Another one bites the dust
Another auction — appropriately enough, this time of a waste management firm — is consigned to the dustbin of history. As Catherine Hornby and I wrote earlier:
“Dutch utility Essent scrapped the sale of its waste-management unit, blaming low prices and other problems with bids for the failure of an auction that had once aimed to raise a billion euros or more.
“The sale of Essent Milieu, which bankers began working on in late 2008, had originally promised to be one of Europe’s first big leveraged buyouts (LBOs) since the credit crunch, with a staple financing helping attract private equity firms such as BC Partners and PAI.
“Instead, the sale’s abrupt cancellation angered the two remaining bidders — the all-Dutch “Orange” financial consortium and U.S. waste firm Covanta (CVA.N) — and marked the latest auction scuppered by scarce debt and disagreements over price.
“None of the bids could live up to our criteria,” Essent spokesman Jeroen Brouwers said. “With these market circumstances they couldn’t offer the price we wanted.”
Back in January it seemed this deal would illustrate “how much appetite remains for the unglamorous but dependable business of garbage treatment, which enjoyed its own mini-boom during the credit bubble”. Not so much, it turns out.
And it’s in keeping with a wider trend of drawn-out and sometimes failed auctions that we highlighted in March. For its part, Essent says it never planned to sell at just “any price”. One of Essent’s spurned suitors retorts: “Essent don’t understand why the business isn’t worth what it was a year ago. Well, I’m afraid the world has moved on.”
Another deal in healthcare: what’s the magic pill?
As dealmakers everywhere struggle to get deals done, the healthcare industry seals yet another one.
Express Scripts has agreed to buy health insurer WellPoint’s prescription business for $4.68 billion in a significant expansion for the U.S. pharmacy beenfit manager. The deal will be a concoction of cash and up to $1.4 billion in common stock, and will generate more than $1 billion of incremental EBITDA.
This comes on the heels of Pfizer’s $68 billion acquisition of Wyeth, Merck’s $41.1 billion takeover of Schering Plough and Roche Holding’s $46.8 billion buyout of Genentech. Granted, this isn’t a pharma deal, but it still falls under the umbrella of the healthcare sector.
And in a market where deals aren’t getting done — mainly due to tight credit conditions and partly due to value gaps between buyers and sellers (due to the huge declines in stocks late last year) — you’ve gotta ask: what’s the magic pill?
Deals of the day:
* Indian mid-sized IT outsourcer Tech Mahindra won a bidding auction for a majority stake in fraud-hit Satyam Computer Services Ltd, edging out Larsen & Toubro, seen by some analysts as the favourite bidder. * India’s Larsen & Toubro, which has built up a 12 percent stake in Satyam Computer Services, plans to hold on to the stake, its chief financial officer said on television channel NDTV Profit. * Pakistan’s Habib Bank Ltd. (HBL) and MCB Bank are interested in buying the operations of Royal Bank of Scotland (RBS) in the South Asian nation, the two banks said in separate statements on Monday. * A bid by Japan’s Mitsubishi Rayon Co for unlisted British chemicals maker Lucite International has hit a hurdle in China where regulators have delayed the acquisition, two sources briefed on the matter said.
* Orascom Telecom said on Monday it was proposing to extend the deadline to April 15 for implementing a court order for the Egyptian firm to sell its shares in mobile firm Mobinil to France Telecom.
Big car. Smaller and smaller offers.
The number of bidders for GM’s Hummer brand has narrowed down to three, with current offers ranging from $100 million to $200 million in cash, in addition to other commitments, sources told Reuters.
That would be a further comedown from what was already a comedown — investment bankers initially estimated that the iconic gas guzzler could fetch between $500 million and $750 million, considering it a distressed asset.
Last month, GM turned back a Kentucky industrialist with a lowball bid, who had also put together plans for new powertrain options for Hummer, including a hybrid version of the H3 that would double its fuel economy from the current 14-to-18 miles per gallon, a source said.
That leaves the carmaker, which has lost about $82 billion since 2005, with one U.S. bidder and two from overseas, sources said.
The bidders include private equity and wealthy individuals. Automakers, even from emerging markets, are notably absent.
DEALS OF THE DAY
* Private equity firm Crescent Point, founded by former Morgan Stanley <MS.N> bankers, is looking to sell its controlling stake in Masterskill, Malaysia’s largest nursing training school, sources said, in a deal that could fetch more than $200 million.
Call it a case of missing hyphens. We should have written “14-to-18 miles.” In fact, we’re updating the entry to say that.
Chairgate: the Economist recants
The Economist has published a correction to its earlier report that Henry Kravis, KKR’s archetypal “Barbarian at the Gate”, may have stumped up 22 million euros for a chair once owned by Yves Saint Laurent:
“Our report suggested that Henry and Marie-Josée Kravis may have been the purchasers of an early 20th-century chair designed by Eileen Gray. Mr Kravis assures us that neither he nor anyone in his family bought the chair in question. Our apologies to all concerned,” the free-trade-loving weekly says.
Our post yesterday on the Economist’s original story prompted some acerbic follow-ups elsewhere in the blogosphere and a firm denial from Kohlberg Kravis Roberts HQ.
Anyone who knows the whereabouts of the actual buyer of the chair, or who wishes to speculate as to his or her identity, please leave a comment.
UPDATED: KKR denies an auction victory
(This updates an earlier post with KKR’s denial).
Maybe the days of private equity paying eye-watering prices at auction really are over.
Kohlberg Kravis Roberts has firmly denied a report in the Economist’s books and arts section saying that, despite the deep economic funk, buyout doyen Henry Kravis was behind the “startling” $28 million purchase of a vintage chair at the recent Yves Saint Laurent sale in Paris:
“Who, in the current climate, were the buyers?” the Economist asked. ”Few prices were more startling than the €22m commanded by an early 20th-century chair designed by Eileen Gray. Cheska Vallois, an Art Deco dealer, won the work in the room; it is thought that she did so on behalf of Henry and Marie-José Kravis, who had already acquired examples of Gray’s work from Ms. Vallois at the Biennale des Antiquaires in Paris.”
But this is one sales process KKR is keen to distance itself from.
“Contrary to speculation, I can categorically deny that neither Henry Kravis, nor anyone in his family, purchased the chair in question,” KKR spokesman Peter McKillop told Reuters in an email. A spokeswoman for the Economist did not immediately return an (admittedly late in the evening) request for comment.
Who was Gray anyway? As London’s Design Museum explains, Gray is “regarded as one of the most important furniture designers and architects of the early 20th century and the most influential woman in those fields.” Kravis, as you must know, was by Forbes‘s reckoning the 49th richest American last year.
