In case you missed any of these catchy tunes last week, it's not too late to boogie down. Grab your headphones, CD player, iPod, speakers, guitar, cowbell, whatever you need -- it's time for the M&A Mix Tape.
"I Heard It Through the Grapevine" by Marvin Gaye and First Data
One of the things that struck me about KKR's $29 billion buyout offer for First Data
Is a $29 billion buyout just not what it used to be? If you ask me, this is another great example of the effect expectations can have on investors' reactions. After the buyout masters of the universe have been relatively quiet for a few years, everyone gets excited when they start throwing their might around. But put them on a tear for a couple years, with a $39 billion deal (Equity Office) followed up by a proposed $45 billion deal (TXU
Of course, it also helps that a takeout of First Data has seemed to be on the horizon ever since the company spun off its Western Union
Both First Data and Western Union have some fans over here at the Fool. Both have been recommendations from Philip Durell for the Inside Value newsletter, and my colleague Brian Pacampara just recently singled out First Data as his pick for the ultimate Rule Maker. And as for its private equity fans, there's a lot to like, but what I see is another confirmation of the value of a company that has a rock-solid, predictable business.
"Money" by Pink Floyd and Apollo Management
If the answer to the question is "money," then the question could very well be, "Why are so many private equity firms thinking about selling a stake right now?"
Though it's better known as a hedge fund, the majority of the funds managed by Fortress Investment Group
It's not like these firms came out of nowhere and are suddenly wowing the investing community with their prowess. They've been around for a while, and have likewise been impressive for a while. But right now, debt is cheap, private investors are pouring money into new PE funds, and the PE shops are rocking and rolling with massive buyout deals. In other words, the stars have aligned to create a great valuation environment for PE IPOs.
The most recent word is that Apollo may be opting to sell a piece of the firm privately rather than going through the IPO process, but it wouldn't be a shock if it went the public markets route after all. And it definitely wouldn't be a surprise if some of the other big boys were mulling a public offering as well.
"Go Your Own Way" by Fleetwood Mac and Coles Group
In case you thought all the buyout fun was in the U.S., a quick look Down Under proves otherwise. Last week, Australian conglomerate Wesfarmers, along with buyout firms Pacific Equity Partners and Permira and investment bank Macquarie, made a $16 billion bid for retailer Coles Group. The deal would mark the largest buyout in Australian history and pushes the total announced deals in the country to $62 billion for the year.
Though the geography is different, the names aren't wholly unfamiliar; the bid by Wesfarmers and friends bests a bid that KKR -- along with Carlyle, CVC Capital, TPG, Blackstone, and Bain -- made for Coles Group last year. KKR's bid was rejected as too low, but it is expected that the firm may come back and try to outbid Wesfarmers.
Liner notes
Fresh off the desk of the "stuff we already knew" department, DaimlerChrysler
AirTran has upped the ante in its quest to snap up Midwest Air. Last week, the discount airline upped its bid 13% to $15 per share, or $389 million for the entire company. This comes as the consolidation that once seemed inevitable in the airline industry seems to have cooled off drastically.
And in more local M&A happenings, Philadelphia's Ritz Theaters, my favorite place to catch indie films when I lived in Philly, has been bought out by the Landmark Theatre chain. According to a report from The Philadelphia Inquirer, Landmark is planning to keep the same Ritz operations that patrons have come to know and love.
That's it for this album, but be sure to keep tuned in to The Motley Fool for more tunes from the M&A front.
TXU is a former Income Investor recommendation. You can check out any of the Fool's newsletters with a 30-day free trial.
Fool contributor Matt Koppenheffer is currently ranked 5,467 out of 25,583 Fools participating in The Motley Fool's CAPS service, and he encourages everyone to get heard. He does not own shares of any of the companies mentioned. The Fool's disclosure policy doesn't fear the reaper.
