Does M&A activity follow or lead stock market action?

With yesterday’s roaring stock market rally on the heels of the deal announcements, the action begs the question, is M&A activity a precursor to a good market or does it follow an already buoyant one. I believe its the latter but a good market can last a while as can the M&A deals, particularly strategic ones where growth is tough to come by. The US$ is getting a lift for a 2nd day after some help from some major trading partners. The Japanese Finance Minister, backtracking on recent comments, said they would intervene in the FX market if “currency markets move abnormally.” Also, a top EU official said they welcome the US government to insist on a strong $ and yesterday Trichet said it’s “extremely important that we can have a strong $” in terms of helping the global economy. Euro Zone economic confidence and Retail PMI both rose to the highest since ‘08. Case-Shiller HPI and Consumer Confidence are key data points today.


Chris Hammond Joins Gen Cap America

Chris Hammond has joined Nashville-based private equity firm Gen Cap America as a vice president. He previously was a principal with Calvert Street Capital Partners.

PRESS RELEASE

Gen Cap America, Inc., a private equity firm located in Nashville, has named Christopher Hammond as vice president, company officials announced today.

As vice president, Hammond’s responsibilities will include business development, due diligence and the structuring and negotiation of acquisitions for Gen Cap, a leader in the middle market management buyout niche.

“We’re very pleased to have Chris on board,” said Barney Byrd, president of Gen Cap America.  “We continue to strengthen our team with experienced leaders from the industry and look forward to Chris’ involvement in uncovering opportunities and growing our fund’s portfolio.”

Prior to joining Gen Cap America, Hammond was a principal with Calvert Street Capital Partners, a mezzanine fund based in Baltimore, Maryland, focused on investing alongside private equity sponsors in lower middle market buyout transactions.  Prior to Calvert Street Capital Partners, Hammond was in Chicago, Illinois as a vice president in GE Capital’s Commercial Finance Group and, previously, with Heller Financial, Inc. and a CPA with Ernst & Young, LLP.

He holds a B.B.A. from the University of Notre Dame and an M.B.A. from the Kellogg School of Management at Northwestern University.  He and his wife, Kate, now live in Nashville with their three children.

Founded in 1985 and headquartered in Nashville, Gen Cap America is one of the oldest and largest buyout firms located in the Southeast.  In May, Gen Cap completed fundraising of approximately $165 million for its latest buyout fund, Southvest Fund VI.  More information can be found at www.gencapamerica.com.

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CCMP Capital Snares Anadarko Petroleum COO

Karl Kurz has joined CCMP Capital as a managing director, and co-head of the firm’s energy investment practice. He also will sit on the CCMP investment committee. Kurz had spent the past nine years with Anadarko Petroleum, most recently as chief operating officer.

PRESS RELEASE

CCMP Capital announced today that Karl Kurz has joined the firm as a Managing Director and a member of the firm’s Investment Committee effective September 21, 2009.  Mr. Kurz joins Chris Behrens as co-head of CCMP’s energy investment efforts.  He will be based in CCMP Capital’s Houston office.

Stephen Murray, President and CEO of CCMP Capital, remarked, “Karl brings over two decades of experience in the oil and gas industry having been COO of Anadarko Petroleum and having held management positions at Vastar and ARCO Oil & Gas.  His operating expertise will be invaluable to the firm as we work to optimize the performance of existing portfolio companies and evaluate new energy sector investment opportunities.”

“The addition of Karl to CCMP’s senior leadership team strengthens our ability to drive operational improvement in our portfolio companies and to make thoughtful investment decisions,” commented Greg Brenneman, Chairman of CCMP Capital.  “We have made great progress in adding seasoned operating executives as partners of our firm.  Their talents will be critically important in our efforts to generate outsized returns for our investors.”

“CCMP has successfully partnered with management teams in several outstanding energy investments and I hope to create future successes by drawing on my experiences in the sector,” said Mr. Kurz. CCMP Capital’s founders have been investing in energy since 1990.  Selected investments include Bear Paw Energy, Bill Barrett Corporation, Brand Services, Carrizo Oil and Gas, Encore Acquisition Company, Latigo Petroleum, Noble Environmental Power, Patina Oil and Gas, and Vetco International. 

