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Term Sheet — Friday, January 8

Random Ramblings

Can you make an introduction to El Presidente?

That was the request made around six months ago by Mike Kerns to the agent for Jared Lorenzen, a former NFL quarterback and contributor to Barstool Sports, the controversial website led by Dave Portnoy (known to the site’s fans as El Presidente). Lorenzen obliged, and Kerns ― head of digital for PE-backed media and technology firm The Chernin Group ― soon was on a flight from San Francisco to Boston, to have dinner with someone who he kept coming across via Twitter.

“Both myself and [Chernin Group president] Jesse Jacobs are sports fans, and thought the Barstool guys had a good sense of humor,” Kerns says. “I reached out to better understand his vision for the future, and to see if he’s the type of person we’d want to work with.”

For Portnoy, this was hardly the first time he had been approached by someone with deep pockets. And he had always said “no,” concerned that outside investors would meddle with the site’s editorial content. Lorenzen, however, was a “warm introduction.”

“We weren’t looking for an investment, and I had said that I’d never do a deal unless it was so much money that I could just go live on an island,” Portnoy explains. “But Mike and Chernin Group are the first ones that I felt totally understood the brand and liked us with all of the warts.”

The two sides yesterday announced a deal whereby Chernin Group acquired a majority stake in Barstool Sports for an undisclosed amount, with Portnoy retaining 100% editorial independence. Barstool also will consolidate its geographically-disparate staff in Manhattan, which actually was Boston-based Portnoy’s idea.

“I believe that, in order to take the next step, we should all be working together in the same place,” Portnoy says. “And I had a couple of guys in New York who were more entrenched, with family and stuff, so I’m moving… I love Boston, but it’s a smaller city for the personalities and video and the other stuff we want to incorporate.”

For Portnoy, the deal is a chance to significantly upgrade Barstool. Owing largely to its lack of outside investment, the company doesn’t currently employ anyone who has ever written a line of code, let alone formal product managers (Portnoy also acknowledges that his focus on profit over revenue likely cost him on valuation, which he put at between $10 million and $15 million).

For Chernin Group, this is an opportunity to keep building out its digital footprint by partnering with unique content providers. “This is one of the rare digital media companies with engagements analogous only to messaging apps and fantasy sports,” Kerns says. “The fact that they have that sort of engagement with their audience without any log-in is amazing.”

That said, it wasn’t always a slam dunk. That engagement is known to sometimes go to some pretty dark places, including misogynistic harassment of those who raise the ire of Barstool readers. In fact, Chernin Group even briefly discussed holding off on yesterday’s announcement after Sports Illustrated published a piece about one such incident (Barstool’s website has already added the critique’s headline ― which suggests the company “weaponizes social media” ― next to its logo). Portnoy, for his part, said he’d never “let someone… ruin this moment for us, but it does stink that they’ve gotten intertwined.”

Kerns acknowledges that Barstool has been offensive to many in the past, and that Portnoy’s continuing editorial control means it is almost certain to offend in the future:

“We certainly understand that there’s an element of controversial topics and off-color content and programming… and we talked a lot about it. So there is certainly an element that isn’t going to be for everyone… But our general point of view is that a lot of the most unappealing and insensitive comments brought up in the Sports Illustrated piece were from commenters on both the site and on Twitter. You can go to any link at most any website that has a story about Donald Trump or Ted Cruz and find offensive stuff in the first hundred comments. Let alone on Twitter, Reddit or Tumblr.”

Even if Kerns ― who will sit on the Barstool board along with Jacobs ― knows what he’s getting right now, there is a big question as to whether or not his new investment can achieve its ultimate vision: To become a top comedy brand.

The Chernin Group’s bet here is that Barstool is much more about sensibility than sports, as evidenced by the company’s announcement video.

“In the past, you’d send your resume to SNL or work for an alternative newspaper,” says Portnoy, who adds that he’s unlikely to spend his evenings recruiting at the Comedy Cellar. “We’ve found that standup doesn’t really equate to the type of comedy we’re looking for. When I think about some of our best guys, one was doing real estate, another was doing accounting. I’m not convinced there’s a ‘right’ background, but I do know that there’s a lot of talent out there. We want that next generation here with us.”

• Have a great weekend…

THE BIG DEAL

• Nexstar Broadcasting Group (Nasdaq: NXST) has agreed to acquire Media General (NYSE: MEG) for $2.3 billion in cash and stock, but the deal would be contingent on Media General terminating a $2.4 billion agreement to purchase magazine publisher Meredith Corp. (NYSE: MDP). For its part, Meredith is demanding new concessions to let Media General out of its deal. Read more.

VENTURE CAPITAL DEALS

• MakeMyTrip, an India-based online travel booking service, has raised $180 million in equity funding from Chinese peer Ctrip (Nasdaq: CTRP). The deal gives Ctrip up to a 26.6% ownership stake in MakeMyTrip, plus a board seat. Read more.

