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May 31, 2007

Critical Analysis Shows Private Equity Job-Creation Claims "Worthless"

In a paper commissioned by the UK T&G, David Hall of the University of Greenwich Business School examines the methodologies underpinning the principal surveys and reports on private equity buyouts and job creation, and finds their claims to be "effectively worthless".

Hall examined the reports - in large part commissioned by private equity associations - which, without ever having undergone critical evaluation, are invariably cited by the funds and their lobbyists - and concluded that they all "suffer from a number of flaws, both in sampling and in data quality." "Most of the assertions made by commentators, and some made by the reports themselves", writes Hall, "cannot be justified on the basis of the evidence from existing surveys. Problems of self-selection and the difficulty of verifying data on employment arise from the information opacity which is a systematic feature of private equity buyouts. The most reliable results suggest that buyouts generally depress wages but there is no clear overall effect on employment compared with other forms of ownership."

For a copy of the full report, write to


May 30, 2007

Nestle sells Turtles confectionery brand to private equity fund

"Private equity fund Brynwood Partners is to acquire the rights to the Turtles confectionery brand in the US from Nestle, through a newly formed company, DeMet's Candy Company. The acquisition is expected to close by June 1, 2007. Under the deal, Brynwood Partners will also acquire Nestle's Turtles production facility in Toronto, Canada in a separate transaction and will merge this manufacturing facility into DeMet's."

Continue reading: Nicci Pugh , "Nestle sells US rights to Turtles confectionery brand", Food Business Review, 24 May 2007.

DeMet's will manufacture Turtles in the Canadian facility to supply the US business and will continue to supply Turtles and selected other products to Nestle Canada through a long-term supply contract.

DeMet's will market Turtles products in the US. Brynwood Partners intends to merge another of its operating companies, Signature Snacks Company, the producers of Flipz coated pretzels, with DeMet's and integrate both product lines into a combined confectionery company.

Brynwood Partners said that David Clarke will be appointed to the position of president and CEO of DeMet's Candy Company. Mr Clarke had previously served as the president and COO of Signature Snacks. Brynwood Partners is to retain the management team of Signature Snacks to run the newly formed DeMet's Candy Company.

Henk Hartong III, managing partner of Brynwood Partners, said: "Brynwood Partners is very excited about the acquisition of the famous Turtles brand and the reintroduction of the storied DeMet's name to the candy business. We have a successful track record in the food space and specialization in the confectionary area. Revitalizing undervalued brands through rigorous operational focus and strong marketing initiatives has been a key component of Brynwood Partners' success.

"This acquisition, combined with our already successful investment in Flipz, will offer us continued and significant growth opportunities."

Brynwood Partners also owns the Stella D'oro Biscuit Company and Richelieu Foods, a leading supplier of private label salad dressing and frozen pizza.

"Turtles is a wonderful brand and an indulgent chocolate treat," said Mr Clarke. "The combination of Turtles and Flipz under DeMet's will create a national, full line chocolate company. The combined product lines will allow us to become a much more significant supplier to our retail customers."

May 29, 2007

Cadbury US Beverages Sale to "Unlock" Shareholder Windfall

Cadbury-Schweppes' projected sell off it's US drinks division to private equity appears to be advancing on schedule, following the March demerger of the two divisions.

Two rival buyout consortia are being mentioned as the leading contenders: Blackstone, KKR and Lion Capital vs. TPG, Bain and Thomas Lee Partners. Financial analysts are predicting a GPB 5 billion special dividend to shareholders if the ca. GBP 8 billion deal goes through.

Shedding its last remaining non-confectionery brands is also expected to stimulate Cadbury's own hunger for acquisitions, with Hershey, Kraft confectionery, and Ferrero and Perfetti in Italy mentioned as possible targets.

Cadbury without its drinks would be the largest "focused" global Confectionery Company. Swollen with new brands, it would itself constitute a tempting target for a buyout fund to swallow whole. Given the size of recent deals, the deal is completely feasible.

May 28, 2007

New IUF Publication: A Workers' Guide to Private Equity Buyouts

The IUF first drew the attention of the international trade union movement to the growing scale of private equity buyouts in the context of the "financialization" of corporate investment to deliver maximum short term financial returns to shareowners. The secretariat has briefed UK and European parliamentarians on the threat of private equity, established a unique website on private equity in the IUF and other sectors (www.buyoutwatchinfo) and assisted affiliates in responding to private equity buyouts.

