Retail

Polygon bets on a Sainsbury bid

20 Feb 2007

The appearance of the hedge fund on J Sainsbury s share register suggests its confident a buyout of the UK supermarket group will work out. But how much upside is there? A private equity bid at 550p stacks up; any more looks a stretch. But that s not a bad return for a risk arb.

Carrefour board rift could hinder turnaround

15 Feb 2007

This is the wrong time for a battle. Carrefour s turnaround is far from over and the stock has been underperforming. A fight may be brewing between the family that owns 13% of the French retailer and the company s chairman.

J Sainsbury shouldn’t open its books to CVC

9 Feb 2007

At least not until the private equity bidder shows it s serious by coming up with a price and the assumptions used to reach it. There s a case for saying that Sainsbury s doesn t need to open its books at all. It s a pretty simple business. But that might not be wise. At least not until the private equity bidder shows it s serious by coming up with a price and the assumptions used to reach it. One could argue that Sainsbury s doesn t need to open the books at all. It s quite a simple business. But that might not be tactically wise.

South African LBO tests a new frontier

8 Feb 2007

South African retailer Edcon could be the first of several emerging market LBOs to be financed in Europe. But on top of the usual leverage risks, these LBOs carry currency and political risk. Financing such deals may test investor appetite.

Sainsbury’s might struggle to rustle up an auction

7 Feb 2007

Sparking a bidding war would be a great way for the UK supermarket group to ensure investors get a good deal. But there aren t many buyers. The big foreign retailers would be foolhardy to try. And in the UK, only M&S would be able to jump the competition hurdles.

What chance a rival Sainsbury consortium?

7 Feb 2007

It s looking much less likely now. TPG has defected to the CVC group and Cinven is not actively trying to put together a rival bid. That leaves the way clear for CVC and the US players, all of whom need a big deal. The risk is that European funds get left further behind.

Could it be second time lucky for Goldman with Sainsbury?

5 Feb 2007

The bank was kicked out as an adviser to the £9.3bn UK supermarket group over two years ago after it suggested that it might like to buy it. Now it has turned up advising the LBO consortium which may bid for Sainsbury. Getting a slice of the equity itself hasn t been ruled out.

How will Sainsbury’s Hampton handle King?

5 Feb 2007

Sainsbury boss Justin King stands to make a fortune if a buyout for the UK grocer succeeds and another if the bidder tries to hire him. That creates a tricky situation for his chairman, who could be tempted to use his CEO as bait. The answer is to keep King on a tight rein.

Sainsbury private equity approach well-timed

2 Feb 2007

The stars look nicely aligned for a buyout of the UK retailer. Midway through the turnaround, almost every analyst is a seller. With the family trust selling and a chief executive who has previously grumbled about his pay, private equity should be sure of a hearing.

India no pushover for Western retailers

1 Feb 2007

Like China a decade ago, India offers massive growth and little organised retail. No wonder WalMart and its peers are queuing to get in. But the risks to success in India are greater. That s because India has plenty of experience in something China didn t capitalism.

Caremark winner may be a loser

30 Jan 2007

A bidding war has broken out between CVS and Express Scripts over the $25.5bn healthcare company. The market s expecting more Caremark trades above both offers. Yet any higher and both bidders flirt with capital destruction. The market is expecting more Caremark trades above both offers. But a higher bid would flirt with capital destruction.

Caremark’s independent actors should act that way

24 Jan 2007

The $25bn pharmacy benefits manager s board has thrown in its lot with CVS and shown reluctance to deal with rival suitor Express Scripts. Caremark s board composition offers an explanation. Directors should show their independence by urging an auction of the company.

DSG’s profit squeeze makes for grim viewing

17 Jan 2007

Volume growth is getting ever more costly for electrical retailers. And things will probably get worse before they get better. The UK electrical retailer suffered in recent weeks from tough competition and widespread deflation of gadgets like flatscreen TVs.

M&S widens gap between the good, bad and ugly

9 Jan 2007

The recovering UK retailer grew 9% over Christmas, while others suffered bankruptcy, profit warnings and plummeting sales. Expect an even greater divergence between winners and losers in 2007 and a shakeout of those perching nervously in the middle.

A buyout won’t fill the Gap’s holes

9 Jan 2007

The clothing retailer hired Goldman Sachs to explore its options. Given its struggles, its founders may be keen to sell out. A buyout would be doable. But decent returns are dependent on something private equity has avoided of late hard operational work.

Caremark directors wrongly snub $25bn offer

8 Jan 2007

The benefits manager s board has nixed a hostile bid from rival Express Scripts in favour of an inferior $22bn offer from drug chain CVS. Their concerns an Express bid would trigger antitrust concern and leave the company overleveraged don t stand up to much scrutiny.

Ebay’s latest stumble – in China

19 Dec 2006

The web auctioneer pulled the plug on its Chinese auction site only days after unveiling a salvage plan to revive its troubled Skype deal. Ebay's inability to chart a successful new path for growth makes further retrenchment and an expansion of stock buybacks advisable.

Circuit City catches Wal-Mart influenza

19 Dec 2006

The secondbiggest US electronics retailer lost money as it slashed prices to compete with WalMart s massive discounting drive. Best Buy, which has also caught WalMart s cold, is in a better position to pull through. Circuit City s problems look deeper.

Indian tribe threatened with scalping

7 Dec 2006

The Seminoles still technically at war with the US are paying Rank $965m, or 14 times ebitda, for Hard Rock. That s a 40% premium to the sector. To avoid a pillaging, it will need to exploit the brand like pioneers.

Premier Foods puts RHM out of its misery

4 Dec 2006

Doughty Hanson tripled its money on RHM. Despite a 30% premium, the UK food group's £1bn sale to Premier will leave investors out of pocket. That may not be the buyout firm's fault, but it won t help sentiment towards private equity.