Mr. Kurz, 48, spent nine years with Anadarko Petroleum Corporation, most recently serving as chief operating officer responsible for overseeing the company’s global exploration and production, marketing, midstream, land, technology and service businesses.  Prior to joining Anadarko, Mr. Kurz was general manager of midstream and marketing for Vastar Resources, Inc. where he managed the company’s marketing of oil, natural gas liquids, gas and gas processing.  Prior to joining Vastar in 1995, Mr. Kurz held management positions at ARCO Oil and Gas Company in several business units including reservoir engineering, production operations, crude oil marketing, hedging, and financial trading.

Mr. Kurz has served as a board member of the American Petroleum Institute, the Independent Petroleum Association of America, the Natural Gas Supply Association, Western Gas Partners LP and the Carl McCain Foundation.  He currently is a director on the board of SemGroup, LP.   Mr. Kurz holds a B.S. in petroleum engineering from Texas A&M University and he is a graduate of Harvard Business School’s Advanced Management Program.

About CCMP Capital

CCMP Capital Advisors, LLC, is a leading global private equity firm specializing in buyouts and growth equity investments in companies ranging from $500 million to more than $3 billion in size.  CCMP Capital focuses on five primary industries: Consumer, Retail and Services; Energy; Healthcare Infrastructure; Industrial; and Media and Telecom.  Selected investments under management include: Aramark Corporation, Edwards Limited, Generac Power Systems, Grupo Corporativo ONO, Legacy Hospital Partners, Quiznos Sub and Warner Chilcott.  CCMP Capital’s founders have invested over $12 billion since 1984.  CCMP Capital’s latest fund, CCMP Capital Investors II, L.P., closed in September 2007 with commitments of $3.4 billion.

CCMP Capital has offices in New York, Houston and London.  Through active management, its global resources and its powerful value creation model, CCMP Capital has established a reputation as a world-class investment partner.

For more information, please visit www.ccmpcapital.com.

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Barracuda Networks Buys Austria’s Phion

Barracuda Networks Inc., a Campbell, Calif.-based provider of email and Web security appliances, has acquired Phion AG, a publicly-traded Austrian provider of enterprise security solutions. The deal was valued at approximately €12.8 million. Barracuda raised a $40 million Series A round in 2005 from Sequoia Capital and Francisco Partners.

PRESS RELEASE

Barracuda Networks Inc., the worldwide leader in content security appliances, and phion AG (WBAG:PHIO), an Austria-based provider of enterprise security solutions, today announced the successful completion of the Voluntary Public Takeover Bid as a result of meeting the acceptance threshold of more than 75 percent of the phion shares through the recently completed public tender offer.

“phion has defined the next generation of enterprise firewall technology, bringing the security, management, and reliability features needed to thwart today’s ever-changing threat environment,” said Dean Drako, president and CEO of Barracuda Networks.  “phion’s  technology combined with Barracuda Networks’ world class marketing, sales and support infrastructure will bring this next generation of firewall technology to the more than 85,000 Barracuda Networks customers worldwide.”

phion customers will benefit from Barracuda Networks’ worldwide network of sales and support operations newly extended to phion products.  The combined Barracuda Networks and phion product portfolios will result in increased sales opportunities for the partners of both companies. 

“Barracuda Networks is a well-established global brand, and we believe that Barracuda Networks’ expansive channel presence and commitment to the customer experience will help to accelerate the global traction of the phion product offerings,” said Wieland Alge, CEO of phion.

About Barracuda Networks Inc.
Barracuda Networks Inc. built its reputation as the worldwide leader in content security appliances by offering easy to use and affordable products that protect organizations from email, Web and IM threats.   Barracuda Networks has leveraged its success in the security market to offer networking products that improve application delivery and network access as well as world-class solutions for message archiving, backup and data protection. Coca-Cola, FedEx, Harvard University, IBM, L’Oreal, and Europcar are amongst the more than 85,000 organizations protecting their networks with Barracuda Networks’ solutions.  Barracuda Networks’ success is due to its ability to deliver easy to use, comprehensive solutions that solve the most serious issues facing customer networks without unnecessary add-ons, maintenance, lengthy installations or per user license fees.  Barracuda Networks is privately held with its headquarters in Campbell, Calif.  For more information, please visit www.barracudanetworks.com.

