bloggingbuyouts

Investors have long coveted hot initial public offerings. But access to the biggest IPOs usually requires big money and insider connections. However, a deal between Kohlberg Kravis Roberts & Co. and Fidelity Investments may change that.

The companies are reportedly near a deal to give some of Fidelity's 20 million individual and institutional clients access to IPOs by the stable of companies in which KKR has made private equity investments.

I received an interesting email alert this morning from The Blackstone Group (NYSE: BX) regarding the addition of a new Board of Directors member. The addition is Richard H. Jenrette.

Board member additions are usually not stock events or at least not actionable events, but Mr. Jenrette is founder of DLJ, or Donaldson Lufkin & Jenrette ("DLJ"). That firm was founded in 1959.

DLJ wasn't exactly an institution that went without problems through the years, but it was built essentially from scratch to a multi-billion dollar behemoth in the financial sector with operations in trading, brokerage, investment banking, advisory, clearing, and more. Ultimately it was acquired by Credit Suisse Group (NYSE: CS), and its discount brokerage operations were acquired by E*TRADE Financial Corp. (NASDAQ: ETFC).

Mr. Jenrette is also also a former Chairman of the Securities Industry Association and has served as a director or trustee of The McGraw-Hill Companies, Advanced Micro Devices Inc., the American Stock Exchange, The Rockefeller Foundation, The Duke Endowment, the University of North Carolina, New York University and the National Trust for Historic Preservation.

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.

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.

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.

Back in May, there was word that a new commercial finance company called Tygris Commercial Finance Group was going to set a record with a $1.75 billion capital raise.

This morning, I received an email from a PR firm and then saw the press release. On June 6, Tygris closed with more than a $2 billion raise, setting an even higher record than expected.

Tygris is a commercial finance company that provides liquidity and growth capital to middle market companies throughout North America. Tygris has three commercial finance businesses: corporate finance, equipment leasing and asset finance, and small ticket leasing. Tygris has offices in Chicago, Stamford, CT and Parsippany, NJ.

United Rentals Inc. (NYSE: URI) has announced a major self tender offer this morning and is is seeing shares surge in pre-market trading. It isn't going private, but it is cleaning up its books and retiring a large portion of its common stock and preferred shares. It seems it is doing what the old private equity acquisition couldn't do.

The company has announced its plans to tender for up to 27,160,000 shares of common stock through a modified dutch auction. This will be at a price of not less than $22.00 and not greater than $25.00. Shares closed at $19.50 yesterday and its 52-week trading range is $14.83 to $34.98.

The number of shares to be repurchased in the tender offer represents approximately 31.4% of the total outstanding number of shares. If fully subscribed, the total purchase price for the common stock would be roughly $679 million. There is also the retirement of preferred shares outstanding as part of this deal, which ties into Apollo Investment Funds and the associated board members will resign from the board of directors as part of the transaction.

Continue reading the full details and analysis at 247WallSt.com.

HireRight, Inc. (NASDAQ: HIRE) is going private and shares are surging as a result. The company has entered into an agreement to be acquired by US Investigations Services, LLC, a Delaware limited liability company and Hercules Acquisition Corp. Under this buyback shares shall be canceled and converted automatically into the right to receive $15.60 in cash, without interest.

The merger is subject to regulatory approval and subject to shareholder approval. As far as how this compares to shareholders, HireRight's 52-week trading range is $8.00 to $15.15. Shares closed at $10.47 yesterday, giving this a near 50% premium. This stock has been public since last summer.

On last look with an hour to the open it looks like about 26,000 shares had traded hands and the last seen print was at $15.25.

Pier One Inc. (NYSE: PIR) has made an offer to acquire rival Cost Plus, Inc. (NASDAQ: CPWM). Cost Plus confirmed this today. Unfortunately, nether stock is reacting with anything resembling an overwhelming response. It may seem like a game changing deal on the surface.

As far as the terms before any dilution, this would have been a 31% premium for Cost Plus before any dilution metrics come into play. The buyout terms are for 0.6 shares of Pier One for each share of Cost Plus. When you factor in the share drop at Pier One, this looks like a resounding thud.

