Almost everyone thought of the Penn National Gaming Inc. (NASDAQ: PENN) private equity LBO merger as dead money for quite some time. It only officially became a dead merger this morning. This was the last of the big multi-billion deals still officially on the books that was put together back before we had a full blown credit crunch.
PNG Acquisition Company Inc. was the buyout entity, which was indirectly owned by certain funds managed by affiliates of Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners, L.P.
The buyout price of $67.00 per share was older than Methusela. Since January, this stock slid steadily from over $60.00 down to under $30.00. The deal was a known to be dead by everyone. But there is actually a silver lining here for the company. Penn National will get $1.475 Billion in cash out of this.
Affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia, and affiliates of Deutsche Bank will all be holders of those notes. To top it off, Fortress Investment Group's Chairman & CEO, Wesley Edens, will join the Penn National Gaming Board of Directors.
Keep reading for on the fly analysis, guidance, and ramifications at 247wallst.com.
There is a rather interesting deal out there that can be viewed as a glass half-full or glass half-empty depending on whether or not you are from the private equity side or from a public company.
Fiserv Inc. (NASDAQ: FISV) has announced a rather interesting move this morning. It is selling a majority interest in its insurance business operations for some $510 million in equity and debt to Trident IV, a private equity fund managed by Stone Point Capital LLC.
The company has announced that it will turn around and repurchase up to 10 million shares of common stock in a repurchase program.
Krispy Kreme Doughnuts, Inc. (NYSE: KKD) gave some very unusual volume trading alerts this morning, and the culprit here is nothing less than buyout offer chatter. Yep, it seems that the rumor mill has the fried dough maker as one of the next buyout candidates.
It took only about 35 minutes for us to see double the normal average daily trading volume. The culprit is a private equity buyout of $7.25 per share, yet no one understands if the "offer" is real. MGL Asset Management Group LLC out of Charlotte has been named as the suitor. Whether or not that is the case is something different entirely.
If you know the history of this company you probably understand that it is synonymous with "disappointment." The buyout chatter price is $7.25, yet the 52-week trading range is $2.23 to $9.48. You can determine on your own whether or not an offer is a good as a take. Chatter on top of that is yet another issue.
Despite this having been covered on CNBC and despite the written reports above, it would take a lot more faith than sense to believe this until actual facts are released from either the private equity firm or Krispy Kreme itself.
So you think there's a credit crunch and a glut of property on the market? Tell it to Manhattanites. Global private equity giant The Carlyle Group has announced along with Extell Development Company and RREEF that they have secured a $613 million construction loan for the development of two luxury residential buildings at Riverside South on Manhattan's Upper West Side.
Deutsche Bank led the large lending consortium of nine banks that provided the financing. The release calls this the largest construction loan secured in the U.S. in 2008.
This property group is located on the upper West Side located at West 62nd and West 63rd Streets between Riverside Boulevard and Freedom Place South. The two buildings also total some 880,000 gross square feet and the buildings are under construction. For now, the completion dates are slated for the first half of 2010.
Riverside South is a 13-acre tract of land purchased by Carlyle and Extell for $1.8 billion in 2005. One building will be rental properties and one will have dual rental and ownership units.
"The rest of us" have a hard time understanding where the endless money comes from to keep buying up these micro-spaces for more than many will ever amass in an entire lifetime. When you see people still willing to pay $1 million for under 1,000 square feet, it's no wonder at all how or why these projects get financed.
If you have been following the alternative energy saga alongside ridiculous oil prices going from rising to high to astronomical, you've run across the name Tesla Motors. Tesla is a venture capital and privately funded auto maker that produces a high performance electric powered sports car.
The Tesla Roadster and soon to be sedan are now both now going to be manufactured in California, or so a report in the San Francisco Chronicle and elsewhere are noting. Governor Schwarzenegger included some incentives that have kept the electric auto maker from moving manufacturing to New Mexico (besides the Governator ordering one unit for himself). But it appears that the State of California is giving it more than mere tax incentives.
It appears that this is going to get equipment leases from the state, as well as additional grants. What is interesting here is that this gets the company even further on the map. There have been recent reports that Tesla was in the market for another huge financing. Whether or not that comes about now is not certain. Other reports show that the company may even supply battery units to Daimler or other car manufacturers.