About phion
phion is one of the leading European providers of solutions to protect company communications.  With the netfence product portfolio, phion offers solutions for the most demanding standards in terms of availability, security and management.  netfence appliances consistently address all security-related aspects: from perimeter defense to the safe and highly available connections to branch offices, right up to blocking dangerous content and protecting internal networks.  airlock protects Web applications like e-banking platforms and web services from any attacks or misuse.  All phion products have core management and are distinguished by their remarkable TCO.   phion is listed at the Vienna stock exchange (symbol: PHIO) and is based in Innsbruck, Austria and Zurich, Switzerland.  phion’s customers include well-known, internationally operating companies from all sectors of industry.

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If Japan Is Going To Blow Up

The theme that (I believe) started in Barron's over the weekend about Japan eventually blowing up has picked up a little attention as several people have written about it. You can look at Sunday's post for a couple of highlights as to why and the link to Barron's.

If this happens it will cause a lot of havoc for investors who rely on the iShares MSCI EAFE Index Fund (EFA). EFA allocates 23% to Japan. If Japan truly blows up as some are calling for then it stands to reason that any equity fund heavy in Japan, like EFA, will get hit very hard.

I've never liked Japan as an investment destination and obviously avoiding it has been right far more often than it has been wrong. I've written a lot of posts about the merits of country selection and while not everyone will want to do this country avoidance could become very important.

I am not aware of any broad based fund that avoids Japan but the country can be avoided by anyone not willing to pick countries. As a substitute for EFA a combo of WisdomTree Asia Ex-Japan High Yield Equity Fund (DNH) and Vanguard European Stock ETF (VGK) gives broad coverage and bypasses Japan. Some clients own DNH, no one owns VGK.

Clients do not have heavy exposure to big Western Europe as I think they have some big problems too just not as bad as Japan. But the context here is people who do not want to pick countries but might really want to avoid Japan.

On a lighter note Red Sox legend Johnny Pesky turned 90 over the weekend and threw out the first pitch last night. The way he was bouncing around I am pretty sure he could have gotten a hit off of Red Sox starter Michael Bowden (a September call up) who got racked by the Blue Jays.

Update at 5:55 am; I forgot, today is the fifth anniversary of the start of this site. I downloaded Firefox and blogger was a preloaded bookmark. It started out not being about the stock market but I ran out of things to say after a couple of days. Five years, yikes.

Accretive Health Files for $200 Million IPO

Accretive Health Inc., a Chicago-based provider of healthcare revenue cycle management services, has filed for a $200 million IPO. It plans to trade on the NYSE under ticker symbol AH, with Goldman Sachs and Credit Suisse serving as co-lead underwriters. The company reports around $398 million in 2008 revenue, and that Oak Hill Capital Partners holds around a 21% pre-IPO ownership position. www.accretivehealth.com

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Banks vs Retailers: The Battle For Card Usage

Lately, I’ve noticed a card war brewing.

On one side, stand the Banks and Credit Card firms. They get paid a percentage of every sale when you swipe your Amex, Master Card or Visa in a credit card machine.

On the other side, are the Retailers.

In the middle, the Consumer. The battle between the two giant sectors means that choices (and potential costs) are multiplying — if consumers become aware of them.

The battle is over that 3% or so processing fee (it varies) when you swipe your card at a store. It is a big chunk out of Retailer profits, especially during an economic downturn. One recent retailer study found some stores paid as much as 63% more in transaction fees than they earned in profits.

“Choice Architects” — as Richard Thaler calls them in Nudge — working for retailers have been trying to cut down on these fees: An increasing number of stores have changed their default card settings to “Debit” from “Credit.”

I first noticed this during a visit to Target. I swiped my bank debit card — also a Visa — thru the machine. Sometime ago, the default setting was Credit, but now it seems the default setting was Debit.

So too is the default setting at the Supermarket. If you wanted cash back, you previously had to select Debit, than punch in a dollar amount. Now, the default is debit, and you are automatically asked if you want cash back (some consumer groups advocate sticking with credit over debit).

Interesting . . .

The banks aren’t sitting by idly while a big chunk of their profits disappear. Several majors have begun to emphasize cash back for credit card purchases, and have issued specific credit cards that pay a % back.

Next volley in the war: Look for the retailers to fire back:  I am waiting for a major chain to offer a 1% discount for using debit versus credit card.

