Heinz buyout raises M&A revival hopes
By Lina Saigol
The $28bn Warren Buffett-led buyout of Heinz comes hot on the heels of two other mega-mergers, raising hopes among financiers that cheap debt will spur the big-ticket deals popular before the financial crisis.
In the past few days, Michael Dell struck a deal to take Dell private for $24.4bn in what is the biggest leveraged buyout since the financial crisis, while Liberty Global said it would buy Virgin Media for about $15.75bn in stock and cash.
More
ON THIS STORY
Buffett and Brazil tycoon make Heinz offer
Call options jump before Heinz deal
FT Long Short Be like Buffett
Different faces in dealmaking deluge
Brazilian sage retains his top-table touch
ON THIS TOPIC
Inside London OFT will take the fizz out of Britvic merger
Lex European cable
Heinz deal brings it back to its roots
Mideast bankers hope steady M&A continues
IN FINANCIAL SERVICES
Credit derivatives pioneer to head PNC
SAC Capital extends investor deadline
BlackRock fixed income chief steps down
Nestor fined £175,000 over trades
Some of the biggest private equity deals to date took place between 2005 and 2006, when debt was both cheap and plentiful. According to financial data provider Dealogic, the average value of a buyout of a US company in 2006 was $1.6bn.
Blockbuster deals included the $17.5bn buyout ofFreescale Semiconductor in September 2006 by a consortium consisting of private equity groups TPG Capital, Blackstone, Carlyle and Permira. After struggling with a big debt load, Freescale went public in 2011.
In July that year, Bain Capital, KKR and Merrill Lynch engineered what at the time was the biggest leveraged buyout ever – the $32.1bn deal of US hospital chainHCA.
One month later, Kinder Morgan, the US oil-and-gas pipeline company, was bought for $15bn by Carlyle, Riverstone, GS CapiHigh quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/66f59bfc-76b0-11e2-ac91-00144feabdc0.html#ixzz2KzQQ2s4f
Heinz buyout raises M&A revival hopes
By Lina Saigol
The $28bn Warren Buffett-led buyout of Heinz comes hot on the heels of two other mega-mergers, raising hopes among financiers that cheap debt will spur the big-ticket deals popular before the financial crisis.
In the past few days, Michael Dell struck a deal to take Dell private for $24.4bn in what is the biggest leveraged buyout since the financial crisis, while Liberty Global said it would buy Virgin Media for about $15.75bn in stock and cash.
More
ON THIS STORY
Buffett and Brazil tycoon make Heinz offer
Call options jump before Heinz deal
FT Long Short Be like Buffett
Different faces in dealmaking deluge
Brazilian sage retains his top-table touch
ON THIS TOPIC
Inside London OFT will take the fizz out of Britvic merger
Lex European cable
Heinz deal brings it back to its roots
Mideast bankers hope steady M&A continues
IN FINANCIAL SERVICES
Credit derivatives pioneer to head PNC
SAC Capital extends investor deadline
BlackRock fixed income chief steps down
Nestor fined £175,000 over trades
Some of the biggest private equity deals to date took place between 2005 and 2006, when debt was both cheap and plentiful. According to financial data provider Dealogic, the average value of a buyout of a US company in 2006 was $1.6bn.
Blockbuster deals included the $17.5bn buyout of Freescale Semiconductor in September 2006 by a consortium consisting of private equity groups TPG Capital, Blackstone, Carlyle and Permira. After struggling with a big debt load, Freescale went public in 2011.
In July that year, Bain Capital, KKR and Merrill Lynch engineered what at the time was the biggest leveraged buyout ever – the $32.1bn deal of US hospital chain HCA.
One month later, Kinder Morgan, the US oil-and-gas pipeline company, was bought for $15bn by Carlyle, Riverstone, GS Capital Partners and AIG. The company was floated in February 2011.
In February 2007, Texas-based energy group TXU was taken private for $44.4bn by a consortium including Goldman Sachs and KKR.
Although investment bankers will be cheering the return of big buyouts, some industry experts are warning that purchase prices and debt levels have reached levels last seen in the run-up to the financial crisis.
Partners Group, the Swiss alternatives house, says average debt multiples for €1bn-plus leveraged buyout deals have reached six times underlying earnings – a level last seen in 2007 – while purchase prices in Europe have reached 9.7 times earnings before interest, taxation, depreciation and amortisation, a level Partners describes as “inflated”.
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
tal Partners and AIG. The company was floated in February 2011.
In February 2007, Texas-based energy group TXU was taken private for $44.4bn by a consortium including Goldman Sachs and KKR.
Although investment bankers will be cheering the return of big buyouts, some industry experts are warning that purchase prices and debt levels have reached levels last seen in the run-up to the financial crisis.
Partners Group, the Swiss alternatives house, says average debt multiples for €1bn-plus leveraged buyout deals have reached six times underlying earnings – a level last seen in 2007 – while purchase prices in Europe have reached 9.7 times earnings before interest, taxation, depreciation and amortisation, a level Partners describes as “inflated”.
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Source:
Heinz buyout raises M&A revival hopes - FT.com
