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Term Sheet — Friday, November 7

Random Ramblings

Carl Icahn was right about Dell.

That’s the sentiment I saw filtering through my Twitter feeds yesterday, following a Bloomberg story about how the tech giant is now valued 90% higher than when Michael Dell and private equity firm Silver Lake bought the company last year for $24.9 billion. Icahn, as you might recall, argued that the valuation was absurdly low, and that Michael Dell was trying to “steal” his eponymous company. Nearly a 2x paper return in 12 months looks a lot like vindication.

But here’s the thing that’s missing in this knee-jerk analysis: Carl Icahn didn’t want Michael Dell to stick around.

In March 2014, Icahn announced plans to nominate a new slate of directors for Dell and that, if successful, Michael Dell would not be kept as CEO. A few months later, he added the following: “Very often the founder of the company should not be running it later when it matures and I don’t think he has done a good job and I think the board has been asleep on the switch. They should have held him accountable years ago.”

To be sure, Icahn wasn’t alone in wanting a change at the top. The Blackstone Group, which made a rival bid for Dell that it ultimately dropped, reached out to both Mark Hurd of Oracle and Michael Capellas (ex-CEO of both Compaq and First Data) about their interest in the job. But it is difficult to claim that Dell’s 90% valuation increase would have been identical with a different CEO. Unless Icahn and Blackstone would argue that the valuation would be even higher — a belief that was not reflected in either of their proposed valuations at the time.

As I wrote earlier this week, it is far too early to tell if Dell has really experienced a fundamental fix, or if its valuation is just riding the bull market wave like everyone else. But if it’s fixed, then Michael Dell would seem to deserve some of the credit. And if it only is worth more today because of macro conditions, then Icahn isn’t vindicated. At least not yet.

• Deal data: Global M&A volume for 2014 is now at $2.89 trillion, which is up 47% over 2013 year-to-date, according to Thomson Reuters. U.S. M&A is up 53% over last year, while global private equity volume is up 41% to $459 billion. Private equity volume in the U.S., however, is up just 19% to $217 billion.

• Feedback: Just interested to hear if any readers believe that this week’s election results will have any tangible impact on their business (whether investment or operating). If you have thoughts on the matter, please send them my way. Taxes, immigration, regulation, etc…

• Have a great weekend…


• Cott Corp. (NYSE: COT) has agreed to acquire DSS Group Inc., an Atlanta–based provider of direct-to-consumer bottled water and coffee products, from Crestview Partners for approximately $1.25 billion.


• Powa Technologies PLC, a UK-based provider of ecommerce shopping cart solutions, has raised $80 million in new VC funding from existing shareholder Wellington Management, according to VentureWire.

• Fyndiq, a Swedish online marketplace for end-of-run goods, has raised $20 million in VC funding led by Northzone Ventures. Read more.

• Vicarious, a Union City, Calif.-based artificial intelligence research company, has raised $12 million in new VC funding from ABB. Other companies shareholders include Good Ventures, Founders Fund, and Open Field Capital.

• Highspot, a Seattle-based sales engagement platform, has raised $9.6 million in Series A funding led by Madrona Venture Group.

• Tolero Pharmaceuticals Inc., a Salt Lake City-based developer of treatments for oncology and hematologic diseases, has raised $8.2 million in new Series B funding led by existing backer Fred Alger Management. The round total is now $22.4 million, including a previous tranche that closed in August.

• Confluent, an open-source infrastructure startup formed by the LinkedIn engineers who created Apache Kafka, has raised $6.9 million in first-round funding. Benchmark led the round, and was joined by DataCollective and LinkedIn. Read more.

• Creditera, a San Mateo, Calif.-based provider of business credit monitoring services, has raised $6.5 million in Series A funding from Kleiner Perkins Caufield & Byers.

• MyTomorrows, an Amsterdam-based “pioneering healthcare platform that facilitates patient access to experimental treatments,” has raised €4.5 million in first-round funding co-led by Balderton Capital and Sofinnova Partners.

• Zen99, a San Francisco-based provider of tax and insurance tools for independent workers, has raised $2.5 million in seed funding. Backers include Upside Partnership, Collaborative Fund, Y Combinator, SV Angel and CrunchFund.

