News: Deals

Apax, Hicks Muse bolt onto Yell
Buyout houses Apax Partners and Hicks, Muse, Tate & Furst have agreed to buy US directories business McLeodUSA Publishing for $600m.

The business will be bolted onto Yell, the directories business that the pair bought from British Telecom for £2.14bn in June 2001. For Yell, which already owns US directory publisher Yellow Book USA, the deal marks a major step toward further expansion into the US market. It doubles the number of states that the group will operate in, and brings in additional annual revenues of around $300m.

?McLeod provides us with new growth opportunities in the largest directory market in the world,? said John Condron, Yell's CEO. John Muse of Hicks, Muse, Tate & Furst said Yell would continue to look for acquisitions. ?We are really excited about this business,? Muse said.

The deal is part of the restructuring that McLeodUSA Inc. is currently undergoing to avoid bankruptcy. Prior to Apax and Hicks Muse tabling their bid, McLeodUSA had received a $535m bid from private equity house Forstmann Little, which has over $1bn invested in the struggling parent company. Rather than wanting to buy the business itself, Forstmann is understood to have wanted to inject some momentum into the auction process. Forstmann's offer was structured so that McLeod would not face a penalty if a better bid came along. It is understood that Boston-based firm Thomas H. Lee also participated in the auction.

Now CIBC World Markets and Credit Suisse First Boston are arranging a $500m financing for Yell, which is expected to include a $250m high yield bond.

The deal is the latest in a string of transactions where private equity firms buy the strong cash flows of directories businesses. Last year US house Texas Pacific Group bought the directory arm of Norwegian company Telenor. A group of firms led by Thomas H. Lee and Providence Equity Partners also bought TransWestern Publishing.

VCs back Content acquisition
Kennet Capital and Cazenove Private Equity have acted as lead investors in a deal enabling Clearswift, the email manager, to buy Content Technologies from Baltimore, the struggling encryption software maker.

The syndicate, which also included venture houses Amadeus Capital Partners and Bank of America Equity Partners, invested a total of £22.2m in Clearswift to fund the acquisition and inject working capital. Kennet and Cazenove invested £7m each, Amadeus invested £6m and Bank of America contributed £1.9m. Individuals also participated.

The deal is an example of how venture investors can currently benefit from the pressure in the public technology markets that is forcing quoted businesses to raise capital by selling off assets. David Carratt, managing director of Kennet Capital, said: ?This divestiture is clearly indicative of the type of deal opportunities that exist for technology investors in today's market environment.? Clearswift agreed to pay Baltimore £12m in cash and a further £8.5m in shares and loan notes for Content.

Clearswift first received venture backing in June 2001 when Amadeus invested alongside Pino Ventures, an Italian private equity firm, and US group 4C Ventures.

The combined group, operating under the Clearswift name, will have a customer base of more than 11,000 companies. It will continue to develop content security software. Baltimore put Content up for sale last August saying the business did not sit well within its encryption software business.

Platinum pushes into Europe
Platinum Equity, the technology buyout firm, has agreed to buy the European distribution operations of Alcatel, the French telecommunications group, for an undisclosed sum.

The unit, which has revenues of €1.5bn, will be bolted onto NextiraOne, a network operator offering integrated voice, data and internet services across North America. Tom Gores, CEO of Platinum Equity, said the acquisition marked an important step towards fulfilling the firm's aim of building a portfolio of voice and data network solutions providers with a global customer base. ?As there are no overlaps in regions served or operations, Alcatel's enterprise distribution and services business is an excellent complement to NextiraOne,' he said.

Platinum, set up in 1995 and headquartered in Los Angeles, has completed more than 30 deals, often involving blue-chip US vendors. The firm has made it known that it is keen to do more business in Europe going forward. It is understood to be holding talks with European investment bankers to scan deal flow.

Middle East buyout fund in debut deal
Dubai-based Rasmala Buyout Fund is buying Aramex International, a courier firm serving the Middle East and India, in a $61m deal. Rasmala has committed $20m to the transaction. Senior debt and mezzanine capital will be used to finance the deal.

Rasmala Buyout Fund is managed by Rasmala Partners, whose origins date back to 1999 when it launched a $34m venture capital fund focused on start-up investments in the Middle East. Deutsche Bank owns a minority stake in the partnership.

