York-based developer of therapies for rare and orphan brain diseases, has raised $75 million in Series B funding. Fidelity led the round, and was joined by Sanofi-Genzyme BioVentures, Tekla Capital Management, Sphera Global Healthcare Fund, Jennison Associates, Redmile Group, Cormorant Asset Management and return backers like DoubleLine Equity Healthcare Fund. www.ovidrx.com
• G5, a Bend, Ore.-based provider of digital marketing solutions for the property management sector, has raised $76 million in new equity funding led by Peak Equity Partners. www.getg5.com
• DoubleDutch, a San Francisco-based mobile event technology company, has raised $45 million in growth equity funding. KKR led the round, and was joined by return backers like Bessemer Venture Partners and Index Ventures. A source familiar with the deal says it was done at a $200 million post-money valuation. www.doubledutch.me
• C2FO, a Fairway, Kansas-based online marketplace for working capital, has raised $40 million in private equity funding led by Temasek. Other C2FO shareholders include Union Square Ventures, Summerhill Venture Partners, OPENAIR Equity Partners, Mithril Capital and Tiger Global. www.c2fo.com
• PokitDok Inc., a San Mateo, Calif.-based online health marketplace, has raised $34 million in Series B funding, according to VentureWire. The company previously raised more than $4 million from New Atlantic Ventures, Rogers Venture Partners and Subtraction Capital. www.pokitdot.com
• VATBox, an Israel-based provider of automated VAT recovery and governance solutions, has raised $24 million in new VC funding led by Viola Private Equity. www.vatbox.com
• Checkmate Pharmaceuticals, a Cambridge, Mass.-based cancer immunotherapy startup, has raised $20 million in Series A funding from Sofinnova Ventures and venBio. The company also said that it has exclusively licensed a validated virus-like particle platform from Cytos Biotechnology Ltd (Swiss: CYTN). www.checkmatepharma.com
• Illumitex Inc., an Austin, Texas-based developer of LED lighting products, has raised $16 million in C1 funding. WP Global Partners led the round, and was joined by return backers NEA, Morgan Creek Capital, Mousse Partners, Apex Venture Partners, Jimmy Treybig, Larry Abrams, DMWMDW Interests and Syngenta Ventures. www.illumitex.com
• Fresh Dining Concepts LLC, a Delray Beach, Fla.-based franchisee of 22 Auntie Anne’s Inc. locations, has raised $9.4 million in equity and senior secured debt financing from CapitalSouth Growth Fund. www.capitalsouthpartners.com
• Inverse, a millennial male-focused media startup led by Bleacher Report co-founder Dave Nemetz, has raised an undisclosed amount of seed funding from Greycroft Partners, Crosslink Capital, Bertelsmann Digital Media Investments, Social+Capital Partnership, Rothenberg Ventures and individual angels. www.inverse.com
PRIVATE EQUITY DEALS
• ChyronHego Corp. a Melville, N.Y.-based portfolio company of Vector Capital, has acquired VidiGo, a Dutch provider of software solutions for live broadcast production workflows. No financial terms were disclosed. www.chyron.com
• Electrical Components International Inc., a St. Louis-based maker of wire harnesses for the home appliance industry a, has completed a dividend recapitalization that paid out $50 million to stockholders like KPS Capital Partners. www.ecintl.com
• Infogain, a Los Gatos, Calif.-based IT consulting firm, has raised $63 million in private equity funding from ChrysCapital. www.infogain.com
• Infor, a portfolio company of Golden Gate Capital, has agreed to acquire Oakland-based cloud software company GT Nexus from Warburg Pincus for $675 million. Read more.
• Global Blood Therapeutics Inc., a South San Francisco-based developer of drugs to treat serious blood-based disorders, raised $120 million in its IPO. The company priced 6 million shares at $20 per share (above $16-$18 range), for an initial market cap of around $556 million. It will trade on the Nasdaq under ticker symbol GBT, while Morgan Stanley and Goldman Sachs served as lead underwriters. Shareholders in the pre-revenue company include Third Rock Ventures (63% pre-IPO stake) and Fidelity (13.2%).www.globalbloodtx.com
• CSC (NYSE: CSC) has agreed to acquire Fixnetix, a UK-based provider of front-office managed trading solutions in capital markets. No financial terms were disclosed. Sellers include Delta Partners. www.fixnetix.com
• Freeman Spogli & Co. has agreed to sell Paradies, an Atlanta-based airport travel retailer, to France’s Lagardère Travel Retail, for $530 million. ww.theparadiesshops.com
• Gavea Investimentos is in talks to sell its 30% stake in Brazilian medical lab operator Instituto Hermes Pardini, according to Bloomberg. Read more.
