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December 03, 2009

Recap Rerun: Short Memories, Missing Regulation

While defaults rise and growing numbers of private-equity backed companies continue their march to bankruptcy (though not necessarily losses for the funds which marched them there), the "creative" financial devices which helped fuel the buyout boom appear poised for a comeback.

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September 02, 2008

'Unlocking Value': US PE Chiefs' 2007 Pay At 19,000 Times Average Wage

The latest survey of US CEO Compensation documents the ever-widening gap between executive pay packages and the earnings of the average US worker. Compensation for private equity and hedge fund managers claims a special prize in the inequality sweepstakes.

Continue reading "'Unlocking Value': US PE Chiefs' 2007 Pay At 19,000 Times Average Wage" »

July 02, 2008

SEIU Targets Buyout Fund KKR for Global Action

Massive use of high-risk debt, aggressive restructuring, asset stripping, "quick flips" and the systematic exploitation of tax loopholes (many of which their lobbying efforts have inspired) - these are the tools behind the enormous profits raked in by private equity, or leveraged buyout funds. Workers, public revenue and the public interest generally are the big losers in these financial engineering operations. One of the oldest and biggest of the funds is the US-based KKR - Kohlberg, Kravis, Roberts & Company - the "barbarians at the gate" behind the USD 31 billion buyout of RJR Nabisco which effectively destroyed the company and led to the loss of an estimated 40,000 union jobs.

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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.

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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. "

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April 16, 2007

TXU maintenance workers reach deal with TXU buyers, KKR and Texas Pacific Group

The International Brotherhood of Electrical Workers, representing TXU Electric Delivery workers, reached an agreement with the prospective buyers of TXU Corp, KKR and Texas Pacific Group, which have launched a US$32 billion leveraged buyout of the company. The agreement calls for the immediate suspension of a transmission and distribution joint venture planned by TXU and the scrapping of a proposed outsourcing agreement.

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April 14, 2007

The New Titans of Wall Street: Unlike Past Entrepreneurs These Men Like to Hide in the Shadows out of the Public's Scrutiny - ABC NEWS

As Stephen A. Schwarzman, CEO and co-founder of the Blackstone Group, splashed out on a US$3 million birthday party, it's clear where the wealth that's being sucked out of companies is ending up. As this report from ABC News reminds us (though we don't need reminding): "It's All About the Cash".

"These guys are not people who buy and hold. They buy, transform and sell. They're sort of a new beast out there."
Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business

Contine reading: Scott Mayerowitz, 'The New Titans of Wall Street - Unlike Past Entrepreneurs These Men Like to Hide in the Shadows out of the Public's Scrutiny', ABC News, 12 April, 2007.

March 23, 2007

'Cadbury a sweet target for bidders' - The Birmingham Post

“Investors are lining up to buy the American drinks division of Cadbury Schweppes should the company decide to sell the business, which includes name brands such as 7Up, Dr Pepper and Snapple. Private equity firms including as Kohlberg Kravis Roberts and Texas Pacific Group are among those believed to be interested in bidding for the beverage group, while Lion Capital and Blackstone – who acquired the Cadbury bottling business in 2005 – have also been mentioned.”

“... there is concern that once the sale is completed the private equity speculators will turn their attention to the company's confectionary business.”

Continue reading: Duncan Tift, ‘Cadbury a sweet target for bidders’, The Birmingham Post, Mar 23 2007.

February 06, 2007

'Barbarians At The Gate II ' - BusinessWeek (US)

“Private-equity outfits have been snapping up companies like there's no tomorrow. Now, a trio of investment firms, including storied Kohlberg Kravis Roberts, has topped all others. With a record $33 billion bid, including $11.7 billion of debt, the firms said on July 24 that they would take over HCA (HCA ), the nation's largest hospital chain. The price tag surpasses the record holder, KKR's $31.4 billion buyout of RJR Nabisco, a 1989 deal described in the book and film Barbarians at the Gate.”

Continue reading: 'Barbarians At The Gate II ', BusinessWeek (US), 7 August, 2006.

See the background and links about Barbarians at the Gate: The Fall of RJR Nabisco, by Bryan Burrough and John Helyar about KKR's leveraged buout of RJR Nabisco in 1988. The book was the basis for the film, Barbarians at the Gate, released in 1993.

'Barbarians or benefactors? The rise and rise of private equity' - The Guardian (UK)

"The Transport & General Workers' Union warned yesterday about the potential Sainsbury's bid. Brian Revell, T&G national organiser for food and agriculture, said: 'Such a takeover would be based on borrowed money followed by extracting as much wealth as possible from the company ... Private equity does not create wealth; they extract it for their shareholders.'"

Continue reading: Jill Treanor and Terry Macalister, ‘Barbarians or benefactors? The rise and rise of private equity’, The Guardian (UK), February 6, 2007.

February 01, 2007

"Barbarians at the Gate" - KKR's leveraged buyout of RJR Nabisco in 1988

Until July 2006, the largest leveraged buyout in history was the takeover of RJR Nabisco by the private-equity fund Kohlberg Kravis Roberts & Co (KKR) for US$31.4 billion. In July 2006 this record was broken when KKR, together with Bain Capital and Merrill Lynch, bought out the biggest hospital group in the US, HCA, for US$33 billion.

Continue reading ""Barbarians at the Gate" - KKR's leveraged buyout of RJR Nabisco in 1988 " »