• Cloud9, an Amsterdam-based provider of a cloud-based development environment, has raised an undisclosed amount of VC funding from Balderton Capital. It is the first deal for Balderton partner Suranga Chandratillake (ex-Autonomy, BlinkX), who joined the firm back in January. Existing shareholders include Accel Partners and Atlassian.

• Electrochaea, a German developer of power-to-gas technologies, has raised “several million euros” in Series A funding. Backers include Munich Venture Partners, B-to-V, Caliza Holding, Focus First, KfW and Sirius Venture Partners.


• Advent International and Avista Capital Partners have agreed to acquire Kremers Urban Pharmaceuticals Inc., a Princeton, N.J.–based generic pharma group, from UCB (Brussels: UCB)  for $1.525 billion.

• Apollo Global Management, BC Partners, Clayton Dubilier & Rice and KKR have been invited into the second round of bidding for retailer PetSmart Inc., according to the WSJ. PetSmart has a current market cap of around $7 billion. Read more.

• Astrodyne Corp., a Mansfield, Mass.-based portfolio company of Audax Group, has acquired TDI Power, a Hackettstown, N.J.-based maker of power supplies and systems for the semiconductor, industrial and medical markets. No financial terms were disclosed.

• Athletico Physical Therapy, an Oak Brook, Ill.-based portfolio company of Harvest Partners, has agreed to acquire Chicago-based Accelerated Rehabilitation Centers from OMERS Private Equity. The combined business will have 336 physical therapy centers in eight states. No financial terms were disclosed.

• Bain Capital and The Blackstone Group each are considering final bids by today’s deadline for the chemicals business of Orica Ltd. (ASX: ORI), according to Bloomberg. The unit may be worth around A$1 billion. Read more.

• BlackRock and KKR have partnered to acquire a majority stake in Home Partners of America Inc., a single-family home rental company that had been controlled by Lew Ranieri, according to Bloomberg. No financial terms were disclosed. Read more.

• Crestview Partners and B-29 Investments have partnered to form Endurance Lift Solutions, an acquisition platform focused on the artificial lift industry. The firms have committed up to $200 million in equity.

• Global Healthcare Exchange, a Louisville, Colo.-based provider of supply chain solutions, has agreed to acquire Vendormate, an Atlanta-based provider of vendor relationship management software. No financial terms were disclosed. GHX is a portfolio company of Thoma Bravo.

• Kohlberg & Co. has agreed to acquire PPC Industries Inc., a Pleasant Prairie, Wis.-based provider of engineered specialty plastics for applications in niche segments of the medical, food and industrial markets. No financial terms were disclosed, except that GE Antares arranged a $160 million senior secured credit facility. The seller was AEA Investors.

• Southcross Holdings LP has secured a $210 million preferred equity commitment from Energy Capital Partners Mezzanine Opportunities Fund and GE Energy Financial Services. Southcross Holdings owns 100% of the general partner of Southcross Energy Partners LP (NYSE:SXE), some LP stakes and several Eagle Ford based midstream assets.

• TPG Capital has agreed to acquire Italian-themed casual dining chain Prezzo (AIM: PRZ) for £304 million.


• Three companies have postponed IPOs that had been expected to price this week: Jaguar Animal Health, Radius Bancorp and Sky Solar. • Coherus BioSciences Inc., a Redwood City, Calif.-based biologics platform company focused on biosimilars, raised $85 million in its IPO. The company priced 6.3 million shares at $13.50 per share (middle of range), for an initial market cap of around $433 million. It will trade on the Nasdaq under ticker symbol CHRS, while J.P. Morgan and Credit Suisse served as lead underwriters. Coherus reports a $50.2 million net loss on $8.6 million in revenue for the first half of 2013, and had raised around $100 million in VC funding, from firms like Lilly Ventures (11.17% pre-IPO stake), KKR (9.67%), Sofinnova Ventures (8.28%), Venrock (7.65%), RA Capital Management, Rock Springs Capital, Fidelity Biosciences and Vivo Capital.

