A handful of today’s PE-related headlines.
Factbox: By my calculations, three of the top ten widest M&A spreads are LBO-backed. That seems like good news until you realize LBOs only make up 20% of the total pending deals tracked by Reuters (its 35 total). That means just slightly less than half of the pending public-to-private LBOs have very little investor confidence in their completion. Penn National is rocking a 52-point spread, not helped by the fast-approaching one-year anniversary of its announced sale to Bain Capital Partners and Thomas H. Lee Partners. Still, the top spot was nabbed by corporates: With a 90 point spread, the struggling Blockbuster’s attempt to buy
CNN and WSJ: In a matter of a few days, Jones Day lawyer Robert Profusek told the press that
Regarding the former, Profusek very quotably told WSJ’s Heidi N. Moore, “Private equity is going to be just plain equity. The “L” won’t be there in “LBO” any more.”
As for the latter, I have to say I buy it. Just look at the four $10 billion-plus mega tie-ups of 2008: Verizon/Alltel, InBev/Anheuser, Mars/Wrigley and HP/EDS. I don’t have the data in front of me but I’m fairly certain the largest four deals of the first half of 2007 were not corporate mergers. In fact, I’d be interested to see if any strategic tie-ups during that time crossed the $10 billion mark. First Reserve is the only PE firm to even come close to that kind of deal volume (accounting for 25% of all LBOs this year, Buyouts reported), even though The Blackstone Group’s Tony James recently alluded to a larger-than-$2 billion deal in the near future at a conference hosted by The Deal.
Reuters: Cerberus is raising an international distressed fund and is not looking at loan and property portfolios.
dealReporter: In case you missed it, Borders asked for its first round bids Monday… According to this report, there were 30 initial IOIs. With only two obvious strategic bidders (Amazon.com, and the favored candidate, Barnes & Noble), that means PE firms might see this as a steal. It is, after all, down about 30% from where it traded a year ago. It’s unclear if Amazon is actually interested, but according to The AP, Borders’s minority shareholder isn’t playing coy. Aside from Barnes & Noble’s potential antitrust issues, its market cap is only slightly higher than that of Borders. Why doesn’t a PE firm help ‘em out? Anyone?
Reuters: Friday the 13th is actually safer than other Fridays. Seems like the markets weren’t too scary today if that’s any further evidence…