Random Ramblings
After news broke yesterday that Verizon was buying AOL for $4.4 billion, Kara Swisher reported that AOL has been simultaneously negotiating a concurrent sale of HuffingtonPost. She wrote:
The talks have been most serious with Axel Springer, the German media conglomerate, but a number of private equity firms have also expressed interest in the high-profile property. Sources said the Huffington Post has been valued at above $1 billion in this scenario, which would either be a complete sale or, more likely, structured as a joint venture.
The idea of a strategic spinoff or partnership makes a lot of sense since Verizon is buying AOL primarily for its ad technology, not for its content. And while I could see AOL boss Tim Armstrong trying to use the specter of private equity to drive up HuffingtonPost’s value, it’s hard to imagine financial sponsors having any actual interest.
Remember, private equity typically uses leverage to buy companies, and then relies on cash-flow to cover debt interest and repayment. But HuffingtonPost is not believed to be profitable, in large part due to its international expansion efforts (AOL does not break out HuffingtonPost’s financials, which are part of its Brand Group). And an independent HuffingtonPost might need to add all sorts of back-office expenses that it currently only pays for partially via shared service arrangements.
So how exactly would private equity firms finance the deal? Sure they could slow down growth, but that would seem to defeat the value proposition of owning a growing media property.
I’ve seen some suggestions that this would be similar to later-stage financing deals for Buzzfeed or Vox Media, but those were much smaller growth equity transactions that didn’t require leverage. No growth equity firm is going to go it alone and pony up $1 billion out of its own coffers.
It's also worth noting that HuffingtonPost is unlikely to be the only AOL property up for sale. After all, what would Verizon want with something like TechCrunch is it's already dumped HuffPo?
Armstrong gave an interview yesterday to TechCrunch in which he said "TechCrunch is not getting sold off." Then again, Swisher reports that Armstrong just days ago had "denied explicitly" that AOL was in serious talks with Verizon. So if past lies are an indication of future deal-making...
As an aside, I did reach out to TechCrunch founder (and current venture capitalist) Mike Arrington to see if he'd have interest in buying back the site. His succinct reply: "No."
• Just linking around: My Fortune colleagues have been all over the AOL/Verizon deal since it was announced. Here are some links:
- Erin Griffith: Welcome to the ad business Verizon
- Stephen Gandel: Verizon is actually paying through the nose for AOL
- Christopher Matthews: Is merger a sign of an overheating economy?
- Matthew Ingram: Verizon's 'For Sale' sign on The Huffington Post
- Stacey Higgenbotham: What Verizon/AOL has to do with the Internet-of-things?
- Peter Suciu: The Verizon-AOL deal shows how much AOL has reinvented itself
- Daniel Roberts: AOL is worth barely more than Snapchat was at 2 years-old
• Everyone needs an arch-enemy: The New Yorker this week published a long profile on Marc Andreessen, which somehow managed to be fascinating despite the dozens of prior Andreessen profiles published elsewhere. It included the following line from Andreessen about rival Bill Gurley of Benchmark: “I can’t stand him. If you’ve seen ‘Seinfeld,’ Bill Gurley is my Newman.”
For starters, I think Gurley is actually closer to Bizarro Marc than Newman. Benchmark and Andreessen Horowitz are both in the same business, but operate completely differently -- with the former running exceedingly lean and the latter featuring all sorts of supplementary professionals and services.
That said, Gurley has not responded to my email request for who he views as his Newman. Come on Bill, since when have you been shy? I'll also accept your Elaine, George, Kramer or Bania...
