Remember the good ole’ days, when PE firms would agree to buy a company for $30 per share, and then it would trade around $35 per share? Visions of activist shareholders dancing in daytrader heads…
Well that time is gone, judging by the spreads on pending “take-private” transactions. Thomson Financial has provided a list of 26 such deals with private equity sponsors, and not one is trading above its sale price as of yesterday’s market close. The widest spread by percentage is 54.76% per share for Goldman Sachs/Myers Industries, while the widest by dollars is $21.46 per share for Alliance Data/Blackstone.
You can download the full chart here.
Also, Steven Davidoff over at Dealbook has some thoughtful insights into some of the deal-by-deal spread issues, and some overall analysis. For example, he notes that sponsor reputation no longer seems to matter: “Apollo Management has yet to walk on a deal, but the market seems to give them no credit for that in the Huntsman/Hexion transaction (Hexion is a portfolio company of Apollo). It is the same for Penn Gaming and Fortress.” Go here for his full writeup.