ApolloManagement posts
FeedPosted Feb 13th 2009 11:40AM by Tom Taulli (RSS feed)
Filed under: Private Equity
In the world of private equity and M&A, Henry Silverman is a giant. And, at 68 years old, he's getting back into the game. That is, according to a report in the Wall Street Journal [a paid publication], he has joined Apollo Management as the chief operating officer.
With the credit crunch and terrible economy, Apollo has suffered a variety of setbacks over the past two years, such as the bankruptcy of Linens 'N Things and the legal battle over Huntsman (NYSE: HUN). So, the firm definitely needs a boost.
Continue reading Legendary dealmaker joins Apollo
Posted Jan 7th 2009 12:47PM by Tom Taulli (RSS feed)
Filed under: Private Equity, Dow Chemical (DOW), Blackstone Group L.P (BX)
It's been brutal for the chemicals industry. Dow Chemical (NYSE: DOW), for example, lost a multi-billion dollar joint venture deal with Kuwait. Then there was the implosion of the Huntsman (NYSE: HUN) buyout, which singed private equity operator, Apollo Management LP.
Now, there's another victim: Lyondell Chemical. The company, which is part of the LyondellBasell Industries AF empire, filed for bankruptcy.
Lyondell Chemical, a maker of polymers and petrochemicals, couldn't manage the price deflation as well as harsh materials costs. Although, the main problem was a $12.7 billion merger in 2007, which resulted in large amounts of debt.
Continue reading Private equity tries to feast on Lyondell blow-up
Posted Dec 15th 2008 11:50AM by Tom Taulli (RSS feed)
Filed under: Law, Private Equity
It's been the key question for Huntsman Corporation (NYSE: HUN): Deal or no deal?
Now we know. This week, the company reached an agreement with its private equity sponsor, Apollo Management, to end its $6.5 billion buyout transaction.
For the past six months, the parties have been embroiled in heated litigation with Huntsman getting the edge as the Delaware court ruled that Apollo had to use best efforts to close the deal . As a result, Apollo's settlement is not cheap. The fees come to about $1 billion.
Although, it's a good deal for both parties. Apollo could have lost even more money if the merger agreement had been enforced. As seen with the collapse of the BCE (NYSE: BCE) deal, there is no appetite for multi-billion-dollar deals. And since Huntsman is in a highly cyclical business – specialty chemicals -- it would have likely made it difficult to justify a buyout.
The dispute is far from over, though. Huntsman is still pursuing a lawsuit with its bankers -- Credit Suisse and Deutsche Bank -- on the deal. In other words, Huntsman may even snag even more money from the broken deal.
Still, Wall Street isn't too thrilled. In today's session, Huntsman's shares are down 44% to $3.27 by midday trading.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market
. He is also the founder of BizEquity, a valuation website.
Posted Oct 9th 2008 1:41PM by Tom Taulli (RSS feed)
Filed under: Private Equity
Back in the summer of 2007, Apollo Management LP struck a typical private equity buyout. The deal called for paying $6.5 billion for Huntsman (NYSE: HUN), a chemicals company. In fact, the deal provided lots of synergy since Apollo already controlled a variety of similar businesses (through an entity called Hexion).
Well, of course, this was the peak of the private equity boom – and the credit markets began to unwind fairly quickly. What's more, the fundamentals of Huntsman started to weaken.
As a result, Apollo tried to extricate itself from the deal. And this meant a tough litigation fight.
Of course, this can be pretty a dicey thing. That is, the Delaware court ruled against Apollo and there was an order to get the deal done.
Yet again, this was bad news for Apollo (which has other faltering deals, such as Linens 'N Things). Actually, some of the top private equity firms have been taking some major hits lately, such as the TPG Group with its Washington Mutual (NYSE: WM) disaster.
So, to deal with the court ruling, Apollo has agreed to pony up $540 million to close the Huntsman transaction. Interestingly enough, Apollo has also agreed to give up its lucrative fees (amounting to $100 million or so).
This means that Huntsman should be on firm footing (especially in terms of its solvency). And, something else: the banks on the deal – which include Credit Suisse and Deutsche Bank – will have to raise the necessary funding, which will likely mean losing several billion on the transaction.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He is also the founder of BizEquity, a valuation website
Posted Aug 15th 2008 10:20AM by Tom Taulli (RSS feed)
Filed under: Earnings Reports, Private Equity, Initial Public Offerings
GSTrue, which is operated by Goldman Sachs (NYSE: GS), is a new-fangled marketplace to trade privately-held interests. One of its high-profile listings is Apollo Management LP., a top-tier private equity firm.
Unfortunately, the shares have lost more than 40% over the past year. Of course, this has been the treatment for many other private equity players because of the severe credit crunch.
According to the latest quarterly report, Apollo suffered a loss of $96 million, compared to a net profit of $144 million in the same period a year ago. The internal rate of return (IRR) fell from 42% to 21% over the quarter.
Moreover, Apollo is involved in litigation on its botched deal for Huntsman Corp (NYSE: HUN). And there was a 20% write down on the investment in Harrah's.
