VIEWS: 35 PAGES: 3 POSTED ON: 11/29/2009
Briefs Compiled by Warren Strugatch On Sale Now at A&P: Six Stores Rubinstein: P.E.‟s „Golden Days‟ Are Over David Rubenstein Turmoil in the global credit markets has put M&A activity in “pause mode,” but even so alternative investments still outperform most investment modes, David Rubenstein, co-founder of the Carlyle Group, said Wednesday in a speech to the American Enterprise Institute. “Returns are probably going to come down,” he said, but “they are still better than almost anything else you can do that is legal,” the Associated Press reported. “The golden days of private equity are probably behind us,” he went on, “and we have to adapt to that.” The industry needs to clean up its public image, he declared, connecting the industry‟s chronic PR problems with growing vulnerability to legislative scrutiny. “We need to engage government officials on a regular and constant basis,” suggesting that private equity firms should rally around this cause. Translation: Let‟s lobby more aggressively and contribute more generously to political campaigns. We think it shouldn‟t be too difficult finding candidates willing to accept campaign bucks. More online at Yahoo Finance http://biz.yahoo.com/ap/071128/private_equity_credit_crunch.html?.v=1 Professors Say LBO Dealmakers Profit From Layoffs Workforce reductions are more likely to occur at companies following a leveraged buyout than at similar businesses in the same industries, according to new research. Private equity firms typically lay off workers in the second and third years following a leveraged buyout, and retail operations are more likely to experience layoffs than manufacturing companies, the study reports. Investors “disproportionately go into firms that are already shrinking, and then shrink them more,” according to Steven Davis, professor at the University of Chicago‟s Graduate School of Business, and one of the report‟s authors, said Thursday, Bloomberg reported. More at Bloomberg http://www.bloomberg.com/apps/news?pid=20601103&sid=acg0PYOYcq_M Fund Bids $217M for Trans World Entertainment Sherwood Investments of Orlando, Fl. proposed a $7 per share buyout of Trans World Entertainment Corporation (Nasdaq: TWMC) yesterday, a deal worth $217 million for owners of the money-losing movies-and-music retailer. On Wednesday Trans World, which owns and operates such chains as f.y.e., Sam Goody, Coconuts Music and Movies, Wherehouse Music and Movies, and Strawberries, signed a nonbinding agreement to be acquired by Riley Investment Management LLC of New York for $5 a share. Bryant Riley, who controls Riley Investment Management, owns nearly 12 percent of Trans World. Robert E. Higgins, chief executive of the retailer, and owner of 40 per cent of its stock, approached Mr. Riley last month about a sale. Sherwood, which owns a 4.3 percent stake in the company, slammed Riley‟s terms as “grossly inadequate” before countering with its own bid. Trans World has been losing money and closing stores as music sales decline across the board; on Nov. 21 the company its third-quarter loss widened to $14.3 million, or 46 cents a share, compared with a loss of $11.4 million, or 37 cents a share, a year ago. Sale on at A&P, Now Through Jan. 10 Great Atlantic & Pacific Tea Co. must sell six of its stores by Jan. 10 in order to proceed with its planned acquisition of the Pathmark supermarket chain, the Federal Trade Commission ruled Tuesday. The decision clears the way for the $665 million deal to close as early as Monday. The Montvale, N.J.-based acquirer, which already owns A&P, Super Fresh, Food Emporium and Waldbaum‟s, announced plans in March to purchase Pathmark for stock and cash on hand. Total divested revenues would amount to about $149 million, analysts reckon. Aequitas Capital Management Acquires Windswept Capital Brian Oliver Aequitas Capital Management, an alternative investment firm based in Lake Oswego, Ore., has acquired Windswept Capital, LLC, of Seattle. Aequitas describes itself as a “socially conscious alternative investment firm” investing in alternative-energy opportunities and employment-generating businesses like healthcare. It has about $200 million under management. Windswept is an investment banking firm focused on mergers, acquisitions and recapitalizations for middle market companies located in the Pacific Northwest. “We were interested in adding service capacity and gaining a physical presence in Seattle, and they were interested in being a part of something bigger,” said Brian Oliver, senior managing director of Aequitas. Terms of the deal were not disclosed. Dolphin Pushing Sale of Multimedia Dolphin Limited Partnership III, L.P., a New York investment fund, called earlier this week for Multimedia Games Inc to seek a sale or merger. The fund, which owns about 3 percent of Multimedia‟s outstanding shares, said that the company lagged sector rivals in earnings. Multimedia Games' repurchase of 2 million shares of common stock this spring likely revealed potential deal partners, Dolphin Limited asserted in a letter to management that was also filed with the Securities and Exchange Commission. Multimedia manufactures video lottery games and bingo terminals. Take a Little Longer, Just Get the Money Image Entertainment Inc. (Nasdaq: DISK), a distributor of music and video to North American consumers, said Wednesday it has agreed to extend the closing date of its planned acquisition by BTP Acquisition Company, LLC, to Dec. 3, in order to give BTP more time to arrange financing. Image Entertainment, headquartered in Chatsworth, Calif., licenses about 3,000 exclusive DVD titles and approximately 250 exclusive CD titles domestically. In second quarter results released Nov. 13, Image showed a loss of 17 cents per share on falling revenue. BTP is perhaps best known as the owner of Thinkfilm, a film distributor, and also operates Capitol Entertainment in the U.K. The deal, valued at $95 million, was announced Oct. 23 and originally scheduled to close Nov. 6. American Greetings to Acquire PhotoWorks for $26.5M American Greetings Corporation (NYSE: AM) will acquire PhotoWorks, Inc. (OTC: PHTW) for $26.5 million. American Greetings will make a cash tender offer to acquire all outstanding common shares of PhotoWorks for 59.6 cents a share. Zev Weiss, the chief executive of American Greetings, said that PhotoWorks provides the company with a “strong integrated supply chain platform” allowing customers to create “unique, high quality physical products” out of their photos. The acquisition follows American Greetings‟ acquisition last month of Webshots, an online photo service, for $45 million. F.C.C. Gives Green Light on Tribune Deal Kevin Martin, chairman of the Federal Communications Commission, said Wednesday that he was willing to waive restrictions against a company owning both a newspaper and a broadcast station in the same market rather than impede the pending buyout of Chicago‟s Tribune Co. by real estate investor Sam Zell. Noting that the rules have been inconsistently enforced – that‟s an understatement! - Mr. Martin called for a vote next month that would produce clearer cross-ownership rules. Tribune Co. currently owns both newspapers and broadcast stations in five markets: New York City, Chicago, Miami, Los Angeles and Hartford, Conn. Formally Speaking, After Hours Acquisition Erodes Men‟s Wearhouse Q4 Earnings Men‟s Wearhouse, the Dallas-based clothing chain, said costs associated with its April acquisition of After Hours Formalwear will weaken fourth-quarter earnings. The acquisition will lower the company‟s earnings by 31 or 32 cents a share, the company said Wednesday. Eurocrats Suspend Anti-Trust Probe of IBM‟s Telelogic Bid The European Commission suspended its anti-trust investigation into International Business Machine‟s takeover bid for Telelogic, the Swedish software developer, as it continues to collect information from the companies. IBM announced its intention to acquire Telelogic in June for about €550 miilion, or $812.13 million.