As reported yesterday, Kohlberg Kravis Roberts (KKR), one of the biggest private equity groups in the world, offered 40bn EUR (51bn USD) to take over Vivendi, the French entertainment and telecommunications group. Although sources close to the talks said that the negotiations were “dead and not coming back”, this deal would represent the biggest buy-out transaction ever if completed.
Just a few months ago, we discussed the biggest buy-out to date in our finance classes here at INSEAD – the 31bn USD take over of RJR Nabisco, an American tobacco and food conglomerate, a deal portrayed in the highly acclaimed book Barbarians at the Gate and a TV movie by the same name. What’s remarkable about this deal is that it remained the biggest leveraged buy-out deal for almost 18 years, only to be surpassed in July of this year, when a deal was announced to take over HCA, the largest operator of hospitals in the US, in a 33bn USD transaction (including debt). In all of these deals, KKR was the lead investor.
Where will it all end? Although private equity firms are experiencing increasing competition and governments around the world seemed determined to increase the level of regulation significantly, some have suggested that only the sky is the limit. Dan Primack, editor of the daily newsletter PE Week Wire, believes that 80bn USD are a reasonable ceiling for future LBOs, while both the Financial Times and BusinessWeek suggest that even Microsoft, one of the biggest companies by market capitalization, could become a suitable LBO target.
Interesting times ahead.
Update: Although the HCA deal finally closed on November 17 for $33bn, it is no longer the biggest LBO ever: The Blackstone Group, another PE firm, just announced the take-over of Equity Office Properties Trust, a Chicago-based real-estate management group, in a deal valued at $36bn.
As expected, my last period here at INSEAD is much more relaxed than the previous ones – we go out a lot, have dinners together and just generally enjoy life.
Last Tuesday we had our big Halloween party at Lindsay’s place here at Heritage View. Great fun, even though I’m not sure I remember it all :-) Enjoy the pictures!
Greetings from the Grim Reaper!
Anand and myself celebrating the beginning of P5 at Momo’s last week. Thanks to Tom for the pictures!
My short trip back home proved quite successful – I returned with a couple of job offers in my bag, as well as a few more interviews in the process. I’m very happy about this, especially since it means that I won’t have to worry about job search too much during my final period here in Singapore. To all my classmates out there who are still looking, good luck! Remember, we will all get good jobs with our degree on the resume.
Today, I attended a workshop of the Venture Capital Case Competition (VC3) of the Asia-Pacific Students Entrepreneurship Society (ASES) in Singapore. After mentoring one of the teams in the competition over the past few weeks, I was happy to see them make it to the final presentation next Tuesday. Way to go, Team Pusoy Dos!
My last period at INSEAD is off to a good start. While most of my courses don’t begin before next week, the most entertaining one is already well under way. It’s called Your First 100 Days, and it’s about running your own company for the first few months after a Management Buy in. If you want to find out more, see this BusinessWeek article as well as this entry in Johnny’s blog.
I finally decided to change the look of my blog. It’s still work in progress, so please bear with me as I experiment with different themes and pictures. Oh, and please do let me know what you think about it – click on the “No comments” link to leave your comment. Equally, if you know of other INSEAD blogs I haven’t yet included in my blogroll (on the right), let me know as well.