A workers guide to private equityThe secretariat has now published a A Workers' Guide to Private Equity, a 36 page A5 brochure, aimed at IUF affiliates and trade unions and their members around the world. Available in English, and shortly in French, German, Spanish and Swedish, the publication sets out in accessible language what private equity is, how it operates and the dangers it represents to workers and unions. It points to possible strategies in bargaining with the private equity funds who are becoming increasingly significant players as owners and employers in many IUF sectors. It explains how a specific political environment (deregulation) has made it possible for the funds to expand globally, and how political action can contain the funds.

Single copies of the brochure are CHF 5 per copy, plus postal charges (CHF 6.20 for Europe, CHF 8.50 for the rest of the world, for a total of CHF 11.20 for Europe and CHF 13.50 for the rest of the world).

Bulk copies of the brochure are available from the secretariat for CHF 3 per copy for orders of ten or more, plus postage. Bulk orders may be purchased by direct bank transfer, or we can invoice via paypal for secure online payment with a credit card. For more information, contact the secretariat at www.iuf.org

You can view a pdf version of the brochure by clicking here.

Secure credit card payments can be made online by clicking here:

Order a single copy - for Europe (CHF 11.20):

Order a single copy - for anywhere else in the world (CHF 13.50):

May 23, 2007

US, European Unionists Call for International Action on Buyouts

The UK Guardian reported on May 23 on calls by UK and US trade unionists for global regulatory action on leveraged buyouts.

According to the Guardian, writing on the European Trade Union Confederation (ETUC) Congress in Spain, UK TUC general secretary Brendan Barber stated "We need a Europe-wide campaign led by unions to secure proper rules. A new super-rich elite can suck value out of companies without even paying proper UK tax on their windfalls or disclosing what they are doing. Meanwhile, the rest of us face possible reduced returns on our pension investments, the risk of economic slowdown if the takeover debt bubble bursts, and - if we are unlucky enough to work for a takeover target - real threats to jobs, pensions and living standards."

US AFL-CIO Treasurer Richard Trumka, describing union initiatives in the US and pledging support for action in europe, told the Congress "In the late 1980s and early 1990s, the largest leveraged buyout (LBO), RJR-Nabisco, resulted in 43,000 lost jobs. Another large LBO of that era, Safeway, began with mass layoffs in the late 1980s and ended with an attack on employer provided health care that led to a prolonged strike in Southern California in 2004. In 2005, a private equity firm bought up a whole string of largely mothballed coal mines, reopened the mines and then took those mines public as International Coal Group. The International Coal Group bragged about its safety record in the public offering, then six weeks after the offering closed, twelve miners died in the International Coal Group’s Sago Mine.
So the booming growth of private equity funds, the magnitude of their financial resources, and their disregard, if not disdain, for the labor movement, is the real issue for us – the predatory role of private equity players like Blackstone, KKR and Texas Pacific. Their business strategy puts them inherently at odds with the workers’ interest in maintaining living standards, and at odds with our members’ interest in having employers and pension funds that focus on long-term value."

The Guardian wrote that "Poul Rasmussen, leader of the European Socialist Party, said the European trade union movement should use the G8 summit next month to press for global action against private equity.
An ETUC delegation received a favourable reaction from Angela Merkel, German chancellor and EU president, especially on enforcing new transparency rules for private equity. She largely blamed EU inaction on Tony Blair, saying he had blocked measures to limit private equity firms."

May 22, 2007

AFL-CIO Challenges Blackstone IPO

The US national trade union center AFL-CIO has challenged Bladkstone's USD 40 billion public offering by calling on the Securities and Exchange Commission (SEC, the federal regulatory agency) to require Blackstone to register as an investment company subject to applicable legal requirements under the 1940 Investment Company Act.

The US national trade union center AFL-CIO has challenged Bladkstone's USD 40 billion public offering by calling on the Securities and Exchange Commission (SEC, the federal regulatory agency) to require Blackstone to register as an investment company subject to applicable legal requirements under the 1940 Investment Company Act.

The Act imposes strict corporate governance requirements for investment companies offering public shares. Blackstone has structured its offering as a partnership exempt from requirements concerning, for example, fiduciary duty to investors or independent representation on the company board.

