Investor Carl Icahn says LBO boom has "peaked"

Discussion in 'Wall St. News' started by S2007S, Jun 28, 2007.

  1. S2007S


    Investor Carl Icahn says LBO boom has "peaked"
    Wed Jun 27, 2007 7:19pm ET18

    UPDATE 1-Investor Carl Icahn says LBO boom has "peaked"
    Investor Carl Icahn says LBO boom has "peaked"

    NEW YORK, June 27 (Reuters) - Billionaire financier Carl Icahn on Wednesday told an investor audience that the spate of recent leveraged buyouts has "peaked" because shareholders are balking at selling their companies too cheaply and deal financing is getting more expensive.

    The 71-year-old financier, who has built up an estimated net worth of $13 billion by buying and selling companies over 25 years, predicted that LBO firms won't be able to win shareholder approval for deals as easily as in recent years.

    "They've had a walk in the park for years, but now shareholders are waking up to the fact that we're not going to sell it to you so cheap," Icahn told a "Deals and Dealmakers" conference sponsored by Dow Jones, referring to LBO firms that take companies private. "And interest rates could start creeping up."

    Icahn, who is known for pressuring companies for strategic and management changes, said "I think it's peaked," referring to the private equity boom.

    "When I say peaked, I don't mean they won't make money," he noted. "You've got some real smart guys running private equity firms."

    Icahn's comments came as Lear Corp. (LEA.N: Quote, Profile , Research) shareholders are opposing his efforts to buy the auto parts maker for $36 a share, or $2.86 billion. Pzena Investment Management, its second-largest stockholder, has vocally criticized the offer as too low.

    Concern is also growing that bondholders and credit markets aren't as receptive to financing the recent boom in leveraged buyouts.

    Last week, Ahold's (AHLN.AS: Quote, Profile , Research) U.S. Foodservice postponed the financing backing its $7.1 billion LBO by Clayton, Dubilier & Rice and Kohlberg Kravis & Roberts due to weak market conditions, sources told Reuters Loan Pricing Corporation.

    U.S. Foodservice was raising a $3.36 billion bank loan and a $650 million high yield bond offering.
  2. S2007S


    Goldman's Blankfein Says Private-Equity Hasn't Peaked (Update1)

    By Christine Harper
    Enlarge Image
    Lloyd Blankfein, chairman, CEO of Goldman Sachs

    June 27 (Bloomberg) -- Lloyd Blankfein, Goldman Sachs Group Inc.'s chairman and chief executive officer, said the private- equity boom hasn't reached a peak.

    Transactions in which buyout firms ``shake things up'' and force changes at poorly performing companies aren't ``going out of style,'' Blankfein said today at a conference in New York hosted by the Wall Street Journal.

    Goldman, the world's biggest securities firm by market value, serves as an adviser to buyout firms and competes with them. In April, Goldman said it raised $20 billion for its sixth private-equity fund, beating Blackstone Group LP's plans to raise the biggest investment pool.

    Private-equity firms have announced $538.8 billion worth of deals so far this year, a pace that may eclipse last year's record $701.5 billion by the end of the third quarter. That clip may slow as firms involved in deals including the proposed buyout of U.S. Foodservice struggle to sell bonds to finance their transactions.

    Highly speculative deals ``may go by the boards,'' Blankfein said.

    The buyout boom topped out, billionaire investor Carl Icahn said in a separate interview at the conference.

    ``For years private equity has had this walk in the park,'' Icahn, 71, said. ``I think it has peaked. When I say peaked, I don't mean these guys won't make money. You've got real smart guys running these private-equity firms.''

    U.S. Foodservice, a unit of Dutch supermarket company Royal Ahold NV, yesterday postponed the planned sale of $650 million of senior notes due in 2015 because of market conditions, a person familiar with the sale said. Other companies, including ServiceMaster Co. and Dollar General Corp., are facing uncertain demand for bonds.
  3. Again no big deal. LBO's are overrated.
  4. S2007S


    they are? since when?

    You can thank the Private Equity market for this massive bull rally, now your saying its overrated.