Despite all this, Apollo still appears to be on track for an IPO – to be listed on the New York Stock Exchange. Don't expect it to be easy.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He also operates MergerBook.com.
Posted Jul 21st 2008 3:17PM by Tom Taulli (RSS feed)
Filed under: Private Equity, Initial Public Offerings

Rexnord Holdings has been busy with dealmaking over the past few years. For the most part, the company is an amalgam of $1.3 billion in M&A deals.
In 2006, Apollo Management bought Rexnord from
The Carlyle Group. Seven months later, Rexnord merged with Zurn. And things aren't over. Now, Rexnord has filed to go public.
Basically, there are two key pieces to the company. First, there is the power transformation division, which manufactures gears, bearings, seals and conveying equipment. Next, Rexnord has a water management division. This involves the handling of professional grade plumbing and water control products.
About 85% of the total sales of Rexnord come from products where it has the leading market share positions.
A key to Rexnord is its strong distribution network. For example, the power transmission business has more than 400 distributor customers and 2,200 branches. As for the water management part, there are 550 independent sales reps.
For the year ended March 31, 2008, Rexnord posted net sales of $1.9 billion and adjusted EBITDA of $382.7 million. Since 2004, the growth rate for sales has been about 27% (when you include acquisitions).
The proposed symbol for Rexnord's IPO is "RXN." What's more, you can locate the prospectus at the
SEC website.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He also operates MergerBook.com.
Posted Jun 3rd 2008 8:30AM by Laurie Pasternack (RSS feed)
Filed under: Newspapers, Magazines, Microsoft (MSFT), Yahoo! (YHOO), Intel (INTC),
MAJOR PAPERS:
- As it prepares to report its first quarter results, Lehman Brothers Holdings Inc (NYSE: LEH) may need to raise $3B to $4B to support its balance sheet, meaning its first quarter loss could be higher than the anticipated $300M, according to the Wall Street Journal. The capital raise would likely be through new common shares.
- Yahoo! Inc (NASDAQ: YHOO) shareholders are suing the company over an employee severance plan they say was intended to help block its takeover by Microsoft Corporation (NASDAQ: MSFT), adding between $462M and $2.1B to Microsoft's costs,the Wall Street Journal reported.
- The Financial Times reported that Momentive Performance Materials, a company owned by private-equity firm Apollo Management, has exercised its option to suspend cash payments on part of its debt.
- As manufacturers push to compete in the "netbook" category, Intel Corporation (NASDAQ: INTC) admitted to shortages of its Atom microprocessor. In an interview with with the Financial Times, Intel's executive vice-president, Sean Maloney, said the company had received more orders than expected for the low-power processor.
Posted May 27th 2008 4:02PM by Tom Taulli (RSS feed)
Filed under: Private Equity, Blackstone Group L.P (BX)
Chemtura Corporation (NYSE: CEM), a chemical company, is the result of a merger of Crompton Corporation and Great Lakes Chemical Corporation back in 2005. Since then, the company has been "right-sizing" and "right-shaping" its organization with divestitures as well as more acquisitions. Some of the company's core competencies include plastic additives, seed treatments, pool and spa products, and urethane polymers.
Well, according to a report in The Wall Street Journal [subscription], it looks like The Blackstone Group LP (NYSE: BX) and Apollo Management LP are interested in purchasing Chemtura. True, it sounds like the talks are preliminary; but at the same time, private equity firms are hungry for deals, especially for valuations of $2 to $4 billion.
Blackstone and Apollo are highly experienced in the chemical space, and have had fairly good success. If anything, Chemtura is likely to find synergy with other portfolio companies.
Continue reading Chemtura rises on Blackstone, Apollo buyout chatter
Posted May 27th 2008 8:00AM by Laurie Pasternack (RSS feed)
Filed under: Newspapers, Magazines, Berkshire Hathaway (BRK.A), Barclays plc ADS (BCS), , Blackstone Group L.P (BX)
MAJOR PAPERS:
- Last December Chemtura Corporation (NYSE: CEM), a specialty chemicals company with a market cap of about $1.9B, said it might sell itself, and now The Blackstone Group LP (NYSE: BX) and Apollo Management are in talks to buy the company, the Wall Street Journal reported.
- In part one of a series to help explain the reasons why The Bear Stearns Companies (NYSE: BSC) collapsed, the Wall Street Journal said that the troubled firm was torn apart by executives who couldn't agree on what course to take, including raising capital and slicing mortgage and related bonds from its inventory. And each of about six attempts to raise capital fell part.
OTHER PAPERS:
- The American investor and Berkshire Hathaway Inc (NYSE: BRK.A) chief Warren Buffett said the United States is already in a recession that is deeper and will last longer than the public expects, the Economic Times reported.
- According to the Telegraph, Barclays Plc (NYSE: BCS) is planning to sell Barclays Life Assurance Company, its life assurance arm, which has over GBP7B of funds under management. Sources believe potential bidders for the unit may include Pearl, Swiss Reinsurance Company (OTC: SWCEY), General Re, Canada Life and XL Re. Market commentators believe that on an embedded value basis, the unit is currently valued at around GBP1B.