In its letter to the SEC, the union points out that the IPO structure "serves no practical purpose aside from creating a mechanism for Blackstone Group to sell its shares to the public without being regulated by the Commission". The AFL-CIO emphasizes that if the IPO goes ahead as planned, it would open the floodgates for other private equity and investment pools to tap public security markets while avoiding regulation. US-based private equity funds have for some time been evading US regulatory restrictions by listing on European stock markets.

The full text of the letter is available by clicking here.

May 19, 2007

Steel Partners launches buyout bid for leading Japanese sauce manufacturer, Bull-Dog

Less than two months after its failed hostile takeover bid for Sapporo Holdings Ltd., Steel Partners has launched a new buyout bid - this time for the Japanese sauce manufacturer Bull-Dog.

Steel Partners started the first hostile overseas bid for a Japanese firm in 2003, when it sought control of Yushiro Chemical Industry, the largest Japanese producer of machinery lubricants. Yushiro spent $27 million, about three times its annual profit, to fend off the buyout fund.

Even a failed bid produces cash returns. Steel Partners earned several billion yen when it sold its stake in instant-noodle maker Myojo Foods Co. to industry leader Nissin Food Products Co. after Myojo pursued a capital alliance with Nissin to ward off a hostile takeover by Steel Partners.

Steel Partners now holds more than a 5% stake in 28 Japanese companies, including Nissin Food Products Group and the Ezaki Glico confectionary company.

Steel Partners currently holds a 10.52% stake in Bull-Dog and is offering to buy all remaining shares at a 20% premium over the company's share price.

May 16, 2007

Swedish Union Reps Describe 6 Years of Asset Stripping at Findus under EQT

Findus, the former frozen foods division of Nestlé, was acquired in 2000 by the Swedish private equity firm EQT, which occupies position 21 in the global buyout fund rankings. Swedish Food Workers Union (Livs) journalists Gunnar and Malin Brulin recently interviewed the two union representatives on the Findus board. In the May issue of the Livs journal Mål & Medel, they tell a "hair-rising" tale of 6 years of asset stripping which brought the company to the brink of ruin…

“It nearly went straight to hell!”

Trade union reps on corporate board reveal how former owner EQT mismanaged Findus

A heated debate is going on about how private equity firms are evading taxes and making their directors rich.
Tommy Andersson and Björn Bergstrand were on the board of Findus, as representatives of the employees, when EQT, Sweden’s largest private equity firm, took over the food company and did a reshuffle in the hectic period of 2000-2006.
This gave them a hair-raising look behind the scenes at how EQT was ruthlessly selling off assets to make fast profits, while mismanaging the company.
This is their story.

“Having EQT as our owner was a disaster. It almost went straight to hell. At its worst, we weren’t even sure if there was enough money left to pay our wages,” says Tommy Andersson, president of the Livs branch at Findus.
Findus is a unique company. For the inhabitants of Bjuv it has strong links with the town. It has been a principal employer for generations. Many of the farmers in the area are suppliers to the company.
The company dates back to 1941, when the family-owned company Marabou bought the small company Skånska Fruktvin & Likörfabriken in Bjuv. Soon after, it was renamed Findus (a diminutive of FruktINDUStri), and in 1945 Findus launched its first deep-frozen products in Sweden.
In 1962, the company was bought by the food giant Nestlé. The employees gradually accepted the situation. After all, their jobs seemed fairly secure. For a while, Findus, with its 1,000 employees, was the largest company in the Swedish food industry. The corporation also owned factories throughout Europe, specialising in frozen food products.
Towards the end of the 1990s, however, Nestlé indicated its intention to sell Findus. In February 2000, the new owner was revealed as the relatively unknown Wallenberg-dominated private equity firm EQT.
Local union president Tommy Andersson and head of the health and safety committee Björn Bergstrand were on the board as employee representatives. Initially, they believed it was an advantage that the new owner was a Sweden-based company. That it was a private equity firm did not worry them.
Everything seemed fine. EQT would ensure that Findus was listed on the stock exchange and that investments would be made. A few Dutchmen from the large TNC Procter & Gamble were recruited to the Findus management.
“The Dutchmen promised to make new investments and develop the company,” says Tommy Andersson.
But these promises came to nothing. Instead, the Dutchmen initiated a complex round of buying and selling. The year after EQT had bought Findus, it also took over Frionor with plants in Norway and Thailand.
The Norwegian plants were closed almost immediately, while the ones in Thailand were kept on.
The ready-meals plant Indra in Helsingborg was one of the Swedish Findus plants that were closed down. Production was relocated partly to Bjuv and partly (including pancake production) to the UK plant.
When Findus was at its largest during the EQT ownership period, the company had subsidiaries in 15 countries and nearly 3,000 employees. Attractive headquarters were opened on Queen Street near Buckingham Palace in London, in anticipation of intensified collaboration with the British food supermarket chain Tesco.
But the project was not a success. The Findus management had to close its London offices and the Dutch corporate management which had spend a great deal of time in London had to move to Sweden. They did not want to relocate to Bjuv, apparently, because the head office that had always been in the small industrial town was moved to Malmö.
“Nobody really understood why, because Findus didn’t have a single customer there. But EQT reasoned that production and administration were two separate things. It was probably the distance to the airport in Copenhagen that was the real decisive factor,” says Tommy Andersson.
The plant in Bjuv now underwent a number of cost-cutting measures. The first to be made redundant were white-collar workers. Out of the 200 R&D staff, some 160 were laid off straight away.
“The Dutchmen just said they were too many. They often did that, came and told us there were too many here or too many there,” says Tommy Andersson.
“Their philosophy was to cut back on practically everything except advertising,” says Björn Bergstrand.
The company’s own in-house training of staff which had been called the Nestlé School prior to EQT, and which the trade union had put great effort into achieving, was put on hold.
The Dutch managers were completely ruthless. Tommy and Björn give a few examples. Just after the factory had been declared smoke-free, the Dutch Group CEO came down the corridor with a lighted cigar in his hand. Someone on the office staff told him smoking was prohibited.
“He asked who had ordered the office worker to go around telling people. And then he was sacked.”

