Retail

Private equity’s UK poster child comes unstuck

3 Jul 2007

Permira and Apax wanted £1.8bn for UK retailer New Look. But despite a rosy growth story, buyers balked at the price. The troubled auction process makes the company look like soiled goods, even if the owners will probably manage to wring more cash out of it.

US Foodservice bond snarl-up highlights LBO risks

27 Jun 2007

Buyout shops have exploited a glut of liquidity to achieve evertighter pricing and advantageous structures. But investors are now fighting back. If LBO shops stay greedy, more deals like US Foodservice will trip.

Pier 1’s recovery still a question mark

22 Jun 2007

The US retailer of funky home furnishings has seen its stock rocket ahead this year on hopes of a turnaround. Pier 1's new boss is making the right moves. But a slowing economy could derail the effort and its shares haven't priced in room for error.

Peltz pushes Kraft into the fast lane

22 Jun 2007

The food company s spinoff from Altria has stuck it with a new master in the form of activist investor Nelson Peltz. As at Heinz and Cadbury, he isn't proposing anything revolutionary. But Kraft has ample room to double up its $5bn buyback plan.

US antitrust chiefs target hippies – not fashionistas

21 Jun 2007

Nearly all mergers pass muster with regulators today. So arbs expect luxury eyewear group Luxottica s $2.1bn bid for Oakley to sail through. But why has the FTC opposed a smaller merger of two organic supermarkets? Perhaps the Bush administration prefers Ray Bans to tofu.

Boots pension deal bad precedent for shareholders

19 Jun 2007

KKR has caved in to the Boots trustees' demands. With the heat on private equity in the UK, it had little choice. In future deals, buyout firms may feel they too must treat deficits as highranking debt. That could leave less cash for shareholders.

Puma shareholders could find a home with PPR

19 Jun 2007

The German shoemaker shareholders have until Wednesday to tend their shares to PPR. Holding out for better terms could prove a risky bet. For those who like the merger, investing in the parent company could be a sensible choice. Provided PPR keeps focusing on luxury. The German shoemaker's shareholders have until Wednesday to tend their shares to PPR. Holding out for better terms could prove a risky bet.

Cadbury tries to pre-empt cheap take-out

19 Jun 2007

The planned sale or demerger of its soft drinks business exposes the inefficiency of its confectionery arm. Rather than wait for that to be picked off, Cadbury is raising its margin target closer to Hershey's, its rival and possible merger partner.

Sainsbury’s faces battle on two fronts

18 Jun 2007

A bid from Qatar's Delta Two would be hard to rebuff. But it could cast property raider Robert Tchenguiz as an unlikely white knight. Whoever wins, a transformative deal for the supermarket group now looks highly likely. The question is if its future is public or private.

Is Rose the real bargain at M&S?

8 Jun 2007

He saved M&S from raider Philip Green. But had Stuart Rose backed the other team, he might have made eight times the £8m he made this year. But for Rose, it s not all bad. He still gets one of the UK's highest chief executive salaries and a free pass to the City's hall of fame.

Should managers in buyouts take haircuts?

23 May 2007

To get deals done, a few have had to. In the $3.1bn buyout of OSI Restaurants, managers got 3% less than public shareholders. This is a relatively new phenomenon, and it makes sense. But it won t be long before greedy execs game this trick, too.

How a GUS break-up doubled investors’ money

23 May 2007

The UK conglomerate s fiveyear split into Burberry, Experian and Home Retail has delivered an impressive 110% return for investors. There may be more to come, too. Freed from the sarcophagus, all three businesses now look like tempting takeover targets.

Permira not buying Valentino for its haute couture

21 May 2007

The real appeal of the Italian fashion house is its 51% Hugo Boss stake. Buying Valentino would give Permira control for almost no premium. Boss is the more interesting private equity target. There may be industrial and financial benefits from pushing Valentino and Boss together.

Whole Foods’ growth wunderkind days are over

17 May 2007

The organic supermarket s shares tumbled 14% in the past week as investors recognised that its highflying growth stock days are over. Whole Foods attempt to emulate the Starbucks model has failed. It s not an experience. It s a grocery store.

Sainsbury’s to retain £8.6bn property pile

16 May 2007

The supermarket group has revalued its real estate, but backed away from the spinoff that some investors have called for. As Sainsbury's is already leveraged, and still recovering, that's prudent. But calls for it unlock property value are likely to increase.

KKR performs Indian rope trick in Europe’s biggest LBO

9 May 2007

The buyout firm is getting joint control of Boots, the £12bn healthcare group, for an equity investment of as little as £932m. It can do so because of aggressive leverage, and institutions willingness to underwrite £1.4bn of voteless stock.

Activists give Wendy’s a double whammy

30 Apr 2007

First Bill Ackman pushed the company to spinoff Tim Hortons. Now, under the watch of Nelson Peltz, the company might be sold. If the company is sold, shareholders will reap a windfall from both a demerger and a merger. That s not as backwards as it sounds.

Moberg departure draws line under the old Ahold

27 Apr 2007

The Ahold boss cleared the decks after a major accounting scandal. But he contributed little to the supermarket group s recovery. With Moberg gone, Ahold can focus on more valueenhancing moves such as a full breakup, or strategic deal with rival Delhaize.

Qatari fund parks its trolley in Sainsbury’s aisle

25 Apr 2007

Three Delta, a propertyfocused fund, has bought a 14% stake in the UK supermarket group. That intensifies the pressure on the board. If the result is a more valuable Sainsbury s, that s all for the good. But the risk is that Sainsbury s just ends up in even more turmoil.

KKR knocks Terra Firma out of £12bn Boots battle

24 Apr 2007

By securing a 26% stake in the UK retailer and winning over an insider, KKR made it tough for the rival consortium to proceed. The lesson? Without some inside support, buyout firms need to be clearer about their strategies or settle for lower returns.