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

Legendary dealmaker joins Apollo originally appeared on BloggingStocks on Fri, 13 Feb 2009 11:40:00 EST. Please see our terms for use of feeds.

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

Private equity tries to feast on Lyondell blow-up originally appeared on BloggingStocks on Wed, 07 Jan 2009 12:47:00 EST. Please see our terms for use of feeds.

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.

Apollo out of the Huntsman noose originally appeared on BloggingStocks on Mon, 15 Dec 2008 11:50:00 EST. Please see our terms for use of feeds.

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

More pain for Apollo Management: paying $540 milliont to Huntsman (HUN) originally appeared on BloggingStocks on Thu, 09 Oct 2008 13:41:00 EST. Please see our terms for use of feeds.

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.

Apollo Management: Weak results and ... weak IPO? originally appeared on BloggingStocks on Fri, 15 Aug 2008 10:20:00 EST. Please see our terms for use of feeds.

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.

Apollo Management looks to cash out on Rexnord Holdings originally appeared on BloggingStocks on Mon, 21 Jul 2008 15:17:00 EST. Please see our terms for use of feeds.

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.

Newspaper wrap-up: Lehman may raise billions to help balance sheet originally appeared on BloggingStocks on Tue, 03 Jun 2008 08:30:00 EST. Please see our terms for use of feeds.

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

Chemtura rises on Blackstone, Apollo buyout chatter originally appeared on BloggingStocks on Tue, 27 May 2008 16:02:00 EST. Please see our terms for use of feeds.

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.

• 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.

Newspaper wrap-up: Blackstone Group, Apollo, to bid for Chemtura originally appeared on BloggingStocks on Tue, 27 May 2008 08:00:00 EST. Please see our terms for use of feeds.

Linens 'n Things declares bankruptcy originally appeared on BloggingStocks on Fri, 02 May 2008 11:55:00 EST. Please see our terms for use of feeds.

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.

Linens 'n Things: A black-eye for private equity originally appeared on BloggingStocks on Fri, 11 Apr 2008 12:35:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that home-furnishings retailer Linens 'n Things, acquired by Apollo Management in 2006 and caught by a shrinking housing market and increasing debt load, is expected to file for Chapter 11 bankruptcy-court protection by Tuesday.

• The Detroit News reported that Delta Air Lines Inc (NYSE: DAL) pilots have agreed to a contract revision that clears the way for Delta and Northwest Airlines Corporation (NYSE: NWA) to announce a merger next week, according to sources close the matter.
• The United Auto Workers union notified General Motors Corporation (NYSE: GM) of its deadline to strike three factories in Michigan if the two are unable to agree on local labor pacts, the Detroit News reported.
• The Business Standard reported that Toyota Motor Corporation (NYSE: TM) is planning to invest Rs 1,400 crore in Toyota Kirloskar Motor, its India subsidiary to set up its second plant in the country.

Newspaper wrap-up: Delta pilots agree to changes, clears way for merger originally appeared on BloggingStocks on Fri, 11 Apr 2008 09:15:00 EST. Please see our terms for use of feeds.

Apollo Management, which is one of the largest private equity firms, has traded on Goldman Sach's (NYSE: GS) private exchange, GSTrUE OTC. Unfortunately, the shares are down 40% (since August). Of course, other alternative asset managers - such as Blackstone (NYSE: BX) and Fortress Investment Group (NYSE: FIG) - have suffered plunges as well.

So what's the next step for Apollo? Well, the firm plans to trade on the NYSE. The IPO filing calls for raising $475 million of capital.

Apollo got its start in 1990 and profited handsomely from distressed investments (keep in mind that this was after the buyout boom). Now, the firm manages $40.3 billion and has recently raised a fund for $12.5 billion. Over the past 18 years, Apollo has generated an impressive 29% net internal rate of return.

Continue reading Apollo Management to try its luck on the NYSE

Apollo Management to try its luck on the NYSE originally appeared on BloggingStocks on Wed, 09 Apr 2008 15:08:00 EST. Please see our terms for use of feeds.