Posted May 2nd 2008 11:55AM by Michael Rainey (RSS feed)
Filed under: Private Equity

They say private equity is the smartest of smart money, able to generate massive profits out of thin air. Well, the folks at
Apollo Management probably aren't feeling too smart today, as their $1.3 billion investment in Linens 'n Things has taken a significant turn for the worse.
Linens 'n Things has now confirmed the growing speculation that it would declare bankruptcy. As Zac Bissonnette
reported in April, the company lost $242 million in 2007, after the company had gone private in February of 2006. In the last few months, it was said to be having trouble with its suppliers, which rightly feared providing it with credit and merchandise.
The odd thing is that many private equity funds saw the housing and credit crunch coming. It would stand to reason that a billion dollar chain that feeds on the housing market may not be the best investment towards the end of a great speculative housing boom, but I guess the people at Apollo thought they could work their magic whatever the market conditions.
The good news is that Linen Holdings has secured $700 million in financing from GE Capital. This should enable the company to continue operating as it restructures, although it will close 120 stores. But at least the majority of its 17,000 employees still have hope that they won't lose their jobs, at least not right away.
Posted Apr 11th 2008 12:35PM by Tom Taulli (RSS feed)
Filed under: Private Equity
Back in February 2006, Apollo Management purchased Linens 'n Things for about $1.3 billion. At the time, it looked like a sensible deal. After all, the company has a strong retail format (for home textiles, housewares and so on). What's more, there are over 500 stores in 47 states.
However, with the slowing economy – especially in the real estate sector – things have turned sour. In fact, according to the Wall Street Journal [a paid publication], it appears that Linens is planning a bankruptcy filing and has hired Conway Del Genio Gries, which is a top advisor on restructurings.
For Apollo, this will certainly be a black eye. Keep in mind that the firm has recently filed to trade on the NYSE. Plus, if there is a bankruptcy, it is likely to mean a significant reduction in the equity value of Apollo's investment in Linens.
When creditors sense trouble, things can get particularly bad for retailers. Basically, they will often hold back on shipments or require cash upfront. Plus, Linens has a $15 million debt payment due on Tuesday. And if it doesn't pay it, it looks like that will be the day the company will file for bankruptcy.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He also operates MergerBook.com.
Posted Apr 9th 2008 1:06PM by Aaron Katsman (RSS feed)
Filed under: Deals, Good news, Rumors, Walt Disney (DIS), Citigroup Inc. (C)
With reports that Citigroup (NYSE:C) is close to selling off some $12 billion of leveraged loans and debt, the banking giant is taking a painful but very important step in cleaning up its financial situation. According to Reuters, "The sale would be to private equity firms including Apollo Management, Blackstone (NYSE: BX) and TPG, at an average price slightly below 90 cents on the dollar."
This is important for Citi for two reasons. First, they will end up with about $10 billion in cash to help them get through these tough times. Secondly, the price that they are getting for these bonds is shocking. Who would have dreamed that they could get a little less than 90 cents on the dollar.
Another interesting point is that the private equity group TPG is involved. As my colleague Zack Miller posted yesterday about its investment in Washington Mutual (NYSE:WM), TPG must believe that the banks have bottomed out. Why else would they be ponying up tens of billions of dollars?
It seems to me that we are at or very near the bottom for bank stocks. Long-term investors looking for a turnaround play may want to take a look and do some analysis of the banking sector.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/9/08.
Posted Apr 9th 2008 8:00AM by Laurie Pasternack (RSS feed)
Filed under: Newspapers, Magazines, Dell (DELL), Citigroup Inc. (C), JPMorgan Chase (JPM), Boeing Co (BA), , Blackstone Group L.P (BX)
MAJOR PAPERS:
- In an effort to increase sales in the Middle East, the Wall Street Journal reported that Dell Inc (NASDAQ: DELL) is in talks with a government-owned vehicle in Dubai called Tecom about establishing a joint venture.
- The Wall Street Journal also reported that Washington Mutual Incorporated (NYSE: WM), which obtained a $7B capital infusion from TPG and other investors, had reportedly been working on the TPG deal while negotiating with JP Morgan Chase & Co (NYSE: JPM), which made a preliminary takeover bid of about $7B, people familiar with the deal said.
- Citigroup Incorporated (NYSE: C) is close to reaching a deal to sell $12B in leveraged loans at a discount to a group of leading private equity firms, the Financial Times reported. Although details of the deal were still being worked out, inside sources said Apollo Management, The Blackstone Group LP (NYSE: BX) and TPG would buy the loan portfolio at a discount that could come in at about 90 cents on the dollar.
OTHER PAPERS:
- The UK Times reported that The Boeing Company (NYSE: BA) is today expected to announce that its 787 Dreamliner has been delayed by 18 months, a setback which will affect all airlines that have ordered the 787, including British Airways Plc (OTC: BAIRY) and Virgin Atlantic.
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