• Zymeworks Inc., a Vancouver-based developer of bi-specific antibodies and antibody drug conjugates for the treatment of cancer, autoimmune and inflammatory diseases, has raised US$61.5 million in new Series A funding. BDC Capital and Lumira Capital co-led the round, and were joined by Perceptive Advisors, Teralys Capital, Northleaf Venture Catalyst Fund, Brace Pharma Capital, Merlin Nexus and return backers Eli Lilly & Co., Celgene, CTI Life Sciences Fund, and the Fonds de solidarité FTQ. Zymeworks also has made a strategic equity investment in Kairos Pharmaceuticals, a spinout from The Centre for Drug Research and Development, which includes a future merger option. www.zymeworks.com

• Exosome Diagnostics, a New York-based developer of fluid-based molecular diagnostics, has raised $33 million in new Series B funding (bringing the round total to $60m, including a first close in 2014). Backers include Forbion Capital Partners, NGN Capital, and CD Ventures, as well as new investors, Qiagen, Arcus Ventures, Tiger Management and Blue Ridge Capital. www.exosomedx.com

• Aver Inc., a Columbus, Ohio-based provider of a data management platform for the healthcare reimbursement process, has raised $13.6 million in new VC funding. Heritage Group led the round, and was joined by Cardinal Health, GE Ventures, Hearst Health Ventures, NCT Ventures and StartUp Health. www.aver.io

• PierianDx, a St. Louis-based provider of genomic software and services for personalized medicine development, has raised $9.25 million in Series A funding. Health Catalyst Capital Management led the round, and was joined by Ocean Road Advisors, Inova Translational Medicine Institute and ARUP Laboratories. www.pieriandx.com

• ASLAN Pharmaceuticals, a Singapore-based developer of immunotherapies and targeted agents for Asia prevalent tumor types, has raised $9 million in new VC funding from MVP Capital Partners. This brings the round total to $43 million, including a December first close led by Accuron Technologies Ltd., a wholly-owned subsidiary of Temasek Holdings. www.aslanpharma.com

• Deposit Solutions GmbH, a Germany-based open-architecture platform for retail deposits in Europe, has raised €6.5 million in new VC funding. FinLab AG led the round, and was joined by Peter Thiel, e.ventures, Stefan Wiskemann, Stefan Glänzer and Christoph Linkwitz. www.deposit-solutions.de

• Cloud Elements, a Denver-based provider of a cloud-based API platform, has raised $5 million in new Series A funding from firms like Access Venture Partners. www.cloud-elements.com

• Dibs Technology Inc., a New York-based provider of dynamic-pricing technology for the fitness club market, has raised $1 million in seed funding. Gree Ventures led the round, and was joined by Comcast Ventures’ Catalyst Fund, Caerus and Dreamit Ventures. www.ondibs.com

PRIVATE EQUITY DEALS

• ArcLight Capital Partners has agreed to acquire TransMontaigne GP LLC, an energy terminaling and transportation company, from NGL Energy Partners LP (NYSE: NGL) for $350 million in cash. www.transmontaignepartners.com

• Consonance Capital Partners has sponsored a recapitalization of Bako Integrated Physician Solutions, an Alpharetta, Ga.-based provider of specialty lab testing services. No financial terms were disclosed for the deal, which was done in partnership with company founder and CEO Brad Bakotic. www.bakocts.com

• H.I.G. Capital and Prudential Capital are sponsoring a management carve-out of Salary.com, an online portal for salary and compensation data, from IBM (NYSE: IBM). No financial terms were disclosed. Read more.

• MTS Health Investors has made a “strategic equity investment” in HCAA, a Nashville, Tenn.-based provider of offshore clinical resources to U.S. healthcare companies. No financial terms were disclosed. www.hccahc.com

• Paradigm Window Solutions, a Portland, Maine-based vinyl window manufacturer, has raised an undisclosed amount private equity funding led by CapitalWorks. Ironwood Capital also provided equity co-investment and subordinated debt, while Texas Capital Bank provided senior debt.
www.paradigmwindows.com

• Rizk Ventures has acquired Workforce Prescriptions, a Tampa, Fla.-based provider of SaaS solutions for hospitals that want to decrease costs and improve outcomes without cutting staff. No financial terms were disclosed. www.rvanalytics.org

• Sun Capital Partners has acquired Finlays Horticulture Holdings, a UK-based grower, seller and distributor of cut flowers and fresh vegetables, from a subsidiary of John Swire & Sons Ltd. No financial terms were disclosed. www.suncappart.com

IPOs

• OTG EXP Inc., a New York-based airport restaurant operator with 220 locations across 10 airports, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol OPG, with Morgan Stanley and Credit Suisse serving as lead underwriters. The company reports a $116 million net loss on $285 million in revenue for the 39 weeks ending on Sept. 27, 2015.

• Saudi Aramco, a state-owned oil producer in Saudi Arabia, reportedly is considering an IPO that could value the company at trillions of dollars. Read more.

