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Value of PE Deals Jumps 68% in Q3 as U.S. M&A Slows

U.S. announced mergers in third quarter produced somewhat dismal results, while private equity transactions generated a major surprise.

The deal value for PE-backed transactions actually increased during the time period, according to data from Thomson Reuters. It wasn’t just a small bump, but a 68% jump in deal value.

There were 1,810 U.S. announced mergers in third quarter, valued at about $247.1 billion, Thomson Reuters says. Deal value dropped nearly 20% from 2011 when 2,161 transactions in third quarter totaled $206.1 billion.

The biggest M&A transaction, Thomson Reuters says, comes from Kraft, which said in August it planned to split self into two.  Since that’s not a typical merger, the next deal in line is Richard Schulze’s $8.3 billion bid for Best Buy Co.

On the private equity side, there were 369 U.S. announced transactions in third quarter, totaling $43.3 billion. This compares to 2011 when 396 mergers were valued at $25.7 billion.

Here’s the top five PE deals, according to Thomson Reuters.

Photo courtesy of Shutterstock

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[slide title=”5. Kinder Morgan”]

The quarter’s fifth largest deal comes from Tallgrass Energy Partners.

In August, Tallgrass said it agreed to buy a slew of assets including Kinder Morgan Interstate Gas Transmission Trailblazer Pipeline Co., the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, as well as KMP’s 50 percent interest in the Rockies Express Pipeline. Tallgrass is paying $1.8 billion.

Tallgrass is owned by management,  Kelso & Company as well as a limited group of investors led by The Energy & Minerals Group, including Magnetar Capital.

[slide title=”4. Getty Images”]

The fourth largest deal this quarter is Getty Images, a leading supplier of stock photos, video and other digital content.

On Aug. 15, the Carlyle Group announced it would buy Getty in a deal valued at $3.3 billion. The seller is Hellman & Friedman which acquired Getty in a $2.4 billion deal.

Hellman & Friedman invested up to $941.3 million equity in Getty as part of 2008 buyout, according to SEC filings.

[slide title=”3. Hamilton Sundstrand”]

An industrial deal comes in third place for the quarter.

BC Partners and the Carlyle Group in July said they were buying Hamilton Sundstrand Industrial from United Technologies Corp. The deal was valued at $3.46 billion. Hamilton Sundstrand makes highly engineered, mission-critical pumps and compressors for the global industrial, infrastructure and energy markets.

[slide title=”2. DuPont-Coatings Unit”]

Carlyle continued to be very acquisitive in third quarter. In August, the Washington D.C.-based PE firm said it was buying the auto paint unit owned by DuPont for $4.9 billion.

The investment comes from Carlyle Partners V and Carlyle Europe Partners III.

[slide title=”1. Cequel Communications”]

In July, BC Partners and CPP Investment Board unveiled a $6.6 billion deal for Cequel Communications Holdings, which does business as Suddenlink. BC Partners, CPPIB and certain members of Suddenlink management are investing about $2 billion equity, according to a statement. The deal is expected to close in fourth quarter.

St. Louis-based Suddenlink provides digital TV, high-speed Internet and telephone services to over 1.4 million residential and commercial customers. It generated revenues of approximately $1.8 billion for the 12 months ended Sept. 30, 2011, Moody’s Investors Service has said.

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