>

See also:
Retailers Look to Save by Cutting Credit Card Fees
Andrew Asch
Apparelt News, September 25, 2009
http://www.apparelnews.net/news/retailing/092509-Retailers-Look-to-Save-by-Cutting-Credit-Card-Fees

Retailers Ready for Fight on Credit-Card Fees
JANET MORRISSEY
Time, Sep. 17, 2009
http://www.time.com/time/business/article/0,8599,1924409,00.html


Nesscap Raises $9 Million

Nesscap, a South Korean developer of ultracapacitor technology, has raised $9 million n “bridge financing” led by I2BF Venture Capital.

PRESS RELEASE

Nesscap Inc., a South Korean-based ultracapacitor manufacturing and power storage solutions company, announced today that it has closed a bridge financing round in the amount of $9 million.

The round was led by a London-based venture capital fund, I2BF Venture Capital, with other local and international co-investors also participating. I2BF is an international fund management group which is focused on venture capital and public equity activities for diversified clean energy in the United States, Europe and Asia Pacific.

Nesscap plans to use the proceeds for expansion of its manufacturing and production capabilities as well as for working capital and general corporate purposes.

“I am especially pleased that I2BF’s investment strategy and vision so closely matches with our long term strategic capital requirements,” said Dr. Sunwook Kim, Nesscap Inc., Chairman of the Board and CEO. “It demonstrates their strong support for our technology, market growth and management team.”

Nesscap is a global leader in technology innovation and product development of ultracapacitors. We feature the widest array of standard commercial products in the market from 3 farads to 5000 farads with industry recognized alternative organic electrolytes. Our products are available in both cells and modules for the transportation, power and consumer markets. Complete technical and sales information can be found on our website at www.nesscap.com.

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eBureau Raises $10 Million

eBureau, a St. Paul, Minn.-based provider of predictive scoring and information services for online advertisers, has raised $10 million in Series C funding. Tenaya Capital led the round, and was joined by return backers Split Rock Partners and Redpoint Ventures. The company previously raised around $20.75 million.

PRESS RELEASE

eBureau, a leading provider of predictive scoring and information services for online advertisers, today announced it has closed a $10 million round of Series C financing led by venture capital firm Tenaya Capital, with participation from existing Series A and B investors Split Rock Partners and Redpoint Ventures.

“Our investment demonstrates confidence in eBureau’s management team, the direction the company is taking and the opportunity at hand,” said Ben Boyer, managing director of Tenaya Capital. “We are impressed with the growth in eBureau’s business and believe that, with its real-time predictive analytics technology, the company is exceptionally well-positioned to help online advertisers improve their bottom-line results in the years ahead.”

Over the past two years, eBureau has expanded its customer roster to nearly 100 clients across multiple industries, including financial services, education, automotive, insurance and retail. Through continued product innovation eBureau has strengthened its market position as a leader in the use of real-time predictive analytics to help its clients acquire new customers via the Internet.

“This significant round of funding from top-tier investors further validates our proven approach to addressing the needs of the online advertising industry,” said Gordy Meyer, president and CEO of eBureau. “With this capital we will drive further product innovation and accelerate our growth through expanded sales and marketing activities.”

“A challenging economy places a higher premium on making every advertising dollar generate a strong return on investment. As consumer-facing businesses continue to shift their advertising dollars online, they are keenly focused on finding the best customers as efficiently as possible and making every dollar count,” added Meyer. “As a result, eBureau’s advanced predictive scoring technology has set the company apart from other offerings by delivering practical, valuable insights that enhance the power and performance of online ad campaigns. We help our clients make smarter decisions with their marketing budgets so they can find and convert new prospects into profitable customers.”

About eBureau

eBureau provides a powerful suite of real-time marketing information solutions. Its clients span numerous industries, including financial services, education, insurance, automotive, telecommunications and retail. With headquarters in St. Cloud, Minn., eBureau has designed and built a patented, state-of-the-art data warehouse and real-time predictive scoring system. Since its founding in 2004, the company has received $43 million in funding from its founders; Split Rock Partners; Redpoint Ventures; Pinnacle Ventures; and Tenaya Capital. For more information, please visit www.ebureau.com.