What is becoming fairly certain is that Wall Street expects to see Tesla file for an initial public offering. As capital intensive as these businesses are, the company needs to have a steady vehicle (no pun intended) to be able to raise the capital it needs.
Think of the good news.... At least one US auto manufacturer will be considered cool.
It has been a while since we have seen a lot of news on the front of Special Purpose Acquisition Companies, or SPACs. Apparently they aren't dead. In fact, a huge deal just came in for a SPAC to become operational.
Hicks Acquisition Company I, Inc. (AMEX: TOH) has reached an agreement in principle to go from SPAC to operational in a tentative deal that is expected to be finalized in the next few days. Hicks Acquisition will merge with Graham Packaging Holdings Co. through a transaction with Hicks Acquisition.
Interestingly enough, this will be in partnership with The Blackstone Group L.P. (NYSE: BX) and the Graham Group. Blackstone has also agreed that it will maintain the largest ownership stake for at least two years as it continues to play an important role in guiding the company strategically and operationally.
After the transaction, the combined enterprise will be renamed Graham Packaging Company and will list on the New York Stock Exchange.
Continue reading core background data as to what the company will look like at 247WallSt.com.
What is interesting is that Celebrate Express is a online and catalog retailer of party supplies and costumes marketed under the brands Birthday Express, 1st Wishes and Costume Express. Celebrate will be attributed to the Liberty Interactive Group and will be combining it with BUYSEASONS, Inc.
Both boards of directors have approved the merger and Liberty will pay $31 million in cash, or $3.90 per Celebrate share. Celebrate Express closed at $2.30 today and its 52-week trading range is $2.19 to $10.70.
If you look at the balance sheet of Celebrate Express, it looks like John Malone is getting to add this company into his costume empire for nearly free.
It looks like we have another small information technology merger taking place this morning. This is a US company acquiring an Irish company.
Progress Software Corporation (NASDAQ: PRGS) has entered into a definitive agreement to acquire IONA Technologies plc (NASDAQ: IONA) in a cash buyout of $162 million and approximately $106 million net of cash and marketable securities reported on March 31, 2008. This will bring a cash buyout price of $4.05 per share for IONA holders.
The offer price per share is approximately 16% over the average price for IONA shares over the six months prior to the offer period announced by IONA on February 8, 2008. Unfortunately, the 52-week trading range is $2.01 to $6.28.
So far, IONA shares are trading up 9.4% at $3.94 and Progress shares are up less than 1% at $25.46 in the first ten minutes of trading.
IONA Technologies' board of directors unanimously approved the merger and each IONA Technologies director has entered into an agreement to vote in favor of the transaction. The merger is subject to regulatory approval in teh US and in Ireland and is also subject to IONA shareholder approval.
Progress Software is a global supplier of application infrastructure software used to develop, deploy, integrate and manage business applications. IONA Tech is an established supplier of software integration technology. The companies have both signed a definitive agreement to further the merger. IONA is based in Dublin, Ireland, so it looks like we have yet another cross-border tech and IT merger.
For some reason, private equity has refrained from aggressively investing into energy and oil & gas plays. Perhaps it was that energy prices spiked too fast or perhaps it was because the fears would be that the projects only merited investing if prices were assured to stay high in oil and gas. That may be changing.
The Blackstone Group (NYSE:BX) will invest $500 million in a new pipeline company, Crestwood Midstream Partners LLC. A Blackstone-owned hedge fund called GSO Capital Partners is participating in today's deal.
Crestwood was formed in December 2007 with an initial investment of $150 million from the Kayne Anderson, which has several public entities in the space:
Crestwood is headed by industry veteran Robert G. Phillips, who is former chief executive of Enterprise Products Partners, who joined Enterprise following its merger with GulfTerra in 2006.
Stiefel Laboratories calls itself the world's largest independent pharmaceutical company specializing in dermatology. It has offered to purchase all of the outstanding stock of Barrier Therapeutics in a cash buyout valued at $4.15 per share. This price is a 73% premium to Barrier's average closing price for the past 30 days and is more than a 100% premium to Friday's close.
While the transaction is a high premium buyout, it is valued at approximately $148 million and therefor fits into the near-micro-cap buyout group of stocks we have seen get acquired in the sector of late. This is subject to the valid tender of a majority of Barrier Therapeutics' votes, regulatory approvals and other customary conditions; but the merger is not subject to any financing conditions and it is expected to close by the end of the third quarter of 2008.