Big meatballs only

They go on to relate how Henk Spoon, marketing director, decided that Findus should stop selling small meatballs one Christmas, and only have large meatballs. The result was that they didn’t sell a single meatball that Christmas.
“It was a terrible time. Everyone could see that things were bad, but nobody dared say anything. The executives especially were scared out of their wits.”
They estimate that some 300 executives in Bjuv lost their jobs under EQT. And hardly any investments were made in the plant. Nevertheless huge loans were taken.
“I lost track of how many loan agreements we signed. EQT had to keep changing banks when they didn’t fulfil the loan requirements. And the company was constantly in the credit rating magazine Justitia for not paying its bills. We couldn’t even buy petrol with the company’s credit cards,” says Björn Bergstrand.
He recalls how Tommy Andersson almost literally got the management against the wall and demanded to know if there was enough money to pay the wages.
“Yes, that’s how bad it was,” says Tommy Andersson. Even the Bjuv Local Council reacted when the company stopped paying council bills. Another ordeal was the farmers wanting to be paid for their produce.
Everything was in short supply. In the end, it was so bad that one woman on the production line grew tired of everything breaking down and went to the hardware store and bought the nuts that were missing with her own money.
“She bought 20, and the eight she didn’t need she donated to the company,” says Björn Bergstrand.
The Dutchmen started selling off the company’s property, including two dwellings that belonged to Findus outside the plant.
“I believe they did it to make the books look better and hid the deficit,” says Tommy Andersson.

“Too community-based”

In 2003, Tommy and Björn tried to get the EQT management to take action.
“We tried for three and a half years, but EQT wouldn’t listen. I don’t know how many times I called Håkan Johansson who represented EQT on Findus’ board of directors. Finally, we managed to persuade him to come down to Bjuv. His message to us, when he came, was that our perspective was too narrow. We were too community-based.”
What really took place during those years is hard for Tommy and Björn to know entirely. In three years, EQT had spent more than one billion kronor. Where had all that money gone?
“We could see that money was being siphoned off to the UK. They told us it was invested in production facilities there.”
As employee representatives on the board of directors, they had access to information, but it was not easy to interpret.
“People seem to believe that we employee representatives are economists, but we aren’t. We’ve been to a few courses, but there’s a lot you can hide from us if you’re a sharp financial controller. And our language skills weren’t that good either. We have English from school, but they were talking business English,” says Tommy Andersson.
Findus’ sales did not increase noticeably. Products were phased out or added. Their overall estimate is that more products were phased out than added.
The management had stated that it wanted to sell off parts of the production facility in Bjuv.
“We suspected that they wanted to split the plant up. There was a lot of talk. So many rumours,” says Tommy Andersson.
The colonial goods (production of soup, mayonnaise, etc) seemed to be the management’s main priority to sell, but the plans never came to anything. The bids they received were not adequate.
Tommy and Björn have been with Findus a long time, Tommy for 38 years and Björn for 30. And their many years of experience meant that it was painful for them to be on the board and witness how badly the company was being run.

