DealZone

Morgan Stanley’s surge in fourth-quarter profit indicates its strategy of diversifying its businesses to reduce a reliance on traditional investment banking operations may be paying off.

Wendy’s/Arby’s Group plans to sell its struggling Arby’s roast beef sandwich chain to focus on the Wendy’s hamburger business. The move comes at a time when other fast-food companies are trying to shed assets or even sell themselves.

The Carlyle Group’s back-to-back sell-downs worth $2.6 billion of China Pacific Insurance, put the U.S. buyout fund on course for its best exit ever.

Man Group saw $1 billion of net client outflows in its third quarter, dashing hopes that last year’s purchase of rival GLG would deliver a quick turnaround at the world’s largest listed hedge fund manager.

By Timothy Sifert

Buyout barons are paying themselves on the back of the market's short memory. Dividend recapitalizations are on pace to exceed the volume seen in 2007. Dunkin' Brands and Getty Images mark the latest efforts by private equity firms to get ahead of a potential U.S. tax change. In their zealous quest for Treasury-topping returns, investors seem to have forgotten recent lessons.

The ability to replace equity with debt has come back with a vengeance. Buyout firms managed less than $2 billion of such dividend recaps over the last two years, according to Thomson Reuters LPC. This year, there have been $15 billion of them, with more than $5 billion queued up.

Private equity has good reason to rush these deals out the door. Selling portfolio companies onto public markets has been constrained, making it ever harder to return funds to investors. What's more, the threat of tax hikes means they're eager to write these checks before more winds up going to Uncle Sam.

Communications cable maker CommScope said it agreed to be bought out by The Carlyle Group in a $3.9 billion deal. It’s the latest sign of a resurgence of acquisitions by private equity firms, which are under pressure to invest billions of dollars of capital raised in the past few years. *View article *View preview of Blackstone and KKR’s results

Green Mountain’s near-monopoly in single-cup brewing, just 4 years after it bought coffee machine maker Keurig, makes it a compelling target for food or consumer products giants seeking entry to a fast-growth part of the U.S. beverages market, writes Mihir Dalal. *View article

Private equity is testing the regulatory waters with a rare bank takeover, reports Bloomberg. *View article

Monday’s big deal stories:

Dubai moves to ring-fence prized assets from the $26 billion debt restructuring of Dubai World, denting already fragile investor sentiment ahead of talks between the struggling conglomerate and key creditors.

British confectioner Cadbury (CBRY.L) gives itself a week to post a formal response to Kraft’s (KFT.N) $16 billion takeover offer.

British waste management firm Shanks Group Plc reveals a 536 million pound ($889 million) buyout approach, sending its shares soaring, but says its board and key shareholders were looking for at least 10 percent more.

Carlyle –at one time famous for having former presidents and prime ministers on its payroll– is taking a step to attract more women and minorities into the male-dominated world of private equity.

“I’d say that private equity firms have been behind investment banks and law firms (in such hiring),” David Rubenstein, co-founder of Carlyle told Reuters.

“The industry… probably has fewer women partners and probably fewer minority partners than we probably should have.”

The financial crisis appears to be creating some jobs for at least one group of people – former banking executives.

As private equity firms turn their attention to banks, they are seeking out retired chiefs and other senior executives with banking experience to lead their investments and run the banks they buy. 

Besides their operational experience, these executives bring to the table a crucial quality that can sometimes make or break a group’s bid to take over a bank – street cred with U.S. banking regulators.