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.

Citi debt sale is a move in the right direction originally appeared on BloggingStocks on Wed, 09 Apr 2008 13:06:00 EST. Please see our terms for use of feeds.

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.

• 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.

Newspaper wrap-up: Citigroup closing in on deal to sell $12B of its leveraged loans originally appeared on BloggingStocks on Wed, 09 Apr 2008 08:00:00 EST. Please see our terms for use of feeds.

It appears that Ford (NYSE: F) may finally have a buyer for Jaguar and Rover. The Wall Street Journal reports that Indian conglomerate Mahindra & Mahindra will tie up with private equity operation Apollo Management to buy the car units. Not all of the roadblocks to the deal have been pushed aside. The Journal writes "Labor leaders in the United Kingdom are seeking assurances that the brands' new owner would protect jobs and factories in the country."

Ford paid a little over $5 billion for the two units, and industry estimates put their current value at $1.5 billion. So the sale would mark another step in the humiliating downsizing of Ford.

The probability of a sale also raises an interesting question. If Ford's management is so much better than it was a year ago and it has a much better labor deal with the UAW, why sell the units at all? If a company in India can improve the fortunes of the two brands, why can't Ford?

It is not too late for the No.2 U.S. car company to work on fixing the units itself. The poor results of Jag and Rover are already in the stock. Improving their results ought to help shareholder value.

Douglas A. McIntyre is an editor at 247wallst.com.

Has Ford found a buyer for Jaguar and Rover? originally appeared on BloggingStocks on Wed, 21 Nov 2007 08:43:00 EST. Please see our terms for use of feeds.

TPG/Harrah's (HET) rumored suitor for Australian casinos originally appeared on BloggingStocks on Wed, 26 Sep 2007 13:39:00 EST. Please see our terms for use of feeds.

Apollo: making a move to Goldman's private market? originally appeared on BloggingStocks on Wed, 25 Jul 2007 19:30:00 EST. Please see our terms for use of feeds.

Computer Sciences(NYSE:CSC) call volume and volatility spikes on renewed speculation. CSC is recently up .97 to $61.27 on unconfirmed deal chatter Blackstone(NYSE:BX) or Hewlett Packard (NYSE:HPQ) will make a bid. CSC is frequently chatted as being sold to IBM (NYSE:IBM), Lockheed Martin(NYSE:LMT), United Technologies (NYSE:UTX) or private equity after Apollo Managements' bid for the CSC failed in the spring of 2006. CSC July 62.5 calls have traded 126 times on transaction volume of 3,459 contracts above its open interest of 2,356 contracts. CSC August option implied volatility of 36 is above its 26-week average of 25 according to Track Data, suggesting larger price fluctuations.

Option volume leaders today are: Novastar Financial (NASDAQ:NFI) and Apple Computer (NASDAQ:AAPL).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Option update 7-17-07: Computer Sciences call volume and volatility spikes on renewed speculation originally appeared on BloggingStocks on Tue, 17 Jul 2007 11:45:00 EST. Please see our terms for use of feeds.

With Blackstone Group LLC (NYSE: BX) already public and KKR on its way to the NYSE exchange, there is lots of chatter about the next candidates. Well, according to a recent report in the Wall Street Journal [a paid service], it looks like Apollo Management may be trading soon.

Interestingly enough, the firm's founder -- Leon Black -- took a trip to Abu Dhabi. Yes, there's a ton of money there and I'm sure some eager investors who would want to be a part of Apollo. Although, it looks like there are some issues on valuation.

An investment from Abu Dhabi would likely mean a boost for Apollo's efforts in emerging markets. As the dealmaking gets crowded in the U.S. and Europe, private equity needs to find new frontiers of opportunity.

So, with a slug of capital from Abu Dhabi, Apollo might then file for an IPO and get even more money from U.S. public investors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Apollo of Arabia originally appeared on BloggingStocks on Sun, 08 Jul 2007 10:10:00 EST. Please see our terms for use of feeds.