The board of directors at barrier has approved the transaction but there might be hurdles to overcome here. You can see the full details and analysis at BioHealthInvestor.com.
Most private equity firms hunt for stable companies with stable cash flows that are either cheap or inefficiently operated. These companies can then be resold for more money or taken public, or the strategy can fit into the Warren Buffett time frame of "forever." Biotechnology has long been the realm for only public companies, but that is changing.
Private equity firm Warburg Pincus has already made some biotech plays that seemed to be a harbinger of the trends here, and even more so when you consider foreign drug companies buying US-based biotechs on the cheap with that US Peso of a currency we have.
A new fund called GANIC Pharmaceuticals has been launched this week, with Warburg Pincus as the main backer. the private equity firm made an initial investment in GANIC from the Warburg Pincus Private Equity X, L.P., a $15 billion fund which closed in April. As of now, we do not have any exact launch figures for the size of the investment that was given to GANIC.
GANIC's management is all former senior executives of MedPointe Pharmaceuticals and the company will will focus on building a substantial enterprise by acquiring revenue generating companies, portfolios, and/or products and by investing in innovation and acquiring pipeline development assets.
Read more at BioHealthInvestor.com for estimates of the size and strategies that the fund may employ.
Huntsman Corp. (NYSE: HUN) is seeing the value of its stock destroyed in after-hours trading. This was one of those pending mergers that was old enough that many had forgotten it was even on the docket. Hexion Specialty Chemicals has announced that it has filed suit in Delaware to exit its contractual obligations to acquire the company.
The Hexion-led filed to terminate its proposed $10.6 Billion acquisition of Huntsman Corp. Hexion has said in this suit filed that it believes that the capital structure agreed to by both Huntsman and by Hexion for the combined company is no longer viable.
The reasons noted are because of Huntsman's increased net debt and its lower than expected earnings. Hexion notes that both companies are individually solvent but it believes that the merger's capital structure previously agreed to would render the combined company insolvent.
LinkedIn is the social networking operator that just about every business person has received an invite to join from at least one person they know.
The company issued a press release this morning noting that it has secured $53 million in additional funding in a capital raise. This was its fourth and largest round of funding and is said to value the company north of $1 billion. What is perhaps more interesting than anything is that the finding was from a private equity-led group rather than from venture capital. Bain Capital Ventures, the VC unit of Bain, led the financing with additional reinvestment from the company's existing investors:
Sequoia Capital,
Greylock Partners,
and Bessemer Venture Partners.
Over 23 million professionals use LinkedIn to keep in touch with old contacts, to reach new contacts, to problem-solve, and more.
To top matters off, CNBC hosted the head of the company, Dan Nye, earlier this morning and the hint of going public was much more than a hint. It seems like you can probably expect an S-1 filing with the SEC in the relatively near future if things continue, although that timing could be later in 2008 or into 2009 or even never. But the 'we are going for valuations much higher than this' line was a hard one not to notice. Personally, I'll go ahead and 'bet the over' that we see an IPO filing in the coming months as long as market conditions don't go further awry.
Fertitta has agreed to acquire all outstanding common stock for $21.00 per share in cash. This represents a premium of approximately 37% over the closing share price of the company's common stock on April 3, 2008. This was the last day before disclosure of the revised offer made by Mr. Fertitta to acquire the company. The total value of the transaction is approximately $1.3 billion, which includes approximately $885 million of debt.
Fertitta is a newly formed entity wholly owned by the company's Chairman, President, CEO and original founder, Tilman J. Fertitta. Mr. Fertitta beneficially owns approximately 39% of the Company's outstanding shares of common stock.
A fresh report out of Reuters is saying that Time Warner Inc. (NYSE: TWX) has withdrawn from the bidding process to acquire The Weather Channel due to price. The deadlines on this were supposed to be noon today.
Because this is a private transaction and because this is such a large deal for the ultimate buyer(s) and sellers, this one has been a hard one to follow with any credible or dead set numbers and terms.
This is an ongoing and developing story with an outcome that is not yet known. Stay tuned.
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Most private equity firms hunt for stable companies with stable cash flows that are either cheap or inefficiently operated. These companies can then be resold for more money or taken public, or the strategy can fit into the Warren Buffett time frame of "forever." Biotechnology has long been the realm for only public companies, but that is changing. 
