Professional Documents
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From:
"Dan Primack"
Name:
Dan Primack
Email Address:
Dan_Primack@fortune.chtah.com
Subject:
Date:
02-11-2010 14:22:51
Message
Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington
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the low low rates will likely continue after the Feds two-day meeting ends tomorrow. It seems
that there will be no end in sight to cheap money, which will encourage leverage and push deal
prices ever higher. Sound familiar? But for the companies that are being bought with
increasingly large debt loads, have they truly recovered from the recession? Do they generate
enough cash to handle the leverage if the economy slows down? How much does that matter if
the market is flush with cheap money?
Random ramblings:
** Maybe I'm not convinced that gridlock, er, I mean Congressional certainty, is the
necessary tonic for Wall Street. Lets note that deals made a huge comeback this year despite all
the uncertainty, and that the M&A machine was firing on all cylinders long before we had
government clarity in the form of a lame duck Congress. When asked whether the finance
industry would prefer complete certainty of a fully-formed progressive plan for taxes, the
economy, and financial regulation, versus volatility and uncertainty, I didn't get a lot of votes for
certainty.
*** Election loose change: A whopping $4 billion-plus has been spent on the campaigns for
this midterm election, much more than the 2006 midterm ($2.85 billion), according to the
Center for Responsive Politics. The total could even top 2004 presidential election spending,
which came in at $4.14 billion. Of course, thats small change to candidates like Mitt Romney
and Mike Bloomberg Also, will California Prop 19 be a good or bad investment for George
Soros? With a record 46% of Americans in support of legislation to legalize it, who knows
**** Buyout firms are slowly hiring again and salaries are ticking higher, says a study
conducted by Dow Jones and Glocap Search. Some 37% of the 145 firms surveyed by Dow
Jones and Glocap said that they plan to add non-partner employees this year, up from 24% in
2009. Just 13% of buyout shops plan to bring on partners this year, about the same as in 2009.
As for compensation, 38% of firms will increase partner compensation this year, up from 24% in
2009; and about 50% of buyout firms will raise pay for non-partners, up from 43% in 2009. The
breakdown: a partner will average $1.5 million in salary and bonus; associates will earn just
over $200,000.
***** Watching Blackstone and Dynegy. Heres one cynics take on the debate:
Blackstone wants to lever up the company and suck out dividends in a 2006-07-style mega-LBO,
but not pay shareholders the 2006-07 premium for the privilege of strapping the business with
unrealistic amounts of debt. Okay, thats one guys opinion
******Am I happy for the legions of Giants fans that fell asleep last night in beer-soaked
jerseys? Yes. But are you real fans if youre not willing to destroy your own city in celebration of
a big big win? (see Phillies, Philadelphia, Red Sox, Boston). No. No you are not.
Have a great day and remember to vote!!
Pre-Marketing: Featuring the Giants, the debate over QE2, another appearance from
Nina Easton: The new House power duo - Ryan and Issa
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General Motors is preparing for its IPO, with new projections from the company placing its
stock market value at $50 billion. The Wall Street Journal has a great breakdown of the offering,
concluding that it will be hard for the government to break even as it sells down its stake in the
Detroit automaker. According to the paper, the stock will be offered at $26 to $29 a share; and
it will have to rise to as much as $50 a share for the government to break even as it sells down
its position in GM. The New York Times adds that the offering will allow the federal government
to reduce its ownership stake to less than 50 percent; and that in addition to common stock, GM
also plans to sell up to $3 billion worth of preferred shares that will convert to common shares.
www.gm.com
VC Deals
Vindicia, a Belmont, CA-based maker of an on-demand billing platform, secured $20 million in
series E financing, bringing the total amount raised to over $41 million. New investor FTV
Capital led the Series E round, which included participation from existing investors Bertelsmann
Digital Media Investments, DCM and Onset Ventures. www.vindicia.com
RingCentral, a San Mateo, CA-based cloud computing phone systems developer, raised an
undisclosed amount of Series C financing led by Cisco. RingCentral is also backed by Sequoia
Capital, Khosla Ventures and DAG Ventures. www.ringcentral.com
Callaway Digital Arts, a New York, NY-based publisher of iPad apps announced $6 million in
Series A financing from Kleiner Perkins Caufield & Byers iFund. Ram Shriram, founder of
Sherpalo Ventures, and Mark Pincus, founder and CEO of Zynga, also participated in the round.
