Will Thoma Bravo join Musk in bid for Twitter? And why THL merged portfolio companies

Noting the twists and turns in Elon Musk's takeover bid for Twitter.

Good morning, Hubsters. Happy Friday. MK Flynn here with today’s Wire.

Was greed ever good? The twists and turns in Elon Musk’s hostile takeover bid for Twitter are must-see TV for anyone interested in M&A. Even the language, reminiscent of Wall Street’s Gordon Gekko, is compelling, with all the talk of poison pills and white knights.

Yesterday, Musk showed how serious he is about buying the social media platform, outlining his plans to fund the $43 billion bid, including more than $25 billion in debt from a group of banks led by Morgan Stanley, Bank of America and Barclays.

If Twitter’s board initially thought the move “was just a stunt, it has now found itself on the defensive on multiple fronts,” Financial Times says this morning.

Private equity groups are reportedly considering participating in the Tesla founder’s deal – or perhaps bidding on their own.

Thoma Bravo is rumored to be among them. The firm “believes the platform has been undermanaged and has untapped growth potential, according to a source with knowledge of its thinking,” says the FT. The tech-focused firm “has begun talking with Musk about participating in his takeover effort, said the source, which could help the bid gain traction by attracting additional debt and equity financing from institutional investors, according to multiple prominent lenders.”

“Thoma Bravo doesn’t comment on market rumors or speculation,” a spokesperson for the firm responded to my email query this morning.

We’ll keep watching!

Need for speed. Earlier in the week, Thomas H. Lee Partners announced the merger its two portfolio companies MHS Global and Fortna, each bringing unique skillsets in automating the supply chain. PE Hub’s Obey Martin Manayiti Obey spoke with THL managing partner Mike Kaczmarek.

The deal is expected to create a multibillion-dollar, multinational company providing parcel, warehouse and distribution, and lifecycle services. MHS provides material handling automation technology and systems integration, while Fortna is a provider of software for warehouse and distribution.

“Only about 15 percent of all warehouses globally are automated,” Kaczmarek said. “There’s a long runway of secular growth because many of the distribution centers are still manual, and you have people physically picking and packing boxes. All of that over time will become more automated, which sets this up to be a really interesting opportunity.”

Read the whole story here.

Also see Obey’s story on how private equity firms are investing in the increasingly local supply chain.

Cash-strapped LPs. Blackstone, which set a $150 billion target for a next round of flagship fundraising, does not expect cash-strapped limited partners to impede its progress, writes Buyouts’ Kirk Falconer.

“Our fundraising momentum has never been stronger,” president and COO Jonathan Gray said in the firm’s first-quarter 2022 earnings call. He was replying to a question about LP cash flow constraints, prompted by fewer exits in the wake of record dealmaking, and whether this may reduce capital raising or extend timelines.

Gray acknowledged the issue, adding that another factor is LPs who are now above their private equity allocation limits. Some 23 percent of respondents to Private Equity International’s LP Perspectives 2022 study said they are over-allocated for this year, up from 13 percent in 2021.

Blackstone’s confidence about meeting its fundraising goal owes to the “continued movement into alternatives,” he said. Even in a period of market uncertainty, “it has not stopped.”

Weekend reading. Check out my Q&A with Randy Schwimmer, co-head of senior lending at Churchill Asset Management and founder and publisher of The Lead Left. He shares results of a new survey and explains why private debt is more attractive than ever.

On that note, I’ll wish everyone a happy weekend!