bloggingbuyouts

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.

Shares of MBIA Inc. (NYSE: MBI) soared almost 30% after the world's largest bond insurer got a $1 billion cash infusion from Warburg Pincus LLC, a private equity firm.

The money couldn't have come at a better time for Armonk, N.Y.-based MBIA, which faced a potentially crippling downgrade from the credit rating agencies As Bloomberg News notes, "MBIA's AAA ranking stands behind $652 billion of state, municipal and structured finance bonds, and losing the AAA credit rating would endanger MBIA's ability to guarantee debt, its main source of revenue."

Under the terms of the agreement, Warburg Pincus will make an initial investment of $500 million through the acquisition of 16.1 million shares at $31 per share, a slight premium over Friday's closing. The investor will also backstop a shareholder rights offering of up to $500 million that MBIA expects to make next year. In addition, Warburg will receive warrants to purchase 8.7 million shares of MBIA common stock at a price of $40, and "B" warrants, which, upon obtaining certain approvals, will become exercisable to purchase 7.4 million shares of stock at $40.

Bausch & Lomb (NYSE: BOL) -- volatility of 11 at low end of Range. BOL closed at $62.54. BOL announced it would be purchased by Warburg Pincus for $65 in cash on 5/16/07. Advanced Medical Optics Inc. (NYSE: EYE) announced yesterday it withdrew its offer to purchase BOL for $75. BOL over all option implied volatility is at 11 according to Track Data, suggests decreasing risk.

CheckFree (NASDAQ: CKFR) -- volatility Elevated prior to Fiserve Inc. (NYSE: FISV) paying $4.4 billion for CKFR. CKFR, an online banking, electronic payments, and financials infrastructure and services company, will be purchased by FISV for $48 a share in cash. CKFR will report EPS on August 9th. CKFR over all option implied volatility of 41 was above its 26-week average of 33 according to Track Data, suggesting larger risk.

Accredited Home Lenders (NASDAQ: LEND) -- volatility Spikes higher on Credit concerns. LEND, a mortgage company originating, financing, securitizing, servicing and selling non-prime mortgages, is recently down $2.14 to $6.07. Dow Jones said, "LEND on Thursday filed its delayed 2006 annual report, and raised concerns about its ability to continue to operate as a going concern." Lone Star announced on 6/4/07 it would acquire all of LEND's common stock for roughly $15 per share in cash. LEND September option implied volatility is above 225 according to Track Data, suggesting larger risk.

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

Bausch & Lomb Inc. (NYSE: BOL) needed a savior, and today it announced it had found one in private equity firm Warburg Pincus, which agreed to buy the troubled eyecare products company for $3.67 billion. It's a match that makes eminent sense: Warburg Pincus is the long-acknowledged master of health care finance, skilled at using its heft in the industry to orchestrate turnarounds of the small and mega varieties. Bausch & Lomb is plagued by product recalls which have delayed financial reporting and caused a major hit to the brand's reliability. What once was seen as a premium brand has fallen significantly in the eyes of the consumer -- and management hasn't yet shown any nimbleness in addressing its brand and accounting issues.

The purchase price, about $67.40 a share (Warburg Pincus will also assume $830 million of the company's debt), is only a small premium to the current price, and already the stock is up $5.75, or 9.3%, to $67.25 on the news. Analysts agree that the deal seems fair, and that going private for a bit makes sense for Bausch & Lomb -- it's not easy dealing with such huge issues in the public eye.

Meanwhile, members of the health care group at Warburg Pincus must be salivating for the chance to do every PE employee's favorite task: get strategical and really fix something.

According to a story in Women's Wear Daily, it looks like Neiman Marcus' private equity owners -- Texas Pacific Group (TPG) and Warburg Pincus -- are considering an IPO of the firm. They bought out the company back in 2005.

The IPO could come as early as this summer, although it's more likely to be early next year.

Neiman Marcus has been posting strong results lately. In the fiscal second quarter, sales increased 8.5% to $1.3 billion and operating earnings spiked from $69.7 million to $127.8 million. The company plans to expand the number of its stores to 50-52 by 2010, up from 44. Neiman has also been building out clearance centers, called Last Call.

There has been a drought in retail IPOs. But in light of TPG's highly successful IPO of J. Crew (NYSE: JCG), there's likely to be some interest in a Neiman Marcus offering.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.