Letter of warning to EQT’s management

“In the end, we joined forces with the white-collar unions Sif and Ledarna, and wrote a letter to the owners where we said that enough was enough. That the people running the company knew nothing about food,” they explain.
The letter was dated 16 January, 2004, and addressed to Conni Johnsson, The CEO and founder of EQT, and Claes Dahlbäck, the Wallenbergs’ representative on the board. The letter heading reads: “4 years with EQT – soon there will be nothing left”.
In the letter, the local unions call the Findus group a sinking ship. After all the cutbacks there was no more hope for the future.
They wrote that it must be some kind of record in the Swedish food industry for a company to squander a billion Swedish kronor in three years, and asked if there was anyone on the owner side who could see where this was leading. “When will you slam the brakes on this plummeting financial situation?” The trade union branches demanded in the letter that the Group management team be replaced and threatened to turn to the media if nothing was done.
“I think the letter helped,” says Tommy Andersson. “I think it was our threat to go to the media that prompted EQT to finally take action and replace the management. The Dutch management team nearly killed Findus. they stripped the company of everything they could.”
At the last board meeting with the Dutch team, Tommy and Björn voted four times against continued investments in the UK. The meeting was adjourned four times on this account. The company legal advisor tried to mediate and the atmosphere grew more and more tense.
“I recall that the Group CEO’s yellow shirt got wetter and wetter with perspiration,” says Tommy.
As board members, he and Björn were co-responsible for all decisions, all loan agreements they signed.
“We were really trapped. We had to request help to understand what was going on,” they continue.
So they turned to one of the financial controllers of the company for information. This annoyed the Dutch CEO.
“He told us we had no right to go to others for information. That it was a criminal offence. That it could put us in prison. But I knew he was wrong. As a member of the board, we were entitled to see the books and get access to information. The person we talked to told us the situation, she gave us the truth.”
They concluded that the company assets were being siphoned off. There was hardly any cash left. Turnover in 2003 fell by 8 per cent, and the losses continued to increase over the first months in 2004.
In April 2004, the EQT management finally got the message and had had enough of the Dutch directors. The Findus management team was replaced. Carel van Bremmelen got 22 million kronor as a “thank you” for what he had done. A golden handshake equivalent to two years’ salary.
One year later, in April 2005, EQT sold off the British part of Findus to a former colleague, Geir Frantzen, who continued to operate the company under the same brand name and in close cooperation with the group.

Small profit from sale

The following year, in January 2006, EQT sold the remaining part of Findus to the British private equity firm Cape Vest. By that time, the Swedish equity firm had sold off six plants and countless sales organisations. They claimed that what remained was the core activity.
“I don’t know if EQT made any money in the end. I don’t even care. I’m just happy that we’ve seen the last of them,” says Tommy Andersson.

EQT’s man on the Findus board: “It was a good deal for everyone”

Håkan Johansson, investment director for Findus at EQT, denies any cashflow problems. He claims Findus was a good deal for everyone involved.
Håkan Johansson says that Findus was sold at a profit, but does not want to specify how big a profit.
He also made a profit personally, as a co-investor, but the amount is secret. The financial paper Dagens Industri, however, claims that the profit was marginal.
• Did EQT buy Findus with borrowed capital?
“Yes, that’s always how it is done.”
• How large a proportion was borrowed?
“No comment. It was a normal percentage at the time. If you think it was the debts that led to the problems you are totally wrong,” says Håkan Johansson. “It was the competition from low-price retailers that caused Findus to lose market shares.”
• But no investments were made in the Bjuv plant?
“That’s wrong. We put in a brand new floor and improved the pea line.”
• You cut back on R&D at Bjuv and laid off large numbers of white-collar workers.
“Yes, but that’s because Nestlé had previously had a R&D centre in Bjuv.”
• You also phased out in-house training of staff, the so-called Nestlé School.
“Well, you can hear by the name that it wasn’t our school.”
• In April 2005, you sold off the British part of the company to a board member (Geir Frantzen).
“We had great confidence in him, and we wanted to streamline the Nordic operations. I think we succeeded, and one indication of this is that Findus is now a strong company.

