DealZone

KKR next buyout fund likely 2010

KKR’s next buyout fund will be a 2010 event, sources told us and peHUB – unless the market collapses again… While KKR hasn’t committed to a timeline or even started raising the fund (no documents are out), there had been an expectation it would start raising in 2009. (Private equity research group Preqin published this table in June (flip to page 13) of the funds they’re following as “on the road”. )   

However, KKR still has a sizeable chunk of its existing funds to spend (known as dry powder) – it finished raising a $17.6 billion to spend on buyouts in 2008.

Fundraising is a tough place to be right now. Blackstone is continuing to chip away raising for BCP VI, its sixth buyout fund, which according to Preqin has a $15 billion target.

Other research Preqin has done shows the average time taken to close a fund is 18.3 months. That’s not surprising, as LPs (the investors in private equity funds) are far more concerned that private equity funds don’t make capital calls on existing funds.

But some are managing to raise even first funds  – Huntsman Gay finished raising its first fund, totaling $1.1 billion this week.

Dow Chemical: Official Rainmakers’ Punching Bag

Poor Dow Chemical.

Not only did the company end up having to buy Rohm and Haas at basically the same steep price it agreed to last year, but it has also become the favorite target of lawyers, bankers and maybe even judges at the Tulane Corporate Law Institute, an annual gathering of top dealmakers.

Timothy Ingrassia, head of Goldman Sachs mergers and acquisitions business in the Americas struck the first blow on Thursday morning.

 ”You’ve already had Dow Chemical’s unique interpretation of the merger agreement. There was never a transaction that made Apollo look better,” Ingrassia said, referring to private equity firm Apollo’s previous efforts to get out of an agreement to buy Huntsman Corp. 

Apollo’s Huntsman problem keeps on giving

danprimackThe dispute over the dead Huntsman deal is going further than litigation over the break-up fee.

Apollo was seen by some as getting off lightly by settling the deal for $1 billion rather than slugging it out in court. But LPs might not be so happy about how they’re handling who pays the various pieces of that. Dan Primack at our sister publication PEHUB reports the details here.

Huntsman’s break-up payday

BOLIVIA DOLLARTo terminate its $6.5 billion deal to buy Huntsman, Apollo Management’s Hexion Specialty Chemicals had to cough up $1 billion in fees and charges. This follows the long-awaited collapse of the private equity bid for Canada’s BCE last week, which cost buyers C$1.2 billion in break-up charges.

Hexion agreed to buy Huntsman in July 2007. The deal faltered amid the credit crisis. Apollo tried to walk away, citing insolvency concerns about the combined company.

But with a hefty break-up fee in its pocket – almost as much as its diminished $1.4 billion market cap – Huntsman is looking to settle what could be an even bigger score.

Getting online in Europe

A man browses web at an Internet cafe in MadridWith tens of billions in the bank collecting dust since its failed bid for Yahoo, and the elusive promise of the Internet still beckoning, Microsoft returned to the market for Internet search businesses with a $486 million purchase of Greenfield Online, the U.S.-listed owner of European price comparison website ciao.com. The buy is meant to help lift Microsoft out of fifth place in the European search market by giving a boost to its Live Search platform. Google‘s monster lead in the search market is a whopping 62 percent and 79 percent in Europe, according to the most recent data published by Web usage tracker ComScore. Microsoft has a 2 percent market share in Europe and 9 percent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia’s Yandex.

Four large hedge funds, all Huntsman shareholders, have proposed a plan to finance at least $500 million of the $6.5 billion buyout of the chemical company by a unit of Apollo Global Management. Hedge funds Citadel Investment Group, D.E. Shaw & Co, MatlinPatterson Global Advisers and Pentwater Growth Fund, and as of this morning, the Huntsman family, have agreed to team up on the financing plan, but Apollo’s Hexion Specialty Chemicals unit rejected the plan last night, saying Huntsman’s increased debt and decreased earnings since the deal was struck in July 2007 would no longer make a combined company solvent. “We are not seeking to renegotiate this transaction,” Hexion responded in a statement. “We are seeking to terminate it, and obtain judicial confirmation that Hexion has no obligation to pursue the acquisition or to pay Huntsman a termination fee.”

