Breakingviews

Kraft investors bet Heinz can refill secret sauce

March 25, 2015

The Velveeta cheese maker’s stock jumped a third – making the company worth nearly $50 bln – on news of its sale to the ketchup giant, which 3G Capital and Warren Buffett took private in 2013. The math works if Heinz can repeat its margin magic and leap hurdles to scaling Kraft.

Asian tycoons give LBOs an eastern twist

June 5, 2013

Shuanghui’s takeover of U.S. pork group Smithfield combines hefty leverage and limited cost savings. Recent deals in Thailand and Singapore have also been quasi-buyouts. As long as local banks remain flush, Asian groups will give private equity firms a run for their money.

How to go public and private all in one go

March 28, 2013

Brazilian ethanol producer Biosev is preparing to sell new shares, with parent company Louis Dreyfus offering to buy them back in 15 months. It’s essentially an IPO, a convertible bond and a potential buyout packaged together. It’s an overly clever solution to a unique problem.

U.S. buyout barons have new tax-dodge rivals: MLPs

February 27, 2013

The low tax rates on LBO bosses’ so-called carried interests save them $1.3 bln a year, an advantage critics want wiped out. But new data show investors in energy partnerships are now costing Uncle Sam a similar amount thanks to an outdated perk. Both loopholes should be closed.

Dell LBO objectors in tight corner

February 11, 2013

Shareholders like Southeastern think Dell is cheap at $24.4 bln. They’re right: that’s why the founder and Silver Lake want to buy it. But the shares haven’t topped the offer in months or Southeastern’s valuation in years. Other options provide too little certainty to match up.

Dell’s $24 bln LBO involves a club of one

February 5, 2013

And Silver Lake, the sole private equity firm included, isn’t even really the club. Michael Dell is contributing his 14 pct stake in the PC maker, cash and an investment from his MSD Capital. Time was mega-deals needed a team of buyers. For now, they remain more exclusive.

Blackstone loss could be gain for Facebook owners

May 31, 2012

Judges are citing a ruling against the LBO shop to push firms for more pre-offering disclosure. That could help shareholders claiming the social network downplayed revenue doubts ahead of its IPO. The suits are still iffy, but the precedent should at least keep them in court.

How does a $31 bln mega-LBO become an $18 mln IPO?

February 7, 2012

What sounds like a gambling tragedy is the perplexing, yet true, story of the buyout of Caesars Entertainment by TPG and Apollo. The deal, struck at the height of the bubble, has been a tough one. Co-investors are in such a hurry to get out, they’re actually paying to exit.

Endemol tussle shows trials of evicting LBO owners

January 24, 2012

After years of wrangling, creditors may soon take stakes in the “Big Brother” producer. A sale may follow. Distressed investors have poured money and manpower into Europe in search of similar deals. But future “loan-to-own” victories will require patience and grit.

LBO debt gluttons have now gorged on equity too

December 23, 2011

Buyout barons are sitting on nearly $400 bln of cash committed by investors - or over $1 trln of purchasing power. A big slug of it belongs to mega-funds at or approaching their use-by date, pressuring firms to deploy capital or return it. Expect some overpriced deals in 2012.