Posts with tag The Deal
Posted Dec 26th 2007 11:00AM by Paul Foster
Filed under: Deals, Madison Dearborn Partners, Providence Equity Partners, Engagements, Value and lack thereof
BCE Inc. (NYSE: BCE), Canada's largest telecommunications company, announced on June 30, 2007, it agreed to be acquired by an investment arm of Ontario Teachers Pension, Providence Equity Partners and Madison Dearborn Partners for an announced deal price of $42.75 per share. The deal is expected to close in Q1 of 2008. The Deal said on December 17 that the deal is "awaiting regulatory approvals; apparently on course." BCE closed at $39.17. BCE over all option implied volatility of 26 is above its 26-week average of 18 according to Track Data, suggesting larger risk.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Posted Jul 11th 2007 9:00AM by Kevin Kelly
Filed under: Raising money, Private equity industry
According to
The Deal, the S&P Leveraged Commentary & Data Index fell to its lowest level in four years yesterday morning. For anyone who follows the credit markets closely, this should come as no surprise. I recently spoke to one multi-strategy (but high-yield focused) fund manager who expressed extreme skepticism about the current debt market. In his eyes, the risks aren't being accounted for in interest rates and investors are being paid less to take risk than they have been in previous years. Therefore, this fund manager is much more heavily involved in equities than credit at this point in time.
As the article goes on to say, this is likely to have implications for the entire private equity industry for several reasons. First, it will likely become much more difficult for private equity firms to gain the capital to complete deals. In addition, and perhaps more importantly, the private equity firms might be forced into paying more for their credit as a result of the recent "repricing" in the debt market. This move could bust the financial models private equity firms use to justify their deals. For example, a company's value can vary dramatically in the eyes of a private equity firm if the cost of equity moves from 6% to 7%.
While this likely isn't the end of the private equity boom, I'd argue that events such as these suggest that the easy money days of buyouts are quickly becoming a thing of the past.
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