Allianz is set to sell Dresdner Bank to Commerzbank, sources with direct knowledge of the matter say, in a deal that will fuse Germany’s second- and third-biggest lenders. The deal, to be announced as soon as this weekend, will see Commerzbank take a 51 percent stake in Dresdner and buy the rest later, the sources said. Taking over Dresdner, which analysts estimate to be worth about 9 billion euros ($13 billion), will create a group to rival flagship lender Deutsche Bank and change the face of banking in Germany, Europe’s biggest economy. It will give Commerzbank a badly needed leg up in its home market, which is dominated by state not-for-profit lenders and allow Allianz to end an unhappy marriage that unsuccessfully tried to match investment bankers with insurance salesmen. The deal is likely to result in heavy job cuts, which would have been avoided had Allianz chosen to sell to another would-be buyer, China Development Bank.

Hexion fight vs Huntsman weakened by its own results

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Hexion’s weak quarterly results are going to hurt the chemical company and its private equity owner in more ways than one.

It could take away the punch in their argument against Huntsman, the company that they once wanted to buy.

Hexion and its parent Apollo Management agreed to buy Huntsman for $6.5 billion a year ago, but the deal has been in jeopardy since June, when Apollo and Hexion filed suit against Huntsman seeking to limit their liability in the event that their proposed buyout falls apart.

Huntsman and Hexion spar anew

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Chemical maker Huntsman Corp’s second-quarter earnings have triggered a new round of sparring with its disgruntled suitor, Hexion Specialty Chemicals.

Hexion, a unit of Apollo Management, jumped on Huntsman’ssecond quarterresults, saying they showed that a material adverse change had occurred in Huntsman’s financial condition. Hexion has claimed the $6.5 billion purchase of chemicals maker Huntsman is no longer feasible and the combined company would be insolvent. The two companies have already filed lawsuits against each other.

Hexion said Huntsman’s EBITDA (earnings before interest, taxes, depreciation and amortization) had dropped 19 percent from prior year and its net debt — adjusted for asset sales — was more than 25 percent higher than a year ago.

Huntsman buyout hits the rocks

rocks.jpgPrivate equity buyouts of Clear Channel and BCE have already gone to court due to tightening credit markets, and now it looks like Apollo Management’s $6.5 billion buyout of U.S. chemical company Huntsman Corp may be next. Apollo’s Hexion Speciality Chemicals filed a lawsuit against Huntsman on Wednesday that would seek to limit its liability if the deal falls apart, saying financing for the buyout– one of the last still to close from the private equity boom of 2007 — was in jeopardy because of Huntsman’s weakened financial position. Huntsman called the move “a blatant attempt to deprive our shareholders,” and a countersuit seems to be all but inevitable.

Spanish retail bank Santander is looking at taking over insurer Allianz’s loss-making Dresdner Bank, according to sources familiar with the matter. Commerzbank, Germany’s second-biggest bank, is already in advanced talks about a deal with Dresdner. But foreign banks like Santander are keen not to miss a rare chance to get a foothold in Europe’s biggest economy, whose banking market is largely closed to outsiders because of the dominance of not-for-profit community savings banks.The Dresdner sale is only part of the merger mania in Germany’s banking sector: Top retail bank Deutsche Postbank is also up for sale and Citigroup is selling its retail business here.

Vodafone has dropped out of the auction for Tiscali, according to the the Financial Times, driving the Italian broadband company’s shares down more than 9 percent. Vodafone had been seen as the most likely buyer for Tiscali as it could acquire both the Italian and British divisions to combine them with existing assets. BSkyB and Carphone Warehouse, Italy’s Wind and Swisscom are still in the frame, and the FT said that Vodafone could even re-enter the process if an agreement with the remaining bidders could not be reached. At a time of tight credit markets, slowing consumer spending and flagging broadband growth, it seems that bidders can afford to play hardball.