KKR, Texas Pacific Agree to Buy TXU for $45 Billion UBS Passes Goldman, Morgan in New Hedge Fund Business Hedge Funds Join Grains Boom TPG drives private equity revolution into Moscow Carlyle plans to list $1bn fund
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Private equity chiefs to face fresh protests Citigroup Says SEC Probes Associates First Purchase Citigroup Names Crittenden Of American Express as CFO Heard on the Street: REIT Investors Get Mixed Signals In Office Sector Gupta quits Goldman for buy side Station Casinos Accepts Offer To Take Company Private Starbucks Chairman Says Trouble May Be Brewing Zell joins auction to buy Tribune
KKR, Texas Pacific Agree to Buy TXU for $45 Billion – Bloomberg
Kohlberg Kravis Roberts & Co. and Texas Pacific Group agreed to buy TXU Corp., the largest power producer in Texas, for $45 billion in the biggest-ever leveraged buyout.
KKR, run by Henry Kravis and George Roberts, and David Bonderman’s Texas Pacific will pay $69.25 for each TXU share, or 15 percent more than the Dallas-based power producer’s closing price on Feb. 23, the companies said today in a statement. About $12 billion in debt will be assumed, TXU spokeswoman Lisa Singleton said.
Kravis and Roberts, both 63, upended the buyout world in 1989 with their $31 billion purchase of food- and tobacco-maker RJR Nabisco Inc. It was the largest LBO ever and remained so until November, when KKR joined in the $33 billion buyout of hospital chain HCA Inc. That deal was topped this month by Blackstone Group’s takeover of Equity Office Properties Trust, the biggest U.S. owner of office buildings, for $39 billion….
UBS Passes Goldman, Morgan in New Hedge Fund Business – Bloomberg
UBS AG, trailing Goldman Sachs Group Inc. and Morgan Stanley in prime broking, overtook the U.S. securities firms in providing services to new hedge funds in Europe last year, according to a survey by EuroHedge.
UBS, Europe’s biggest bank, won business from new funds managing $8.3 billion in 2006, compared with $7.3 billion for Morgan Stanley and $5.6 billion for Goldman, according to the report, published today. New funds raised $37.8 billion last year, up 34 percent from 2005, the London-based magazine’s survey said.
Morgan Stanley and Goldman Sachs, based in New York, controlled 42 percent of the European prime brokerage market in 2005. Zurich-based UBS, with 4 percent, is aiming to chip away at that dominance. Prime brokers process trades and lend money and securities to hedge funds, generating annual fees of $10 billion globally, according to Westborough, Massachusetts-based Tabb Group….
Hedge Funds Join Grains Boom – Wall Street Journal
Hedge funds may start taking a bigger role in the booming grains markets.
Following an unusual sale of two grain elevators to a hedge fund recently, industry members say other funds that trade agricultural-commodity futures may start adding physical assets, such as grain elevators, ethanol plants and farms, to their portfolios.
By controlling the operations of elevators and other assets, these lightly regulated investment vehicles may be able to affect price movements at the Chicago Board of Trade, where contracts from corn to wheat are traded, some say….
TPG drives private equity revolution into Moscow – The Times of London
Texas Pacific Group has become the first global buyout firm to set up an office in Russia as it seeks to invest a $15 billion (£7.6 billion) global fund.
The American firm has sent a senior London partner, Stephen Peel, to Moscow to spearhead the effort.
Mr Peel, whose wife is Russian, is a managing director with Texas Pacific and has previously held various senior roles in the investment banking and principal finance divisions of Goldman Sachs.
The office was set up late last year and will focus on investments in Russia and other states in the former Soviet Union, although there have been no transactions yet…..
Carlyle plans to list $1bn fund – Daily Telegraph
Carlyle Group, the US private equity giant, is working on plans to float a new $1bn (£510m) fund in Europe that would invest in bank loans, mortgage portfolios and other fixed income securities.
It is understood that the private-equity group has already raised $500m for the Carlyle Capital Corporation fund through a private placing, most of which has been taken up by investors in other Carlyle funds. A further $500m to $600m would be raised through a stock market flotation pencilled in for the second quarter of the year.
Carlyle, which drew criticism recently for its decision to sell its holding in Qinetiq, the UK defence technology group, has yet to decide whether to list the fund in London or on the Euronext exchange in Amsterdam….
Private equity chiefs to face fresh protests – The Independent
The leading figures of the global private equity world gathering for an industry conference in Germany today will be met with angry protests over job cuts and accusations of a short-term approach to business.
The GMB union is sending a delegation to protest outside the Super Returns event in Frankfurt with banners proclaiming "Plague of locusts" and "Private equity equals asset-stripping".
The 10th annual conference, which has previously passed without much outside scrutiny, will kick off as the world’s largest private equity takeover is unveiled. Kohlberg Kravis Roberts (KKR) and Texas Pacific are expected to announce a $44bn (£22bn) bid for Texas’s biggest power company, TXU, in a move which will top rival Blackstone’s $38.9bn offer for the US landlord Equity Office Properties this month…..
Citigroup Says SEC Probes Associates First Purchase - Bloomberg
Citigroup Inc., the biggest U.S. bank, said the U.S. Securities and Exchange Commission is probing its treatment of tax issues related to the $26.7 billion acquisition of Associates First Capital Corp. in 2000.
The investigation focuses the treatment of certain “tax reserves and releases” from 2000 to 2004, the New York-based company said today in its annual financial filing.
The SEC has subpoenaed witness testimony and certain accounting and internal controls-related information for the years 1997 to 2004, Citigroup said. The company said it is cooperating with the investigation and can’t predict the outcome.