• Freshpet Inc., a Seacaucus, N.J.-based provider of refrigerated pet foods, raised $156 million in its IPO. The company priced 10.4 million shares at $15 per share (above $12-$14 range), for an initial market cap of $499 million. It will trade on the Nasdaq under ticker symbol FRPT, while Goldman Sachs and Credit Suisse served as lead underwriters. Freshpet reports an $11 million net loss on nearly $40 million in revenue for the first half of 2014, compared to a $10 million net loss on nearly $29 million in revenue for the year-earlier period. Shareholders include MidOcean Partners and Tyson Foods.

• James River Group Holdings, a Bermuda-based group of specialty insurance and reinsurance companies, has filed for a $287.5 million IPO. It plans to list on the Nasdaq under ticker symbol JRVR, with Keefe Bruyette & Woods serving as lead underwriter. Shareholders include D.E. Shaw (72.6% pre-IPO stake) and Goldman Sachs (26.3%).

• Rice Midstream Partners, a limited partnership formed by Rice Energy (NYSE: RICE) to own midstream gas assets in the Marcellus Shale, has filed for a $425 million IPO. It plans to trade on the NYSE under ticker symbol RMP, with Barclays listed a sole underwriter.

• Triumph Bancorp, a Dallas-based bank with $1.4 billion in AUM, raised $80 million in its IPO. The company priced 6.7 million shares at $12 per share (below $14-$16 range), for an initial market cap of approximately $199 million. It will trade on the Nasdaq under ticker symbol TBK, with Sandler O’Neill, Evercore and Wells Fargo serving as lead underwriters.

• Upland Software Inc., an Austin, Texas-based provider of enterprise work management applications, raised $46 million in its IPO. The company priced around 3.85 million shares at $12 per share (low end of $12-$14 range), for an initial market cap of around $172 million. It began trading on the NYSE under ticker symbol UPLD, while William Blair and Raymond James served as lead underwriters. Upland reports a $15 million net loss on around $32 million in revenue for the first half of 2014. Shareholders include ESW Capital (24.5% pre-IPO stake), Austin Ventures (19.9%) and Activant Capital (7%).


• Bain Capital sold nearly a 4% stake in listed Indian motorcycle maker Hero MotoCorp for around $400 million via a private placement, according to Reuters. Bain would continue to hold just north of 1.5% in the business. Read more.

• The Riverside Co. has agreed to sell AERCO International Inc., a Blauvelt, N.Y.–based maker of commercial boilers and water heaters, to Watts Water Technologies (NYSE: WTS) for an undisclosed amount.

• Waterland Private Equity Investments has agreed to sell Belgium-based OTC drug company Omega Pharma NV to Perrigo Co. (NYSE: PRGO) for €3.6 billion. Read more.

• Vonage Holdings Corp. (NYSE: VG) has agreed to acquire Telesphere Networks Ltd., a Scottsdale, Ariz.–based provider of unified-communications-as-a-service solutions to small and mid-sized businesses, for $114 million in cash and stock. Sellers include G.C. Investments, Hawkeye Capital Management and Rally Capital.


• Brookfield Infrastructure (NYSE: BIP) has agreed to acquire a 50% stake in the French communication tower infrastructure business TDF at an enterprise value of approximately €1.78 billion. The other 50% would be acquired by other, unidentified, transaction partners.


• Permal Capital is raising up to $500 million for its fifth private equity secondaries and fund-of-funds vehicle, according to a regulatory filing.

• Venture Investment Associates has closed its latest fund-of-funds focused on seed-stage funds. Read more.


• Goldman Sachs has named Ryan Limaye as head of software investment banking. He also will continue to serve as head of communications technology banking. Read more.

• Paul Lee has stepped down as a partner with Chicago-based venture firm Lightbank, in order to launch a “stealth venture” about which he will not yet disclosed details. In related news, Lightbank has promoted  Bill Pescatello to partner. Read more.

• Eric London has joined WL Ross & Co. as a senior director. He previously spent seven years in Credit Suisse’s Customized Fund Investment Group.

• Lucian Wu has joined Auda International as a Hong Kong-based managing director. He previously spent six years as a managing director with Paul Capital.

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