Market Not Buying Recent Buyout Deals

from the about-that-offer... dept

It's easy to forget that just because a buyout has been announced, there's no guarantee that it will actually go through. Pending private equity deals are particularly vulnerable at the moment, because they're all debt financed. One good way to get a sense of whether the market is expecting a given to go through is to look at the current market price of a stock compared to the buyout price. The wider the gap, the less likely it'll actually happen. These gaps are getting pretty wide on a number of deals, including a few discussed here. The purchase of Clear Channel was announced last November, but today the stock trades at 37% below the offering price. Alltel is in a similar boat, trading 22% below the buyout price, which was just announced in May. It's still possible, of course, that both of these deals will get done. But if current conditions persist, we may see them hang around in their current form for a bit longer.

Filed Under: m&a, private equity
Companies: alltel, clear channel

Is Anger At The Private Equity Industry Really Justified?

from the black-stone dept

Ever since private equity firm Blackstone came public earlier this year, there's been a strong backlash against the entire industry. Congress is looking to close a tax loophole that effects both private equity and VC firms, prompting some venture capitalists to lash out against private equity executives for drawing political scrutiny and potentially ending the party. But as Andrew Ross Sorkin points out, all of this outrage pointed at the industry (and Blackstone chief Stephen Schwarzman specifically) is a bit overdone. Plenty of executives could accused of having a big ego or of throwing big, garrulous parties in their own honor, as Schwarzman has done. Ultimately, it was the company's IPO that served as the catalyst for the outrage, so Blackstone, simply by virtue of being first to go public, has borne the brunt of it all. That being said, if things start to deteriorate economically, expect even more outrage at any executive perceived as having cashed out at the top.

Filed Under: private equity, vc
Companies: blackstone

Orbitz IPO Greeted With A Yawn

from the full-circle dept

Throughout its relatively short history, online travel site Orbitz has undergone quite a number of ownership changes. Last year, Orbitz' parent company was bought out by private equity firm Blackstone, which promptly decided to flip it back to the public markets. When it first filed to go public, there were many who argued that the company looked like a terrible investment for both operational and structural reasons. It looks like the market agrees with that assessment, as the IPO ended up pricing below its expected range. Private equity firms aren't infallible, and sometimes they're bound to buy companies that they can't turn into very much. But as more of these unimpressive offerings come to market, there's going to be increased skepticism over whether these firms can apply their magic touch to the tech industry.

Filed Under: ipos, private equity
Companies: blackstone, orbitz

Private Equity Firm To Go Public On Private Exchange

from the mind-bender dept

Whether it's shareholder lawsuits, political interference or Sarbanes-Oxley, there are plenty of reasons for companies to want to avoid the public markets these days. Still, public markets represent a good way to both raise money and give a company's principals liquidity. Private equity firm Apollo Management has announced that it will sell its shares on a private stock exchange established and managed by Goldman Sachs. The exchange is only open to institutional investors, which will allow Apollo to avoid unwanted regulatory scrutiny, while generally relieving it of many other burdens that face public companies. While Apollo will still have to communicate information with investors, it should have a lot more flexibility than the current public system allows for. If Goldman Sachs' exchange can garner a critical mass of listed companies and institutional traders, it, and others like it, should represent an interesting alternative to traditional markets.

Filed Under: markets, private equity, stock exchange
Companies: apollo, goldman