THE BIG DEAL
• Danaher Corp. (NYSE: DGHR) has agreed to acquire Pall Corp. (NYSE: PLL) for approximately $13.8 billion (including assumed debt), or $127.20 per share (7.23% premium). Pall is a Port Washington, N.Y.-based provider of filtration, separation and purification solutions. www.danaher.com
VENTURE CAPITAL DEALS
• JHL Biotech Inc., a Taiwan-based developer of biosimilar drugs, has raised $45.6 million in Series C funding. Sungent BioVenture and Liwick Investment Management were joined by return backer Milestone Capital. www.jhlbiotech.com
• Instart Logic, a Palo Alto, Calif.-based cloud application delivery provider, has raised $43 million in new VC funding. Four Rivers Group and Hermes Growth Partners co-led the round, and were joined by return backers Andreessen Horowitz, Kleiner Perkins Caufield and Byers, and Tenaya Capital. www.instartlogic.com
• Actiance, a Redwood City, Calif.-based provider of compliance, security, archiving and e-discovery solutions for business communications, has raised $28 million in new financing. Golub Capital led the round, and was joined by return backers investors Credit Suisse NEXT Investors, JK&B Capital, Scale Venture Partners and Sutter Hill Ventures. www.actiance.com
• Jumpshot, a San Francisco-based marketing analytics platform, has raised $22 million in Series A funding from Avast Software. www.jumpshot.com
• Credit Sesame, a Sunnyvale, Calif.-based company that helps consumers optimize their debt, has raised $16 million in Series D funding. Syncora Alternative Investments led the round, and was joined by IA Capital Partners and return backers Menlo Ventures, IA Capital, Globespan Capital Partners and Inventus Capital. www.creditsesame.com
• Kapost, a Boulder, Colo.-based marketing content engine, has raised $10.25 million in new VC funding. Access Venture Partners, Cue Ball Capital, Iron Gate Capital and Salesforce Ventures were joined by return backers Lead Edge Capital and High Country Ventures. www.kapost.com
• DocPlanner, a Polish online platform for booking medical appointments, has raised $10 million in Series B funding. The European Bank for Reconstruction and Development led the round, and was joined by return backers Point Nine Capital, Piton Capital and RTAventures. Read more.
• EduK, a Brazilian online education service, has raised $10 million in new funding led by Accel Partners. Read more.
• The Muse, a website that offers career advice to millennials, has raised $10 million in Series A funding. Aspect Ventures led the round, and was joined by QED Ventures, Nancy Pfund, Tyra Banks, Cathie Black, Great Oaks Ventures, Alexis Ohanian, Anjula Acharia-Bath, Chris Herrmannsen and Mike Goldstein. Read more.
• Talkspace, a Pine Plains, N.Y.-based web and mobile platform that connects people with licensed therapists for online therapy, has raised $9.5 million in Series A funding. Spark Capital and SoftBank Capital were joined by return backers Metamorphic Ventures and TheTime. www.talkspace.com
• Vested Finance, an Austin, Texas-based fintech startup focused on equity financing for higher education, has raised $5 million in seed funding led by Sandleigh Ventures. www.vestedfinance.com
• IEX, a New York-based equities marketplace founded by Brad Katsuyama, has raised an undisclosed amount of funding from Sapphire Ventures. IEX was founded www.iextrading.com
PRIVATE EQUITY DEALS
• Advent International has submitted a binding offer to acquire Ammeraal Beltech, a Dutch provider of light-weight process and conveyor belting, from Gamma Holding, a portfolio company of Gilde Buy Out Partners and Parcom Capital Management. No financial terms were disclosed for the deal, which cannot be formalized until employee unions have consented. Ammeraal Beltech generated around €325 million in 2014 revenue. www.ammeraalbeltech.com
• Antin Infrastructure Partners has agreed to acquire Dutch fiber optic network operator Eurofiber from Doughty Hanson for €875 million. The deal is expected to close by the end of June. www.eurofiber.com
• The Blackstone Group and PAG Asia Capital are among the likely bidders for Japanese property asset manager Simplex Investment Advisors, which is being sold by Aetos Capital for around $1.25 billion, according to Reuters. Japanese property group Hulic Co. also is among potential suitors. Read more.
