Barbarians at the gates: the balance of pros and cons Private equity houses’ media strategy ‘naive’ Schwarzman, Doughty Urge LBO Action Against Intrusion New Wall St buyout tool seen carrying risks No buyout bubble, but concerns loom -Carlyle Group
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Blackstone in talks over possible £1bn deal for Jupiter JPMorgan M&A Banker Meng Quits to Join D.E. Shaw Sub-prime lending shakeout heats up Ex-McAfee counsel charged with fraud Lear Faces Six Lawsuits Challenging Icahn Merger Workers to resist Airbus job cuts A&P Bid for Pathmark May Forge Regional Giant Icahn Seeks to Pare Bonus Of Blockbuster Chief Sainsbury family play knight’s defence
Barbarians at the gates: the balance of pros and cons – Financial Times
The barbarians are again at the gates. The announcement this week of the largest ever private equity buy-out of a public company – the $45bn takeover of TXU, one of the largest utilities in the US, by Kohlberg Kravis Roberts and Texas Pacific Group – confirms the trend.
To its defenders, private equity makes companies more efficient. To its attackers, its practitioners are financial manipulators and asset-strippers.
So who is right? An obvious answer is that private equity is a growing activity in which willing sellers meet willing buyers. If it prospers, it must be profitable. If it is profitable, it should also be adding value….
Private equity houses’ media strategy ‘naive’ – Daily Telegraph
One of Europe’s largest investors in the private equity industry has called on it to become more open in its dealings with the general public.
Wanching Ang, managing director of Allianz Private Equity Partners, warned that the communications strategy adopted by most in the sector was "naïve."
Allianz PEP manages more than €4.3bn of assets which are ploughed into various private equity funds on behalf of its investors. But a heavily pregnant Ms Ang believes the industry desperately needs to move onto the front foot…..
Schwarzman, Doughty Urge LBO Action Against Intrusion – Bloomberg
Blackstone Group LP’s Steve Schwarzman and Doughty Hanson & Co.’s co-founder Nigel Doughty said private-equity firms must talk to politicians, regulators and the media to head off government interference in their industry.
The two executives spoke as almost a dozen trade unionists picketed the industry’s annual Super Return conference in Frankfurt yesterday. The demonstrators held placards calling the event “conference of the locusts” to protest job cuts at companies owned by buyout firms.
“I really worry about the political stuff going on,” Blackstone co-founder Schwarzman told conference delegates. “There are people who are trying to, at a minimum, interfere with what’s going on in the private-equity business.”….
New Wall St buyout tool seen carrying risks – Reuters
In their eagerness to participate in the biggest buyouts, Wall Street banks are committing more of their own capital up front, a practice that carries significant risks if markets drop.
Texas’s largest utility, TXU Corp., agreed on Monday to be acquired by buyout giants Texas Pacific Group and Kohlberg Kravis Roberts & Co. for $32 billion. The largest-ever leveraged buyout (LBO) will require investment banks to underwrite about $24 billion in debt.
Beyond that, the investment arms of merger advisers Goldman Sachs Group Inc. , Lehman Brothers Holdings Inc., Citigroup and Morgan Stanley agreed to invest about $7 billion of equity in the transaction.
And in a growing trend, Morgan Stanley, Citigroup and JPMorgan Chase & Co. extended an additional $1 billion as an "equity bridge."….
No buyout bubble, but concerns loom -Carlyle Group – Reuters
Despite the massive amounts of money earned and raised by private equity firms in the last two years, there is no buyout bubble forming though several concerns loom, Carlyle Group co-founder David Rubenstein said on Wednesday.
"I don’t think we’re in a bubble, but there will be declines. We can’t continue like this forever," Rubenstein said, speaking here at the annual SuperReturn private equity conference.
The title of Rubenstein’s speech was "Comparing the Tech Bubble and Private Equity Today."….
Blackstone in talks over possible £1bn deal for Jupiter – The Times of London
Blackstone Group, the US private equity firm, is in negotiations over the potential acquisition of Jupiter Asset Management, even as the fund manager owned by Commerzbank continues to consider a flotation.
Sources close to the situation said that the sale talks, which could value Jupiter at up to £1 billion, may yet come to nothing. A decision over a sale or initial public offering is not expected for several weeks. The news emerged as the private equity industry gathered in Frankfurt for its annual Super Return conference.
The fund manager is understood to have held discussions with other potential bidders from the private equity world, including Candover, the British firm. YesterdayJupiter declined to comment but Eric Strutz, Commerzbank’s finance director, said last week that the bank was evaluating all options for Jupiter’s future, including a float….
JPMorgan M&A Banker Meng Quits to Join D.E. Shaw – Bloomberg
JPMorgan Chase & Co.’s co-head of China investment banking, Meng Liang, has resigned to join the hedge fund D.E. Shaw Group, people familiar with the decision said.
Meng, 34, a merger and acquisition specialist at the third- biggest U.S. bank, was hired by the New York company as chief executive officer of private equity for Greater China, the two people said, asking not to be identified before an official announcement. Marie Cheung, a Hong Kong-based spokeswoman for JPMorgan, declined to comment.
