Largest LBOs of 2009

Last year, the largest LBO list looked like a tallest midget contest. This year, it looks like a frat party. Yes, the top deals of 2009 were largely alcohol-fueled.

Beer giant AB Inbev spent the year scurrying to unload assets to meet a $7 billion payment on its debt this fall, a hangover from the $52 billion merger of Anheuser Busch and InBev in 2008. Buyout firms pounced at the opportunity, giving AB-Inbev divestitures three of the 10 spots.

The year’s largest deals included both an infrastructure and a real estate play. The largest deal of the year was, appropriately, a creditor takeover of bankrupt auto parts company.

But there was some encouraging action. TPG may even do what no one thought possible a year ago: a $5 billion LBO. A take-private, no less. That deal isn’t perfect and faces a few hurdles before closing (including its February shareholder vote), but the fact that the firm is going for it—financing in hand—is more than just a little encouraging.


[slide title=”1. DELPHI CORP”]

Elliot Management Corp and Silver Point Capital
$11 billion
October 6 (closed)

That the largest buyout deal of the year is not an LBO but a post-bankruptcy creditor takeover is telling of 2009’s deal landscape. In October, auto parts maker Delphi officially ended its four year journey through the bankruptcy courts, handing over control to two of its largest lenders, Elliott Management and Silver Point Capital. All but one of the following 9 deals happened in the second half of the year, with most of their closes occurring in November or December.

[slide title = “2. IMS HEALTH” ]

TPG Capital, CPP Investment Board
$5.1 billion
Deal not closed

TPG and CPP offered to purchase the company for $22 per share, a 31 percent premium to IMS shares’ closing price prior to the offer, on November 5. The deal has committed debt financing from the firms and Goldman Sachs affiliates. However, the deal faces challenges: Last week congressional amendment to restrict one of the company’s avenues of revenue was introduced, which sent the company’s shares down. The firms responded by setting a date for a shareholder vote on the deal, which is February 8.

[slide title = “3. SPRINGER SCIENCE” ]

$3.4 billion
Deal not closed

Swedish firm EQT and the GIC, buyout arm of Singapore government, announced their deal to buy the medicine and science publisher on December 11. The deal takes the company off the hands of Candover and Cinven, which created Springer in 2003. The firms took three dividends on the company, loading it up with an unsustainable level of debt. EQT lined up a 1 billion pound loan for the deal.

[slide title = “4. AB INBEV CENTRAL EUROPE” ]

CVC Capital Partners
$3.0 billion
December 2 (Closed)

CVC Capital Partners of Luxembourg acquired the Central European operations of Anheuser-Busch Inbev. The deal consideration consisted of $1.62 billion in cash, $448 million in bonds, $165 million in stock, and up to $800 million in profit-related payments. The transaction included operations in Bulgaria, Bosnia-Herzegovina, Croatia, Czech Republic, Hungary, Montenegro, Romania, Serbia and Slovakia. The deal contributed to the seller’s goal of $7 billion in divestitures to help pay for InBev’s $52 billion takeover of U.S. rival Anheuser-Busch last November. The company’s divestitures were popular among buyout pros; three of the top ten LBOs of the year are Ab-InBev carveouts.

[slide title = “5. BUSCH ENTERTAINMENT” ]

Blackstone Group
$2.7 billion
December 1 (Closed)

In the Ab-Inbev divestiture to top the deal list this year, Blackstone Group, purchased Busch Entertainment Corp, Clayton-based owner and operator amusement parks, from Anheuser-Busch Cos Inc. On completion, Busch Entertainment was renamed SeaWorld Parks & Entertainment. The deal adds ten parks to Blackstone’s existing amusement business, which includes Madame Tussauds wax museums, Legoland and the London Eye Ferris wheel. The senior credit facilities are being provided by BofA Merrill Lynch, Barclays Capital, Deutsche Bank Securities, Goldman Sachs Loan Partners and Mizuho Corporate Bank.

[slide title = “6. GATWICK AIRPORT” ]

Global Infrastructure Partners
$2.5 billion
December 3

Global Infrastructure Partners of the US, a joint venture between Credit Suisse Group and GE Infrastructure Inc, a unit of General Electric Co, acquired London Gatwick Airport Ltd from BAA, which was under pressure from UK antitrust regulators to sell the asset.

[slide title = “7. SKYPE TECHNOLOGIES” ]

Silver Lake, Andreessen Horowitz, Canada Pension Plan
$2 billion
November 19 (closed)

While initially eBay announced it would IPO Skype, its free internet phone business, the company eventually agreed to a bid from Silver Lake and brand new venture firm Andreessen Horowitz. It’s easily the most dramatic and perplexing deal of the year. The company’s founders sued to stop the deal from happening, which was settled by giving them a significant stake in the company. Meanwhile, because of the size of the equity check, it is the largest ever single investment from mega-firm Silver Lake. Even more curious is the involvement of a first time venture firm in such a large deal.

[slide title = “8. KKR PE INVESTORS” ]

$1.9 billion
October 1 (closed)

KKR finally completed its merger with KPE, its Amsterdam-listed fund, setting the stage for the company’s NYSE listing. That listing is likely to happen in the spring of 2010, Reuters reported. From the newswire: “KKR originally announced plans to list on the NYSE via a traditional initial public offering in July 2007, a month after Blackstone went public and just before the markets started to tumble. Blackstone’s shares are currently trading at around half their IPO price of $31. KKR later proposed a more complex method of going public, by combining with KPE. In June, it formally withdrew the proposed New York IPO plan, but kept the door open for such a move, saying it had the ability to seek a listing in the future.”

Is it sad that KKR’s largest deal of the year is essentially the acquisition of itself? The firm made one more appearance on the top ten list, having closed the first deal of the year to top $1 billion with its acquisition of Oriental Brewery.

[slide title = “9. ORIENTAL BREWERY” ]

KKR, Affinity Equity Partners
$1.8 billion
July 24

Kohlberg Kravis Roberts & Co and Korea-based Affinity Equity Partners Ltd acquired Korean beer maker Oriental Brewery, from Anheuser InBev. KKR’s bid was actually the lowest of the three final offers – from Affinity Equity Partners and MBK Partners – but KKR won because its was the only offer with committed financing. This was important to Anheuser-InBev because the company is in a bit of a pinch to pay down debt from its giant 2008 merger. Anheuser-Inbev was so motivated, in fact, that it set up a $300 million PIK note for the deal, something that wasn’t necessarily offered to KKR’s competitors.

Just before the deal closed, KKR sold half of the company to losing bidder Affinity Equity Partners.

[slide title = “10. BROADGATE OFFICE COMPLEX” ]

Blackstone Group
$1.7 billion
November 3

Blackstone Group acquired a 50% interest in the Broadgate office complex of British Land Co PLC, a London-based owner and operator of an office complex, for $1.75 billion. The consideration was to consist of $126 million in cash and the assumption of $1.6 billion in liabilities. Originally, Blackstone was rumored to be planning to acquire a 50% interest in Broadgate.


View the top ten VC Recipients of 2009 here.

For more year-end coverage, go here.