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.
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.
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.
Early this year, The Blackstone Group LP (NYSE: BX) agreed to purchase GSO Capital Partners, a hedge fund that focuses on leveraged finance, for a cool $930 million. Stephen A. Schwarzman, Blackstone's CEO, said that the deal would create "one of the largest credit platforms in the alternative asset management business." Yes, it's an attractive space, especially in light of the credit crunch.
Moreover, Blackstone isn't wasting time in leveraging the GSO platform. According to a report in Bloomberg, it looks like it is raising a new fund that is focused on distressed debt.
True, there hasn't been a surge in defaults and bankruptcies, but such things usually have lag times, and if the economy remains sluggish, there are likely to be many distressed opportunities.
However, the distressed investment market is getting crowded. Some of the recent players include the Carlyle Group and Oaktree Capital Management. In fact, Monarch Alternative Capital and Cerberus Capital Management LP are in the market raising their own distressed funds.
Leave it to private equity to try to bring back Michael Jackson.
The Wall Street Journal recently reported that "Colony Capital, which owns the Las Vegas Hilton and is a major shareholder in closely held Station Casinos, is in discussions with Mr. Jackson to get him back onstage and in the spotlight via a long-term stand in Las Vegas."
Colony Capital may just have the leverage to get something done with Mr. Jackson: he owes them $25 million after the firm acquired the debt from Fortress Investment Group.
The plan is to try to revive Jackson's career with a stint in Las Vegas and, eventually, build a Thriller-themed hotel-casino there. I'm not so sure. Las Vegas has resuscitated -- or at least prolonged -- the careers of a lot of entertainers, but it's hard to think of anyone who carries as much baggage as Michael Jackson.
Similarly, a private equity firm might be able to turn around a struggling brand but, to my knowledge, the industry has never attempted to work its magic on a brand that a large percentage of Americans believe has molested children (with the possible exception of Chrysler). And legal system be darned, that's what many people associate him with.
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.
Invitrogen Corp. will pay $38.00 per share between the cash and stock, compared to yesterday's close of $32.44 and compared to the $37.67 52-week high. After the deal closes, it sees fiscal and calendar year 2009 organic revenue growth in the mid-single digits.
The company says that the combined operations will have annual sales of $3.5 billion and is expected to be neutral to slightly accretive to Invitrogen's earnings per share the first year after close and significantly accretive in year two.
State Street Corporation (NYSE: STT) has a report out showing various 2007 private equity returns. While the numbers are backward looking and do not indicate anything for tomorrow, the numbers are still staggering considering all of the problems that started hitting private equity firms last year.
The State Street Private Equity Index posted its returns for the index date December 31, 2007 and it still shows a long-term return that is higher than the traditional equity markets.
The index is based on the latest quarterly statistics from State Street Investment Analytics' Private Edge Group. It is a detailed analysis of private equity investments for a diverse client base covering public and private pensions, endowments and foundations, representing more than 4,000 commitments totaling more than $160 billion. Continue reading the full report at 247WallSt.com.
If you are Sam Zell right now, you are probably sitting there wondering why on earth as an old billionaire that you thought an old world media property with very little in new media that you'd have to shrink and break apart to profitability was such a good idea. Tonight, that looks even more so the case.
According to MLB.com Tribune Co. rejected a no-tax proposal in the sale of Wrigley Field to the Illinois Sports facilities Authority, which also owns and operates the Chicago White Sox U.S. Cellular Field as well.
If you read the full article you'll see how this may also impact the sale of the Chicago Cubs as well. Zell announced in April 2007 that the Cubbies were to be sold. Interestingly enough, the Cubs are also in first place in the NL Central division.
Goody's Family Clothing, a retailer of lower priced clothing, filed for Chapter 11 bankruptcy protection this week. To this end, the company will shut down 103 stores, about a quarter of the total, as well as a distribution center. Goody's is located primarily in the southeast and has been around since 1953.
It was back in 2005 that Robert Goodfriend, the son of the founder of Goody's, agreed to a $327 million buyout. The private equity sponsors included Prentice Capital Management and GMM Capital. Unfortunately, since then Goody's has been consistently losing money -- perhaps because of the heavy debt load and competition from the like Wal-Mart (NYSE: WMT). According to the bankruptcy filing, the company has $313 million in assets and $443 million in debt.
Actually, there have been a variety of recent bankrutpcies for retailers, such as Lillian Vernon Corp., Linens 'n Things Inc., Sharper Image and Levitz Furniture Inc. And, as the economy continues to slow down, I'm sure we'll see more.
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.
Hologic, Inc. (NASDAQ: HOLX) has signed a definitive agreement to acquire Third Wave Technologies, Inc. (NASDAQ: TWTI) for a purchase price of $11.25 per share, or approximately $580 million in all. This represents about a 24% premium to Third Wave's average trading price over the last three months. The Boards of Directors of both companies unanimously approved the transaction.
This merger is one of the more interesting in medical and diagnostic companies, despite neither company being a household name. Third Wave develops and markets molecular diagnostic reagents for a wide variety of DNA and RNA analysis applications for conditions such as Cystic Fibrosis, Hepatitis C, cardiovascular risk and other diseases. Its HPV market opportunity is a $200 million market and growth in excess of 40% in each of the past five years. Hologic believes the global market for HPV testing will increase to $800 million in the next few years.
Third Wave shareholders will receive an aggregate amount of an estimated $580 million in cash, assuming the conversion of Third Wave's outstanding convertible notes, warrants and restricted stock. Hologic plans to finance this transaction with a $600 million loan in the form of a senior secured credit facility, and it has secured fully committed debt financing for the full consideration from Goldman, Sachs & Co.
Lehman Brothers Holdings Inc. (NYSE: LEH) has in effect set itself up for a future takeunder, or so its pricing and trading seems. The business itself has few proprietary operations, and all of its assets walk in the doors early in the morning and leave at night.
The investment banking and trading firm is raising approximately $6 billion to shore up its balance sheet. It is a solid amount of capital, but it is very bad news that the brokerage had to raise that much. Lehman's loss for the last quarter is now reported as about $2.8 billion. Not so long ago, estimates were for that number to be $300 million.
That leaves Wall Street wondering what other firms are facing. It is hard to imagine Lehman's losses could be eight times greater than expected without results being very poor at other firms trading and investment banking firms.
Lehman likely needs this capital because is still bleeding in the current quarter and may be damaged more through the rest of the year. The company may come out and say that it doesn't need any more capital and that this is it, but we have heard that song over and over. In fact, on Wall Street 2008 may be the year of "Brother can you spare a few billion in change?" for major investment banks and lending institutions.
Most firms on Wall Street put money into the same mortgage paper, LBO loans, CDOs and CLOs, and other derivatives to one extent or another. Lehman's shares traded at a 52-week high of $82.00. In mid-May, it was trading in the mid-$40's. Lehman closed at $32.29 Friday. Shares are trading around $29.50 or $29.60 in pre-market after having traded around $28.00 in earlier pre-market trading.
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Leave it to private equity to try to bring back Michael Jackson.
