DealZone

Kroll’s former boss finds his quarry

You couldn’t accuse former Marsh & McLennan CEO Michael Cherkasky of wandering too far from his knowledge base. Though he may not have been able to shine at Marsh, he seems to have not only found kindred spirits in private equity firm Providence Equity Partners, but he may have gotten them a steal for his old firm, financial intelligence company Kroll.

Six years ago, Marsh bought Kroll for $1.9 billion. Today Altergrity, headed by Cherkasky and backed by Providence Equity Partners, said it would pay only $1.3 billion – cash, mind you – to take the investigative franchise private. Marsh wrote off more than $850 million in goodwill, so analysts note that the insurer could register a profit from the sale. It’s not as if Cherkasky had to come in with some sweep-them-off-their-feet offer. Marsh has had Kroll on the block for at least a month.

Over the years, Kroll has hired plenty of investigators, former police and intelligence officers, and has taken on its fair share of journalists as well. It operates in that colorful space between suits and sleuths. While not an unnatural business for an insurer to own, analysts seem happy with Marsh’s steps to streamline and strip away the non-core asset, so they say it’s a good deal for Marsh to get Kroll off its books.  For Kroll, private equity leadership – particularly as familiar as it feels with Cherkasky at the helm – could be just the kind of management needed to build operations in the shadows.

Private matters

Lehman’s HeadquartersA day after Fox-Pitt Kelton analyst David Trone suggested Lehman Brothers Holdings Inc may be better off going private, the investment bank may be ready to do just that. Lehman Chief Executive Richard Fuld is considering ways to take the Wall Street bank private, but it’s not quite clear how such a move might work, the New York Post reported, citing sources. Lehman’s shares have plunged this year on the back of rumors and questions about its solvency. Talks of privatizing Lehman have got serious as a result, the papers said. The company’s shares closed down more than 14 percent on Monday, reaching their lowest level since August 1999. Lehman’s shares have fallen about 81 percent so far this year. Trone said on Monday Lehman may be better off going private to shake off short sellers that are spreading bogus rumors about the bank.

Those nasty rumors, if that’s what they are, may come back to bite some folks on the hindquarters. The Securities and Exchange Commission has sent subpoenas to more than 50 hedge-fund advisers as it investigates whether individuals spread false rumors to manipulate shares in Lehman and Bear Stearns Cos, The Wall Street Journal said, citing a person familiar with the matter. You remember Bear Stearns, right? You know, the one that initially sold for about $2 a share? No wonder Lehman may be thinking about getting out of the stock market limelight.

And now for something completely different (different from Lehman, anyway). Hong Kong phone company PCCW Ltd says it expects to shortlist bidders for its media and telecoms unit within a month. The deal could fetch more than $2.5 billion. Private equity firms are among those bidding for the newly formed unit, known as HKT Group Holdings, group managing director Alex Arena told reporters on Tuesday. Reuters reported on Friday that the Blackstone Group and Providence Equity Partners were among those pursuing a bid for HKT.