Launched in 2001, the Rasmala Buyout Fund has received $40m in commitments from institutional investors. An initial closing is scheduled for the end of February. The fund is looking to raise $150m in total, which it aims to invest in mature businesses in the Middle East and Indian Subcontinent region.

To help identify target companies, the fund has retained McKinsey & Co., the consultants, as strategic advisers. ?While the region is often criticised for shallow deal flow and limited exit opportunities, our belief is that times are changing, the Middle East markets are evolving and maturing and privatisation, family succession, de-conglomeritisation and consolidation issues all offer attractive investment opportunities,? said Salman Mahdi, a partner at Rasmala.

Patron buys in Barcelona
Patron Capital Partners, the London-based private equity firm focused on the real estate and financial services sectors, has invested in the purchase of the Hotel Arts centre in Barcelona. Deutsche Bank also participated in the transaction.

The €285m deal marks the largest single-asset real estate transaction ever recorded in Spain. Patron's commitment to the venture will be financed by its opportunity fund, Patron Capital, L.P. a $250m fund launched in April 2001 and currently fundraising.

?This is the best time to buy a five star hotel because everyone is scared of hotels post September 11, and the Barcelona market is particularly good at the moment. It is a stable economy that has seen enormous infrastructure spending which we regard as growth potential for the future,? said Keith Breslauer, managing director at Patron.

PAI buys into Yoplait
PAI Management, the French private equity firm, has acquired 50 per cent of Yoplait, the world's second largest yoghurt brand. The vendor is Sodiaal, a consortium of some 13,500 French diary farmers, which retains 50 per cent of the business. PAI has plans to float the business within the next two years. It is not known how much PAI paid for the business, which has annual revenues of €2bn.

End2End raises €24m
DB Capital Venture Partners and Hewlett-Packard have injected €24m into End2End Holdings, a company developing the IT infrastructure for wireless applications. The round marks one of the largest European deals made in this sector in the past 12 months.

Littlejohn purchases Goodyear division
Littlejohn & Company, the US private equity firm, has made a rare appearance in Europe and bought the speciality chemicals business of Goodyear, the tyre manufacturer, for an undisclosed sum. The deal is the third Littlejohn has completed in Europe in the last five years. It was last seen on the continent in 2000 when it sold French semi-trailer manufacturer General Trailers to Apax Partners.

CDC Equity backs kitchen buyout
CDC Equity Capital, the leveraged buyout unit of Caisse des Dép^ts et Consignations, has bought Mathon, a French kitchen accessories mail order company, for an undisclosed amount. The deal sees CDC take a 75 per cent stake in the business, with the remainder being split between the management team and Vincent Mathon, founder of the company. Local French banks led by the Caisse d'Epargne des Alpes in Grenoble arranged financing.

Abingworth leads Danish drug discovery deal
BioImage, a Danish drug discovery company, has secured €15.2m second round funding from a group of investors led by Abingworth Management. Existing shareholder Apax Partners and new investor Novo also contributed.

Vermeulen in EM.TV deal
Stan Vermeulen, formerly of Dutch venture capitalist Alpinvest, is backing EM.TV chairman Werner Klatten's purchase of a 25 per cent stake in the beleaguered media company. How much Klatten and Vermeulen's new firm Constant Ventures agreed to pay for the stake is not known.

Advent Venture invests in Radiant
Advent Venture Partners, the London-based technology venture capital firm, has invested alongside Intel Capital and Sandler Capital in a £16m third round of financing for Radiant Networks, a company developing mobile broadband technology. The round takes total investment in the company to £31.7m.

EQT in €166m Germany premiere
Scandinavian buyout specialist EQT Northern Europe has bought Leybold Optics from Zurich-based Unaxis Group for €166m, marking the firm's first takeover in Germany.

Gimv gains €16m
Gimv, the listed Belgian private equity firm, has sold a 40 per cent stake in the Essers Group, a transport and logistics service provider, back to the Essers family for a capital gain of €16m.

Graphite in £23m MBO
Graphite Capital, the UK private equity firm formerly known as Foreign & Colonial Ventures, has backed the £23m management buyout of Applied Energy Products from GDA Holdings, which was sold off by Marconi and General Electric late in 2001. 50 per cent of the financing came as debt supplied by the Bank of Scotland.