Citigroup spokeswoman Shannon Bell declined to comment….
Citigroup Names Crittenden Of American Express as CFO - Wall Street Journal
Citigroup Inc., an institution struggling to match the financial and stock performance of competitors, has named American Express Co.’s Gary L. Crittenden as its next chief financial officer. He will report directly to Charles Prince, Chairman and Chief Executive Officer, effective March 12, 2007.
Mr. Crittenden, 53, has held the job chief financial officer at American Express since June 2000. He is well-regarded within American Express and the investor community, with a reputation as a methodical and well-versed chief financial officer. Unlike other companies where the chief executive officer conducts the company’s quarterly earnings conference calls, it is Mr. Crittenden who runs the session with investors and analysts. He is also known for having strong relationships with American Express’s large institutional shareholders, many of whom are also likely to have big stakes in Citigroup.
"Gary has demonstrated an exceptional ability to help the organizations he has worked for to generate superior value by supporting the successful execution of their business strategies with the development and implementation of sophisticated financial strategies," Mr. Prince said. "He has distinguished himself as one of the leading chief financial officers in business today, most recently through his tremendous contributions to American Express’s consistent performance."….
Heard on the Street: REIT Investors Get Mixed Signals In Office Sector – Wall Street Journal
It is being uttered by many investors: "If Sam Zell is selling, I should, too."
The real-estate legend’s decision to sell his Equity Office Properties Trust, previously the nation’s largest office owner, has been viewed as proof that office real-estate investment trusts were too richly valued.
Adding to the anxiety is the word that several REIT executives exercised options or sold shares this month, including Boston Properties Inc. Chairman Mortimer Zuckerman, who sold $75 million of stock in a single day.
Yet, investors shouldn’t make too much of these signals. While they should be cautious — and refrain from flooding into the office-REIT sector — they don’t need to worry about whether to hold their positions for a while…..
Gupta quits Goldman for buy side – Finance Asia
Ashish Gupta from Goldman Sachs Singapore finds pastures greener in the asset management business.
Goldman Sachs has lost Singapore based Ashish Gupta to the buy side, post bonus season. Gupta will join Noonday Asset Management, part of the Farallon Capital umbrella, as fund manager. At Noonday he will be responsible for sourcing, evaluating and monitoring investments primarily in the Asian region.
Gupta joined Goldman Sachs in early 2005 from Kotak Mahindra Capital Company in Mumbai. During his stint at Goldman he was part of the investment banking team and worked on M&A and capital markets transactions across south east Asia, India and greater China. Gupta started his career in investment banking at ICICI Securities, also in Mumbai, in May 2002, and was there until he joined Kotak in end 2003….
Station Casinos Accepts Offer To Take Company Private – Wall Street Journal
Ending nearly three months of silence since it first received a management-led buyout offer, Station Casinos Inc. has accepted a revised offer valued at about $5.5 billion from a group led by the company’s founding family and closely-held real-estate firm Colony Capital LLC, according to people close to the situation.
The Las Vegas-based casino company’s board on Saturday voted to enter into a definitive agreement with Fertitta Colony Partners LLC, which will pay $90 per share in cash to acquire the company and take it private, these people say. Station, which first received an $82 per share bid from the same group on Dec. 4, has been quiet since the offer was first announced. The deal also includes the assumption of about $3.4 billion in debt. The total value of the revise deal will be roughly $8.9 billion.
The group buying Station include its Chairman and Chief Executive Frank Fertitta III; his brother, President Lorenzo Fertitta; their sister and brother-in-law Delise and Blake Sartini and Colony. Before the offer was announced late last year, the Fertittas and Sartinis together owned about 27% of the company’s outstanding shares….
Starbucks Chairman Says Trouble May Be Brewing – Wall Street Journal
Starbucks Corp. built its broad appeal on what Chairman Howard Schultz labeled an "experience," including baristas who know customers’ orders by heart and an atmosphere that entices patrons to linger for hours. That experience has enabled the coffee chain to charge the premium prices that fuel its robust earnings growth.
But now Mr. Schultz is questioning whether Starbucks’ drive for growth and efficiency has diluted that experience. In a blunt Feb. 14 memo, he warned executives that the chain may be commoditizing its brand and making itself more vulnerable to competition from other coffee shops and fast-food chains. The nearly 800-word memo questioned whether Starbucks’ automatic espresso machines, new store designs and elimination of some in-store coffee grinding may have compromised the "romance and theatre" of a visit.
The criticisms pinpoint Starbucks’ biggest challenge. Mr. Schultz, the company’s resident visionary, wants Starbucks to become one of the world’s most recognized brands, with 40,000 locations around the globe, or more than triple its current count of about 13,000. But to do that, Starbucks must improve its efficiencies and make other changes that threaten to erode the virtues that made it so successful — which in turn could jeopardize its ability to charge premium prices….
Zell joins auction to buy Tribune – Financial Times
Sam Zell, the Chicago billionaire, has entered the frame for the Tribune auction, making a proposal for the media group ahead of a weekend board meeting, according to people familiar with the matter.
The value of Mr Zell’s offer was not known, although these people suggested that the company’s advisers were initially sceptical that it would outweigh the merits of a company-led restructuring. Tribune and Mr Zell could not be reached for comment.
Tribune, which owns 23 television stations as well as the Los Angeles Times, Chicago Tribune and other papers, put itself up for sale last year under pressure from one of its largest shareholders. So far, the sale has drawn scant interest, forcing Tribune’s board to push back their self-imposed deadline to the end of the first quarter, and highlighting investors’ concerns about the future of the newspaper business….