Gunnar Brulin
Malin Klingzell-Brulin

Facts: The purpose of a buy-out is fast money on sale

There are two kinds of equity, “venture capital” and “buy-out capital”.
Venture capital is used for investments in growing sectors and new companies and is intended to generate high profits in the long term. This is necessary for economic development.
Buy-out capital is something completely different. This capital consists to a high percentage of borrowed money, and is used in mature sectors to buy companies or shares in companies that are then rationalised and divided to achieve a higher visual value on sale. Ownership is short-term, from a few months to a maximum of eight years.
Food processing companies are interesting objects for buy-out capitalists, since they have a large cash flow that can be used to pay off interest on loans. The indebtedness entails higher demands on returns in the bought company.
In the case of Findus, EQT behaved like a buy-out capitalist. This had serious repercussions for the employees. This is something that the IUF, the global organisation for food workers, is cautioning against.
The new IUF website www.buyoutwatch.info has more information on how trade unions can help to protect their members’ interests in connection with buy-outs.

May 15, 2007

Merrill Lynch Warning as Private Equity Targets Big Retail: "If we don't stop it, everyone will be up to their necks in debt"

Property portfolios tempt buyout appetites, prompting retailers to "unlock value" themselves through selloffs.

source: www.just-food.com

A top industry analyst has warned that all of the world's retail giants are vulnerable to bids from the cash-laden private equity sector.

Andrew Fowler, managing director at Merrill Lynch and a 20-year veteran of the retail sector, sounded the warning amid growing private equity interest in retailers.

The relative ease of securing borrowed funds cheaply has left private equity groups with around GBP500bn (US$993bn) of "firepower looking for a home", Fowler said. Bigger retailers, with a rich portfolio of property assets, are most attractive to private equity, he added.

Last month, Sainsbury's rebuffed a takeover bid from private equity group CVC but some shareholders in the UK retailer still want the company to unlock some of the value in its property portfolio, which is said to be worth GBP10bn.

Furthermore, investors in the world's leading retailers are growing frustrated at the lack of returns from the companies' investment in developing markets, Fowler said. That dissatisfaction has led certain shareholders to eye retail property as a way of boosting their returns.

"When it comes to developing markets, it's not been as easy as we thought it would be," Fowler said yesterday (3 May) at the IGD Global Retail Conference in London. "From a shareholder's point of view, there is not yet the return on investment."

As a consequence, Fowler said, it is not just Sainsbury's that is exposed to bids from private equity. Larger, more global retailers may also find themselves the subject of takeover offers.

"Is everyone vulnerable? Metro, which is owned by families living in tax exile in Switzerland, has been under pressure to sell property. At Carrefour, shareholders are agitating for the company to sell property now," Fowler said.

"And at Tesco, a couple of weeks ago, they doubled the amount of cash they are giving back to shareholders. There is a concern that what has happened to Carrefour could happen to them."

Fowler warned of the possible threat to suppliers of private-equity owned retail groups. "If we don't stop it, everyone will be up to their necks in debt," he said. "Retailers will have to pay their interest bill and that could lead to margin compression, or suppliers will have to give buyers longer credit. Then, the ownership of your retail client will change hands again in 2-3 years."


Investcorp Acquires US Hotel Portfolio for $450 million

"Investcorp has announced its acquisition of a group of hotels located in the United States in a series of transactions valued at $450 million. This US Hotel Portfolio comprises nine hotels from the Marriott, InterContinental, Hilton and Starwood hotel groups, located in five US States: Illinois, Oklahoma, Florida, Texas and Virginia. Eight of the hotels have been purchased and the purchase of the ninth hotel is scheduled to be completed in July." © 2007 Al Bawaba (www.albawaba.com)

Three hotels, the Marriott Schaumburg, the Crowne Plaza and the Holiday Inn Express, are located in Illinois. Two hotels, the Holiday Inn Select and the Marriott Palm Beach, are located in Florida and a further two, the Doubletree and the Marriott Waterford, are located in Oklahoma. The remaining two hotels, the Marriott Waterside and the Westin DFW are located in Virginia and Texas respectively. Combined, these nine hotels supply 2,828 rooms and 252,514 square feet of meeting space.