EXITS

• Apple (Nasdaq: AAPL) has acquired Emotient, a San Diego-based artificial intelligence startup that analyzes people’s faces to learn their emotional state. No financial terms were disclosed. Sellers include Intel Capital. Read more.

• Conmed Corp. (Nasdaq: CNMD) has completed its previously-announced acquisition of SurgiQuest Inc., a Milford, Conn.-based maker of technologies for minimally-invasive surgery, for $270 million in cash. In related news, SurgiQuest has withdrawn its IPO registration. Surgiquest reported a $15 million net loss on $35 million in revenue for the first nine months of 2015. Sellers included CMEA Capital (27.9% stake), River Cities Capital (10.9%), Fletcher Spaght Ventures (10.5%), California Technology Ventures(10.5%) and Mosaix Ventures (6.5%). www.surgiquest.com

• HealthpointCapital has sold Blue Belt Holdings, a Plymouth, Minn.-based provider of robotic-assistance instruments for unicondylar or partial knee replacement surgery, to Smith & Nephew (LSE: SN) for approximately $275 million in cash. www.bluebelttech.com

• Hudson’s Bay Co. (TSX: HBC), the parent company of Saks Fifth Avenue, confirmed that it has acquired luxury goods e-commerce site Gilt Groupe for $250 million in cash. Gilt had raised more than $280 million in funding from firms like General Atlantic, Goldman Sachs, NEA, Matrix Partners, DFJ, Pinnacle Ventures and SoftBank Capital. Gilt was valued at nearly $1 billion by its investors in 2010, and raised a down-round last year at around a $746 million post-money valuation. Read more.

• Novacap has agreed to sell Fibrenoire, a provider of fiber optic connectivity services for businesses in Quebec and Ontario, to Videotron, a subsidiary of Quebecor (TSX: QBR). The deal is valued at C$125 million. www.quebecor.com

• TorQuest Partners has sold Pinova Holdings Inc., a Brunswick,, Ga.-based provider of specialty chemicals manufactured from natural and renewable feedstocks, to Germany’s Symrise AG for $417 million. www.pinovaholdings.com

OTHER DEALS

• Laurus Corp., a real estate investment and development firm, has acquired Vail Cascade Resort and Spa. No financial terms were disclosed. Seller Destination Hotels will continue to manage and operate the property, which is about to undergo a $35 million renovation. www.lauruscorporation.com

• Luma, an Atlanta-based maker of WiFi routers, has acquired Nodal Industries, an Internet of Things security startup. No financial terms were disclosed. Luma has raised seed funding from Felicis Ventures, Relay Ventures and Webb Investment Network. Read more.

FIRMS & FUNDS

• American Capital Ltd. (Nasdaq: ACAS) said that it has completed the initial phase of a previously-announced strategic review, and has concluded that it will solicit offers to purchase the company (or its various business lines). Goldman Sachs and Credit Suisse will manage the process. www.americancapital.com

• Half Dome Ventures has launched as a Park City, Utah-based family office vehicle for private equity and real estate investments. Its founder is Nick Hatch, who previously was a partner with private equity fund placement firm Harken Capital.

• Hamilton Lane has secured $240 million in capital commitments for its fourth private equity secondaries fund, according to a regulatory filing. The total target reportedly is $1.25 billion. www.hamiltonlane.com

• Insignia Capital Group, a Walnut Creek, Calif.-based middle-market private equity firm focused on the consumer, healthcare and businesses services sectors, has closed its debut fund with $358 million in capital commitments. Insignia’s founders are: David Lowe (co-founder of Friedman Fleischer & Lowe), Mel Deane (former operating partner at FFL) and Tony Broglio (former principal at Lake Capital). www.insigniacap.com

Moving In, On & Up

• BlackArch Partners, a middle-market investment bank, has promoted Johnny Conklin to managing director and Ryan Jackson to vice president. www.blackarchpartners.com

• Irena Blind has joined private equity firm TSG Consumer Partners as a principal. She previously was a senior VP or retail and consumer investment banking at Raymond James. www.tsgconsumer.com

• Michael Bonney has joined Third Rock Ventures as a partner. He previously was CEO of Cubist Pharmaceuticals Inc., which was recently acquired by Merck & Co. for $7.8 billion in cash. www.thirdrockventures.com

• Tara Gadgil has joined Thoma Bravo as a vice president, after having spent the past two years as a VP with Berkshire Partners. Thoma Bravo also said that it has promoted A.J. Rhode to partner and Andrew Almeida to vice president. www.thomabravo.com

• Anthony Heckman and Jorge Mendez have joined Kapor Capital as an associate and analyst, respectively. Heckman previously was with law firm Cooley LLP, while Mendez was with SunTrust Robinson Humphrey. www.kaporcapital.com

• Luis Gonzalez has joined New MainStream Capital as a managing director, with a focus on investment opportunities in the healthcare services space. He previously was a managing director with MBF Healthcare Partners. www.nms-capital.com.

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