cyanbomb
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Hey was just reading the paper today, and saw this:
8b buyout of audio products firm cancelled
FOR the first time in a two-year private equity acquisition frenzy, buyers have walked out of a major deal.
Last Friday, Harman International Industries said its private equity buyers are pulling out of their US$8 billion buyout deal. Harman's shares fell more than 25 per cent that day.
The audio equipment maker said that Kohlberg Kravis Roberts & Co (KKR) and Goldman Sachs Group's private equity arm believe a "material adverse change" occured in Harman's business and that it breached the merger agreement.
Harman said in a one-paragraph statement that it disagrees such a change occurred and that it did not violate the buyout contract.
KKR and Goldman's decision not only affects Harman, but could have broader repercussions for the firms and the leveraged buyout sector as it comes at a sensitive time. The credit crunch has threatened to scuttle some buyouts, forcing banks stuck with loans to renegotiate deals.
But the Harman bailout looks centred on the financial status of the firm and not the lending agreement. It faces issues such as rising inventories and falling cash flows and sales in the last few quarters, said merger arbitrage traders and an analyst.
Harman had announced the buyout earler in April.
REUTERS
"Rising inventories", "falling cash flows and sales" looks ominous. Even the guys supposed to buy Harman pulled out. Any new products released by the Harman group might be prone to cost-cutting, so perhaps we should start scrutinizing their new products carefully before buying. Of course, all this is just my opinion.
8b buyout of audio products firm cancelled
FOR the first time in a two-year private equity acquisition frenzy, buyers have walked out of a major deal.
Last Friday, Harman International Industries said its private equity buyers are pulling out of their US$8 billion buyout deal. Harman's shares fell more than 25 per cent that day.
The audio equipment maker said that Kohlberg Kravis Roberts & Co (KKR) and Goldman Sachs Group's private equity arm believe a "material adverse change" occured in Harman's business and that it breached the merger agreement.
Harman said in a one-paragraph statement that it disagrees such a change occurred and that it did not violate the buyout contract.
KKR and Goldman's decision not only affects Harman, but could have broader repercussions for the firms and the leveraged buyout sector as it comes at a sensitive time. The credit crunch has threatened to scuttle some buyouts, forcing banks stuck with loans to renegotiate deals.
But the Harman bailout looks centred on the financial status of the firm and not the lending agreement. It faces issues such as rising inventories and falling cash flows and sales in the last few quarters, said merger arbitrage traders and an analyst.
Harman had announced the buyout earler in April.
REUTERS
"Rising inventories", "falling cash flows and sales" looks ominous. Even the guys supposed to buy Harman pulled out. Any new products released by the Harman group might be prone to cost-cutting, so perhaps we should start scrutinizing their new products carefully before buying. Of course, all this is just my opinion.