The Procaccianti Group, which has retained a small equity stake in the portfolio, will act as property manager for the US Hotel Portfolio. Procaccianti is one of the top five privately held owner operators of hospitality assets in the United States and currently owns 50 hotels supplying 12,993 guest rooms in 17 states, and employs 6,000 people across the country. The company is one of a small number of ‘‘A list’’ operators approved by Marriott, Hilton, Starwood and Intercontinental and over the past five decades has owned or developed real estate valued at over $4 billion. Proccacianti is recognized in the United States as a leading hotel operator.

Andrew Charlesworth, Investcorp’s Bahrain-based real estate specialist, said: “The acquisition of these hotels was well timed as there is considerable current momentum in the US hotel industry. The boom in the US residential construction market has resulted in a constricted hotel supply pipeline which has resulted in increased occupancy and room rates. These nine hotels have attractive locations within five state capitals and, as a result, have high occupancy rates of around 70%. Each of the hotels has undergone a significant recent upgrade and benefits from an affiliation to an internationally recognized brand.”

Investcorp’s New York-based team of real estate professionals invests in all major real estate asset classes throughout the United States with investment profiles ranging from core-plus to opportunistic for mid- to long-term holding periods targeting top tier risk-adjusted returns. Investcorp currently makes common equity investments in properties within two areas: core plus and opportunistic. Core plus properties are geared towards conservative investors and aim to produce current yield, based on strong occupancy rates and good tenancy, as well as solid capital gains. Opportunistic properties aim to produce higher capital gains by investing in slightly higher risk projects involving renovation, refurbishment, conversion or ground-up development. In addition, Investcorp recently formed the Investcorp Real Estate Mezzanine Fund, which invests in structured real estate investments such as mezzanine debt, high yielding debt, and preferred equity in US residential and commercial real estate.

The team oversees a portfolio with a current value in excess of $3.5 billion in selected urban and suburban markets in the United States. Over the past decade, Investcorp has acquired real estate with an initial capitalization of approximately $6.5 billion.

© 2007 Al Bawaba (www.albawaba.com)

May 14, 2007

Burton's Foods (UK) to cut 660 jobs, two months after Duke Street Capital buyout

Burton’s Foods, the UK's second largest biscuit manufacturer, announced it will slash up to 660 jobs just two months after the company was acquired by the private equity fund Duke Street Capital.

The job cuts come as Burton's is further squeezed in a second round of "unlocking value" by private equity funds. Duke Street Capital bought Burton's for £200 million in March from another private equity fund, HM Capital.

Continue reading:

“Cookie crumbles at Burton's Foods site”, Channel 4, 11 May 2007.

“Chocolate biscuit jobs melt away", Telegraph.co.uk, 12 May 2007.

“660 jobs to go at one of Burton's Foods plants”, EARTHtimes.org, 11 May 2007.

LONDON: The second largest biscuit supplier in Britain, Burton's Foods, will shed nearly 660 jobs as it decided to cease operations of part of its production plant at Moreton, Wirral following a business review.

The company, which makes biscuits and cookies for major firms, including Cadbury's, said in a statement it needs to be proactive in anticipating future market, customer, consumer and cost challenges and a streamlined and more flexible manufacturing capability is essential to allow the business to capitalize on growth opportunities.

Some 300 jobs will remain at the plant as it will continue with certain products.

The company, owned by a private equity fund, Duke Street Capital, will continue its operations at other plants, notably Moreton, Blackpool, Edinburgh and Llantamam, South Wales.

The company's chief executive Paul Kitchener said while the company has a successful business, it operates in a highly competitive environment and overcapacity in the country's biscuit market.

Kitchener said the move is aimed at securing the long-term success of the company and its remaining 2,400 workers in other locations.

Some of Burton's Foods' brands are Wagon Wheels, Jammie Dodgers and Maryland Cookies. It also makes chocolate biscuits for Cadbury's. Copyright © 2007 Respective Author

May 11, 2007

Unions Call for OECD Action on Private Equity

Union leaders from OECD countries and innernational trade union organizations will call on governments to reinforce international rules and domestic policies to manage the social and environmental cost of globalisation at consultations between the TUAC and OECD Ministers on the evening of 14 May. In a statement issued ahead of the Annual OECD Ministerial (15-16 May), the unions call on OECD Governments to rebalance growth, to invest in social protection and education, and to strengthen rules on international trade, investment and capital flows.