Callaway also announced a partnership to create iPad apps for Martha Stewart.
www.callaway.com
Gene Security Network, a Redwood City, CA-based company that makes genetic testing
technology, has raised $12 million in Series C financing, led by Sequoia Capital. Claremont Creek
Ventures, Founders Fund, and Lightspeed Venture Partners also participated in the round.
www.genesecurity.net
Solace Systems, an Ottawa-based maker of middleware appliances, has raised an undisclosed
amount of growth capital from Canadian investment firm Tandem Expansion. Solace has
previously raised financing from Genuity Capital Partners and Teachers Private Capital.
www.solacesystems.com
Dynegy, the Houston, TX-based provider of services to utilities companies, said it has won
approval from the Federal Energy Regulatory Commission to sell four natural gas plants to NRG
Energy for $1.36 billion and be acquired by the Blackstone Group for $4.7 billion including debt.
The deal awaits a shareholder vote on Nov. 17, as well as state-level approvals. If the deal goes
through, it will be the largest LBO of the year. Moody's has said that the company's finances
would become tenuous if the buyout were to go through as planned. www.dynegy.com
The Carlyle Group is competing with South Koreas Lotte Shopping to acquire Indonesian
company Mataharis Hypermart business, Reuters reports. According to the news service, there
have been three to four preliminary bids for the retail chain, which could sell for as high as $1
billion.
BOS Solutions, a Calgary-based full-service provider of drilling fluid treatment to oil and gas
exploration companies, will be acquired by Advent International, the global private equity firm.
Terms of the deal were not disclosed. The current BOS management team, led by president and
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chief executive Glenn Leroux, will retain a significant ownership interest in and continue to lead
BOS. www.bos-solutions.com.
Arclight Capital Partners, a Boston-based private equity firm, and OGE Energy Corp
announced they have completed the creation of their previously announced Enogex Holdings
LLC joint venture, owned 90.1 percent by OGE Energy and 9.9 percent by an ArcLight affiliate.
Arclight paid $183 million for the equity ownership stake in Enogex Holdings. www.enogex.com
NXT Capital LLC, a Chicago, IL-based middle-market commercial finance company, has
received a $50 million investment from private equity firm Stone Point Capital, as well as $25
million from an undisclosed U.S. corporate pension fund. www.nxtcapital.com
Harbin No. 1 Tools Manufacturing Company Limited, a Chinese tool maker, received an
$18 million (RMB120 million) investment from Infinity Group, an Israeli firm that focuses on
investments in China. Infinity Group has more than $700 million under management and is
backed by global investors including the IDB Group and the China Development Bank. The
investment in Harbin No. 1 will be used to help the company compete in the international
market. www.infinity-equity.com
Multi-Flex Inc., a provider of aluminum conveyor systems, was acquired by Danville Partners,
a Cleveland, OH-based business development partnership. Financial terms were not announced.
www.multi-flex.net www.danvillepartners.com
Springstone, a hospital administrator, has sold a majority stake to Welsh, Carson, Anderson &
Stowe. Terms of the acquisition were not released. Springstone owns and operates a psychiatric
hospital in Indiana, and plans to acquire additional psychiatric and behavioral facilities across the
US.