The problem is that Pier One shares have fallen and therefore lowered the potential buyout price compared to any cash offer buyout deal. With a 16% drop to $5.55 per Pier One share, this works out to a mere $3.33 for Cost Plus.

Continue reading the full summary and analysis from 247WallSt.com.

Jon C. Ogg

In a report (subscription required) out of the Dow Jones LBO Wire, Carlyle Group L.P. has delayed its deadline for the fund-raising efforts for its new Carlyle Partners V LP. The delay is said to have been moved to the end of the year for it to close on its fund raising efforts. Carlyle V's original closing date was May 30, and it received investor consent to extend the final closing date to Dec. 31 at the very latest.

Fund V efforts started in 2007 and was said to have quickly held an $8 billion first closing with a target of $15 billion and a hard cap of $17 billion.

Carlyle is not the first nor the only facing delays. The Blackstone Group L.P. (NYSE: BX) and Madison Dearborn Partners both delayed the closing of private equity funds earlier this year.

Capital Trust, Inc. (NYSE: CT) has formed a new fund to invest in invest in "high grade" commercial real estate debt. This will include investment grade securities such as CMBS, REIT debt, and CDOs, as well as whole loans and participations therein.

CT High Grade Partners II, LLC with $667 million of commitments from two institutional investors.

This fund will be managed by CT Investment Management Co., LLC, Capital Trust's wholly-owned investment management subsidiary.

This is actually a limited time vehicle as well. CT High Grade Partners II has a one year investment period subject to extension by mutual agreement. Investments will be funded 100% with the investors' capital utilizing no leverage and CTIMCO will earn a management fee equal to 0.40% per annum on invested assets.

Jon C. Ogg

Bristol-Myers Squibb (NYSE: BMY) has entered a definitive merger pact where it will acquire Kosan Biosciences Inc. (NASDAQ: KOSN). Bristol-Myers Squibb will pay $5.50 per share in cash for each share of Kosan. The biotech's stock was only at $1.65 yesterday and its 52-week trading range is $1.28 to $6.49.

This will translate to a purchase price of approximately $190 million after deducting Kosan's projected net cash balance at June 30, 2008. The deal has also been unanimously approved by the boards of directors of both Bristol-Myers and Kosan.

The acquisition of Kosan will enhance Bristol-Myers Squibb's pipeline will get to enhance its pipeline with compounds in two important classes of anticancer agents, called novel Hsp90 (heat shock protein 90) inhibitors and epothilones.

You can read more about the full terms and more importantly what the real acquisition is about in the full story at BioHealthInvestor.com. This is an important deal despite the small size of Kosan as it could create a game changer in smaller biotech premium mergers.

Diebold (NYSE: DBD) is recently down 32 cents to $39.97.

United Technologies (NYSE: UTX) announced on March 3 that it had made a proposal to acquire all outstanding shares of DBD for $40 per share in cash. This afternoon Dow Jones reported UTX's CEO called $40 a share bid for DBD a good offer, and DBD is not a must have.

DBD June option implied volatility of 18 is below its 2-month average 24 of according to Track Data, suggesting decreasing price movement.

M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Usana Health Sciences (NASDAQ: USNA) closed yesterday at $20.83. This morning, Gull Holdings announced its intention to make an offer to USNA shareholders to acquire all of the outstanding shares of USNA for $26 cash.

USNA is a developer & manufacturer of nutritional and personal care products. The stock is up 22% today on the acquisition news.

M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Right after the close, Hewlett-Packard Co. (NYSE: HPQ) did actually confirm in a press release that the company was in advanced acquisition talks with IT-sourcing giant Electronic Data Systems Corporation (NYSE: EDS). While it noted that there are no assurances that a deal will be reached, Wall Street took it in good stride.

As traders look to the news covering whether or not EDS will become part of H-P, traders were looking at how to get in the news. As a result, there are many other tech and IT-sourcing companies to look at that other potential players may take an interest in.

If we took the mid-point of the pricing at $12.5 Billion we would have a rough share price of $25.00 per share on EDS. At that rough price, you would have a company that analysts expect to be priced at 18.2 times DEC-2008 earnings and 0.55-times revenue estimates.

Read the full story of "Who Could Be Next" at 247WallSt.com to see which other stocks in IT-outsourcing stocks could be in play.