The statement also calls for a coordinated series of OECD regulatory measures in response to the destructive impact of private equity and hedge funds,

May 07, 2007

Ahold in $7-billion deal to sell U.S. Foodservice to private equity firms

"Royal Ahold, the Netherlands-based operator of Giant, Stop & Shop and other grocery chains, said Wednesday that it agreed to sell distributor U.S. Foodservice to a consortium of private equity firms for $7.1 billion. "

Continue reading: Associated Press May 3, 2007

Ahold to sell U.S. unit to private equity Dutch food retailer to sell U.S. Foodservice to Clayton, Dubilier, KKR in order to refocus on U.S. retail operations.

NEW YORK (Reuters) -- Dutch food retailer Ahold will sell its U.S. catering unit to two private equity firms for $7.1 billion, leaving it free to focus on its U.S. retail overhaul and possibly a merger with a Belgian rival. Ahold (Charts) said Wednesday it has reached a definite agreement to sell U.S. Foodservice to Clayton, Dubilier & Rice and Kohlberg Kravis Roberts for a price that exceeded analysts' expectations.

Continue reading:Reuters May 2 2007

May 03, 2007

Top 50 Buyout Funds Ranked

Private Equity International the monthly publication reporting on private equity, has ranked the 50 largest buyout funds on the basis of funds raised over the past 5 years. The top 50 have raised USD 551 billion over this period, accounting for 75% of global buyout activity. Using a conservative multiple of 5, the funds exercised a total buyout power of USD 2.76 trillion.

Top 50 Buyout Funds Ranked

1 The Carlyle Group $32.5 billion
2 Kohlberg Kravis Roberts $31.1 billion
3 Goldman Sachs Principal Investment Area $31 billion
4 The Blackstone Group $28.36 billion
5 TPG $23.5 billion
6 Permira $21.47 billion
7 Apax Partners $18.85 billion
8 Bain Capital $17.3 billion
9 Providence Equity Partners $16.36 billion
10 CVC Capital Partners $15.65 billion
11 Cinven $15.07 billion
12 Apollo Management $13.9 billion
13 3i Group $13.37 billion $
14 Warburg Pincus $13.3 billion
15 Terra Firma Capital Partners $12.9 billion
16 Hellman & Friedman $12 billion
17 CCMP Capital $11.7 billion
18 General Atlantic $11.4 billion
19 Silver Lake Partners $11 billion
20 Teachers' Private Capital $10.78 billion
21 EQT Partners $10.28 billion
22 First Reserve Corporation $10.1 billion
23 American Capital $9.57 billion
24 Charterhouse Capital Partners $9 billion
25 Lehman Brothers Private Equity $8.5 billion
26 Candover $8.29 billion
27 Fortress Investment Group $8.26 billion
28 Sun Capital Partners $8 billion
29 BC Partners $7.9 billion
30 Thomas H. Lee Partners $7.5 billion
31 Leonard Green & Partners $7.15 billion
32 Madison Dearborn Partners $6.5 billion
33 Onex $6.3 billion
34 Cerberus Capital Management $6.1 billion
35 PAI Partners $6.05 billion
36 Bridgepoint $6.05 billion
37 Doughty Hanson & Co $5.9 billion
38 AlpInvest Partners $5.4 billion
39 TA Associates $5.2 billion
40 Berkshire Partners $4.8 billion
41 Pacific Equity Partners $4.74 billion
42 Welsh, Carson, Anderson & Stowe $4.7 billion
43 Advent International $4.6 billion
44 GTCR Golder Rauner $4.6 billion
45 Nordic Capital $4.54 billion
46 Oak Investment Partners $4.06 billion
47 Clayton, Dubilier & Rice $4 billion
48 ABN AMRO Capital $3.93 billion
49 Oaktree Capital Management $3.93 billion
50 Summit Partners $3.88 billion

CCA sale in Korea faces strikes - Australian Financial Review

"Coca-Cola Amatil faces the threat of industrial action against the planned sale of its A$700 million South Korean bottling subsidiary unless unions are consulted and employment conditions protected.

Unions representing about 2000 workers at Coca-Cola Amatil's three South Korean bottling operations say they have been kept in the dark about the sale and are pushing for their collective agreement to be renewed.

Three unions with members employed at Coca-Cola Korea Bottling Company plants have opposed the sale of the business to private equity fund CVC Capital Partners, which has submitted an expression of interest and is believed to be on CCA's shortlist."

Continue reading: Mark Skulley and Sue Mitchell, 'CCA sale in Korea faces strikes', Australian Financial Review 2 May 2007.