D.E. Shaw is trying to expand in Asia where private equity and buyout transactions increased by almost eight times last year to $122 billion, according to data compiled by Bloomberg. Meng, who will start work in Hong Kong in May, becomes the third senior banker in Asia to leave JPMorgan this year for hedge or buyout funds, which tend to offer better compensation….
Sub-prime lending shakeout heats up – Los Angeles Times
The shakeout in the business of risky mortgages intensified Tuesday as Freddie Mac swore off buying certain common but foreclosure-prone loans and Ameriquest Mortgage Co., which has struggled to find a buyer, said a potential partner might come to its aid.
Lenders to shaky borrowers have been in turmoil this year, and the tremors probably will be felt by homeowners seeking to refinance their high-risk mortgages.
In another indication of stress, Santa Monica’s Fremont General Corp., which has been a major lender to borrowers with poor credit scores and no down payments, said late Tuesday that it would not release its fourth-quarter financial results today as planned…..
Ex-McAfee counsel charged with fraud – Financial Times
Federal prosecutors on Tuesday charged McAfee’s former top lawyer with fraud for his role in a stock options backdating scheme at the anti-virus software group.
Kent Roberts, 50, stands accused of granting himself extra compensation by manipulating the grant dates of stock options awarded to himself and to other McAfee employees.
If found guilty, he could face up to 20 years in jail and a fine of up to $250,000.
Mr Roberts’s lawyer could not be reached for comment on Tuesday….
Lear Faces Six Lawsuits Challenging Icahn Merger – Wall Street Journal
Lear Corp. said Tuesday it faces six lawsuits from shareholders seeking to block the automotive-parts supplier’s acquisition by an affiliate of billionaire investor Carl Icahn.
Southfield, Mich.-based Lear agreed earlier this month to be acquired by Mr. Icahn affiliate American Real Estate Partners L.P., for $36 a share, but created a 45-day period to accept competing offers. The proposed acquisition involves about $2.31 billion in cash to buy the shares Mr. Icahn doesn’t already own and $2.5 billion in debt assumption.
Opposition to the deal has emerged, with at least three major shareholders, representing a stake of almost 19%, publicly opposing the buy. Mr. Icahn owns about a 16% stake in Lear. The deal with Mr. Icahn is subject to the affirmative vote of the holders of a majority of the outstanding shares of Lear common stock….
Workers to resist Airbus job cuts – Financial Times
Airbus unions on Tuesday threatened serious disruption over plans by the world’s second-largest aircraft maker to cut up to 10,000 jobs.
Workers in one French factory called a pre-emptive strike against Wednesday’s restructuring announcement. Force Ouvrière, the dominant union at Airbus France, said any attempt to sell or close French sites would be considered a declaration of war.
Louis Gallois, Airbus chief executive, is expected to announce plans to cut 4,200 jobs in France and about 4,000 in Germany, partly through the sale or closure of certain sites, said one person close to the subject….
A&P Bid for Pathmark May Forge Regional Giant – Wall Street Journal
Great Atlantic & Pacific Tea Co.’s plan to acquire Pathmark Stores Inc. may create a more potent force in the highly fragmented Northeastern U.S. grocery market.
The Montvale, N.J., company known as A&P said yesterday it is in negotiations for a cash-and-stock deal at a "possible" price of $12.50 a share. The offer, a 3.7% premium to Pathmark’s Monday close at $12.05, values the company at about $651.3 million, based on 52.1 million shares outstanding.
A&P and supermarket industry analysts said that the proposed deal faces significant regulatory hurdles at the Federal Trade Commission, which historically has blocked companies’ efforts to merge and seize a high concentration of stores in a single market….
Icahn Seeks to Pare Bonus Of Blockbuster Chief – Wall Street Journal
In a rare public dispute between a board and its top executive, billionaire investor Carl Icahn is leading a charge on Blockbuster Inc.’s board to keep Chief Executive John Antioco from receiving his full $7.65 million bonus for last year. Word came as Blockbuster reported a 28% drop in fourth-quarter net income due to higher costs for the launch of its program that combines in-store and online rentals.
Mr. Icahn, a major shareholder, was elected to the movie-rental company’s nine-member board along with two allies in 2005 after a bitter proxy fight.
The board told Mr. Antioco it will pay him a $2.28 million bonus on top of his compensation of $2.5 million. What’s more, it said it would pay him no bonus at all if he contests its decision. Mr. Antioco says his 2004 employment contract and other board-approved performance targets entitle him to a $7.65 million bonus…..
Sainsbury family play knight’s defence – Daily Telegraph
Lord Sainsbury of Turville met Sir Philip Hampton, the chairman of J Sainsbury, last week. The retailer’s former chairman is understood to have made clear his support for the management team and the recovery plan put in place by chief executive Justin King, who also attended the meeting.
Lord Sainsbury of Turville: supportLord Sainsbury’s support for the management will be a blow to the private equity consortium circling Sainsbury’s. With a 7.75pc stake in the supermarket group, he is the retailer’s second largest shareholder after US fund manager Alliance Bernstein.
In total the Sainsbury family still own almost 20pc of the company and have historically been united in supporting the company and its board. The other major family shareholder – Lord Sainsbury of Preston Candover – is life president of the retailer…..