Comforce Corp, a Bethpage, NY-based company that provides staffing management services,
will be acquired by Boston-based investment firm ABRY Partners for $84.8 million. ABRY will pay
$2.50 per share for all outstanding shares, which is a 54.3% premium over Mondays closing
price. www.comforce.com
RMS, a Bethlehem, PA-based business-to-business accounts receivable outsourcing service, has
been acquired by iQor Holdings Inc, a New York-based BPO services provider. Terms of the deal
were not disclosed. RMS was spun off from Dun & Bradstreet in 2001 and has 3,000 employees
in the U.S., Canada, Hong Kong, India and Mexico. iQor has also raised an undisclosed amount
of funding from its majority shareholder Huntsman Gay Global Capital, and from Citi Venture
Capital International and Starr International Company. www.rmsna.com
PE-backed IPOs
China Rongsheng Heavy Industries, a Chinese ship building company, hopes to raise $2.3
billion in an IPO, according to Bloomberg. If successful, China Rongsheng could be Hong Kongs
third-largest initial public offering this year.
Exits
Garanti Bankasi, Turkey's second largest bank by asset value, will sell a 24.9% stake to
Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) for $5.84 billion. BBVA is buying the stake
in Garanti from Dogus Holding and General Electric, and will hold a $6.94 billion capital increase
to finance the deal. http://www.garanti.com.tr/en/
Swissport International, an airport ground-services business, will be sold to PAI Partners
Holdings in a deal valued at $909 million. Swissport is a being sold by Spain's Ferrovial in 2005
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Other Deals
Art Technology Group, a Cambridge, MA-ased e-commerce software provider, will be bought
by Oracle for about $1 billion, or 46% more than Art Technology's closing stock price on
Monday. Art Technology also reported earnings on Tuesday of $4.2 million in net income. This is
Oracle's first deal announcement since hiring Mark Hurd. www.atg.com
American Life Insurance Co., the unit of AIG better known as Alico, was sold to MetLife for
$16.2 billion. AIG's deal announcement comes just a few days after its successful public offering
of AIA in Hong Kong. Combined, Alico and AIA have raised $27.7 billion in cash, a large chunk
of which will be used to repay the massive cash injection that AIG received from the
government during the financial meltdown. www.alico.com
Wilmington Trust Corp., a Wilmington, DE-based bank, is selling itself to M&T Bank Corp. for
$3.84 a share, or $351 million. That's less than half the price Wilmington Trust traded at a day
before the deal was announced, and below the bank's book value. As part of the deal, M&T will
be responsible for paying back the $330 million Troubled Asset Relief Program investment in
Wilmington Trust. M&T made its approach in early October, a spokesman told the Wall Street
Journal, as losses grew at Wilmington due to bad construction loans. www.wilmingtontrust.com
Fortinet, a Sunnyvale, CA-based network security company, corrected a Bloomberg report that
said it could be acquired by IBM. The company said in a statement: "Fortinet believes that
investors need to be aware of the error and today announced that it is focused on building a
strong independent company and is not in acquisition discussions with I.B.M. www.fortinet.com
Stuzo, a Philadelphia, PA-based provider of marketing applications for social media, has been
acquired by Dachis Group, the worlds largest social business services company. Terms of the
deal were not disclosed. Stuzo is one of the largest Facebook Preferred Developers and in the
past three years it has helped launch nearly 200 custom social marketing campaigns for over
100 leading global brands and agencies. www.stuzo.com
Prevx Limited, a British Internet security software company that uses real-time cloud
technology, was acquired by Webroot Software. The terms of the deal were not disclosed. The
Prevx acquisition is part of Webroot's plan to expand into the cloud. www.prevx.com
Genesis Networks, a New York, NY-based content distribution company, was acquired by
Global Crossing for $27 million, including $15 million in debt. The deal vastly expands the
Genesis distribution network for its video content, which includes Major League Baseball. The
deal was announced the same day as Global Crossing's third-quarter earnings results of a $7
million loss on revenue of $648 million. www.gen-networks.com
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Softalk, a British company that creates messaging solutions for small- to medium-size
businesses, was acquired by messaging software provider Gordano Ltd. The terms of the deal
were not disclosed. www.softalkltd.com
Email Administrator
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