• Centerbridge Partners has completed its previously-announced acquisition of U.S. indoor water park operator Great Wolf Resorts Inc. from Apollo Global Management for $1.35 billion (including debt). www.greatwolf.com
• Ncontracts, a Brentwood, Tenn.–based provider of vendor compliance and contract management software and services, has secured a “significant growth equity investment” from Mainsail Partners. No financial terms were disclosed. www.ncontracts.com
• Standard Chartered Private Equity has led an investor consortium that is investing $175 million for a minority equity stake in FINE, a Jordanian tissue paper manufacturer focused on the Middle East and North Africa markets. Read more.
• STATS LLC, a Chicago-based portfolio company of Vista Equity Partners, has acquired TVT Video Technologies Inc., a Hillsboro, Ore.–based provider of video technology and engineering for baseball and ice hockey. No financial terms were disclosed. www.stats.com
• Vintage Italia, a Windermere, Fla.-based maker of pasta chips, has secured an undisclosed amount of growth equity funding from Silas Capital, via the CircleUp marketplace. www.pastachips.com
• Webster Capital has acquired an undisclosed stake in Canadian active apparel company Mondatta Canada Inc. No financial terms were disclosed. www.mpgsport.com
• Woodland Midstream LLC, a natural gas midstream company focused on Eastern Texas and bordering states, has been formed via a $40 million equity commitment from EIV Capital. www.eivcapital.com
IPOs
• Glaukos Corp., a Laguna Hills, Calif.-based developer of implants to treat glaucoma, has filed for an $86.25 million IPO. It plans to trade on the NYSE under ticker symbol GKOS, with J.P. Morgan, BofA Merrill Lynch and Goldman Sachs serving as lead underwriters. The company reports a $14 million net loss on $45.5 million in revenue for 2014, compared to a similar net loss on $21 million in revenue for 2013. Shareholders include Montreux Equity Partners (13.5% pre-IPO stake), Versant Ventures (12.9%), Domain Associates (12.5%), Meritech Capital Partners (12.5%), OrbiMed Advisors (12%), Frazier Healthcare (10.7%) and InterWest Partners (10.7%). www.glaukos.com
EXITS
• Great Hill Partners has sold Credibility Corp., a provider of credit and credibility management solutions, to Dun & Bradstreet (NYSE: DNB). The deal is valued at upwards of $350 million, including a $320 million upfront cash payment. www.dandb.com
• PAI Partners is pursuing a dual exit process for airplane cargo handler Swissport, which it hopes to either sell or take public by year-end, according to Reuters. The company could be valued at nearly $4 billion. Read more.
• Providence Equity Partners has agreed to sell Virtual Radiologic Corp., an Eden Prairie, Minn.–based provider of radiology physician services and telemedicine services, to • (NYSE: MD) for $500 million. Providence had paid around $280 million to acquire the company five years ago. www.vrad.com
OTHER DEALS
• General Electric (NYSE: GE) is seeking buyers for its $5 billion Japanese commercial finance business, according to the WSJ. Read more.
FIRMS & FUNDS
• Clearlake Capital expects to hold a first close on its fourth private equity fund on around its $1 billion target within the next month, according to LBO Wire. www.clearlakecapital.com
• FGI, a New York-based commercial finance company, has launched FGI Equity to make both minority and majority investments in middle-market growth companies. It will be led by new managing director Harriette Terbell, who previously founded Terbell Partners and was a general partner with Alsacia Venture Investments. www.FGIWW.com
• MPM Capital, a Boston-based investment firm focused on the life sciences market, has closed its sixth early-stage VC fund with $400 million in capital commitments, according to Dow Jones. www.mpmcapital.com
MOVING IN, UP, ON & OUT
• Art Coviello has joined Rally Ventures as a venture partner. He previously was executive chairman of RSA, the security division of EMC. www.rallyventures.com
• Fort Point Capital, a Boston-based private equity firm, has promoted Christina Pai from principal to partner. She joined the firm in 2011 from Swift River Investments. www.fortpointcapital.com
• Saguna Malhotra has joined Adams Street Partners as a Menlo Park-based partner and member of its primary investment team. She previously was managing director for private equity with Stanford Management Co. www.adamstreetpartners.com
Share today's Term Sheet:
http://fortune.com/newsletter/termsheet