• Tradeshift, a Copenhagen-based digital invoicing platform, has acquired Merchantry, a New York-based provider of cloud-based product information management solutions, for $30 million in cash. Tradeshift last year raised $75 million in VC funding led from Singapore’s Scentan Ventures. Merchantry had raised around $16 million from Greycroft, e.ventures and Kite Ventures. www.tradeshift.com
• Dr Pepper Snapple Group (NYSE: DPS) has agreed to acquire an 11.7% stake in Beverly Hills, Calif.-based sports drink company BodyArmor for $20 million. Read more.
• General Electric (NYSE: GE) has agreed to sell its Healthcare Financial Services business to Capital One (NYSE: COF) for approximately $9 billion. It also has agreed to sell around $600 million of HFS real estate equity investments to an undisclosed buyer. Read more.
• Intellus Holdings Inc. has acquired Classmates.com from United Online Inc. (Nasdaq: UNTD) for $30 million in cash.
• Premier Inc. (Nasdaq: PINC) has acquired Healthcare Insights LLC, a Libertyville, Ill.-based provider of financial management software for hospitals and healthcare systems, for $65 million in cash. www.hcillc.com
• Sumitomo Life Insurance has agreed to acquire Symetra Financial (NYSE: SYA), a Bellevue, Wash.-based provider of insurance and financial products, for around $3.8 billion. Read more.
FIRMS & FUNDS
• Divergent Ventures, a Seattle-based early-stage VC firm, is raising upwards of $25 million for its fourth fund, according to a regulatory filing. It already has secured $5.1 million. www.divergentvc.com
• Flexpoint Ford, a Chicago-based private equity firm focused on the financial services and healthcare industries, has closed its third fund with $950 million. It also has raised $317 million for a side fund that will invest in financial assets like loans, leases and insurance books associated with financial institutions. www.flexpointford.com
MOVING IN, UP, ON & OUT
• Bertram Capital has promoted both Tom Beerle and Tim Heston to principal. Beerle focuses on deals in the consumer sector, and sits on the boards of portfolio companies A1C, ECS Tuning, Paula’s Choice, Omnis and Spireon. Heston focuses on the industrials sector, and sits on the boards of Clarus Glassboards, Maxcess and Rowmark. www.bcap.com
• Chuck Davidson and Tony Best have joined Quantum Energy Partners as a venture partner and senior advisor, respectively. Davidson is the former chairman and CEO of Noble Energy Inc. (NYSE: NBL), while Best was president and CEO of SM Energy Co. (NYSE: SM). www.quantumep.com
• Genstar Capital, a middle-market private equity firm that just raised $2 billion for its seventh fund, has named J. Ryan Clark as firm president. He originally joined Genstar in 2004. www.gencap.com
• Steve Horkay has joined Dresner Partners as an Irvine, Calif.-based managing director and head of the bank’s PIPE transactions practice. He previously was a senior vice president with Wedbush Securities. www.dresnerpartners.com
• Max Justicz has joined UBS as a managing directors in its Americas financial sponsors group. He previously was in the same role at Goldman Sachs. www.ubs.com
• Jeff Teeven, a founding partner of Consumer Growth Partners, has been named VP of finance at CorEnergy Infrastructure Trust Inc. (NYSE: CORR). He originally joined the company last October. corenergy.corridortrust.com
• Marshall Terry has joined Rotation Capital, a New York-based alternative asset management firm backed by Platinum Equity, as a managing director, chief operating officer and chief compliance officer. He previously was COO and CCO with South Ferry Capital Management. www.rotationcapital.com
• TSG Consumer Partners has promoted Michael Layman to principal. He joined the firm in 2009, and has worked on such deals as Planet Fitness, e.l.f. Cosmetics and Popchips. www.tsgconsumer.com
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