About Tenaya Capital

Tenaya Capital is a leading venture capital firm with offices in Menlo Park, California, and Boston, Massachusetts. Founded in 1995 as Lehman Brothers Venture Partners, the firm became an independent company in 2009. Over the years, Tenaya Capital has raised five funds representing over $1 billion of committed capital, and invested it in a wide range of high-growth technology companies, including software, consumer Internet, communications, semiconductors, electronics, and cleantech. For more information, please visit www.tenayacapital.com.

About Redpoint Ventures

Redpoint Ventures teams up with exceptional entrepreneurs to help build industry defining technology companies. Redpoint partners have many decades of experience and success in technology investing; combined with this foundation, the firm is able to leverage a thriving network of entrepreneurs, partners, and industry experts to accelerate building market-leading companies. Redpoint’s portfolio includes innovative start-ups like Scribd, LifeSize, Blue Kai, HomeAway, Solyndra, Topspin Media, Gaia, Fortinet, Answers.com, and others. Redpoint partners have also backed industry leading companies such as MySpace, Netflix, Danger, TiVo, Juniper Networks, Foundry Networks, Ask.com, Zimbra, RightMedia, and Documentum. The firm is headquartered in Menlo Park, Calif., with offices in Los Angeles and Shanghai, China. For more information, please visit www.redpoint.com.

About Split Rock Partners

Split Rock Partners, with offices in Minneapolis and Menlo Park, seeks emerging opportunities in healthcare, software, and Internet services primarily in the Upper Midwest and West Coast. Split Rock was formed in June 2004 by the teams responsible for healthcare, software and Internet services investments for St. Paul Venture Capital (SPVC) and continues to manage SPVC’s portfolio in those sectors. Split Rock closed a $275 million inaugural fund in April of 2005, and a $300 million second fund in May 2008. Representative companies backed by Split Rock’s team include Atritech, Disc Dynamics, EBR, eBureau, Entellus, Evalve, Gearworks, Internet Broadcasting, HireRight, LowerMyBills.com, MyNewPlace, QuinStreet, and Tornier. For more information, please visit www.splitrock.com.

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Tit for tat over derivatives dangers

Shock, horror! Huffington Post tells us on Tuesday that derivative is "one of the dirty words of the financial crisis". "Though these often-risky bets were blamed by many for helping fuel the credit crunch and the downfall of Lehman Brothers and AIG, it seems that Wall Street has yet to learn its lesson",...

NY Post: Paulson Mulls CIT/Indymac Merger

(Reuters) - Hedge fund manager John Paulson is considering merging troubled U.S. finance company CIT Group (CIT.N) with failed mortgage lender IndyMac Federal Bank, the New York Post said, citing people familiar with the matter.

According to the paper, the merger, a plan floated by a number of CIT’s creditors including Paulson, is not part of any formal discussions between CIT and IndyMac.

The New York Post also said the plan of merger was one of several being discussed.

Paulson was part of the consortium that purchased IndyMac from the Federal Deposit Insurance Corp earlier in the year.

A merger between the two banks would diversify IndyMac’s portfolio from mortgages to commercial loans, since the CIT Group is one of the largest lenders to small and mid-sized businesses in the U.S, the paper added.

Representatives of CIT Group and John Paulson could not immediately be reached for comment outside regular U.S. business hours.

(Reporting by Biswarup Gooptu in Bangalore, editing by Will Waterman)

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Markets live transcript 29 Sep 2009

Markets live chat transcript for the chat ending at 12:02 on 29 Sep 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) Paul Murphy (PM)   NH:holaNH:and welcome to Markets LiveNH:FT Alphaville’s daily quick step around the marketsNH:Bryce is here againNH:but having the usual log in problemsNH:have,...

Vaccines give a boost to pharma M&A

A recent flurry of deals in the pharmaceutical sector highlights what savvy investors have known for some time -- vaccines are the new M&A targets. The Wall Street Journal notes on Monday that the recent health scares over global pandemics and the growing involvement of governments in purchasing vaccines en masse have become key driving forces in the  thriving world of pharma M&A....

The ‘smoking gun’ in natgas

Nymex natgas futures rolled from the October to the November contract on Monday. The effect of which was as follows: The above move comes despite more than ample supply in the physical prompt market, leading analysts to increasingly speculate that the price action must be linked to fears of very cold weather this winter -- something which makes those mysterious January call options at $10,...