Despite all the rumors, the $24.7 billion buyout of Alltel (NYSE: AT) got done. With the credit crunch and botched deals, the stock definitely showed volatility. But, the private equity folks at Texas Pacific Group and Goldman Sachs (NYSE: GS) certainly didn't lose interest in the company. The stock price on the transaction was $71.50.

No doubt, Alltel made some key strategic moves to make itself attractive to private equity sponsors. Perhaps the most important initiative was the spin-off of its wireline business in 2006. Basically, this provided more focus for the company.

To get some more perspective on the deal, I checked out the proxy disclosures. Alltel took the approach of a quicker auction - so as to minimize leaks as well as try to get a better valuation.

Alltel had its financial advisors put together a summary LBO (leverage buyout) analysis. The estimates ranged from $59.75 to $70.50. This assumed that the company could fetch 6.5x to 8x multiples on EBITDA by 2012, which would produce a return ranging from 17.5% to 22.5% per year.

All in all, this looks like a textbook example of a quality deal. Yet, there are certainly risks. After all, Alltel will need to manage a debt load of $23 billion.

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 DealProfiles.com.

Alltel gets its privacy - for $24.7 billion originally appeared on BloggingStocks on Fri, 16 Nov 2007 15:50:00 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.

Private equity firm TPG gets a Dell dude originally appeared on BloggingStocks on Wed, 01 Aug 2007 14:40:00 EST. Please see our terms for use of feeds.

The Donald still stuck with his casinos originally appeared on BloggingStocks on Wed, 27 Jun 2007 16:20:00 EST. Please see our terms for use of feeds.

Alltel Wireless will be far more competitive following the $27 billion buyout by divisions of Goldman Sachs Group Inc. (NYSE: GS) and Texas Pacific Group.

How fast will Alltel be able to scale its customer base and compete with the big four wireless companies? Much faster as a private company if you ask me.

Without quarterly numbers to hit, the company can pour capital into becoming what it has the potential to be and at some future time re-enter the market for the payoffs for GS Capital Partners and TPG Group. Until then, we'll all see what Alltel can do to compete with the larger carriers over time. With this buyout probably having been in the works for most of 2007, you can bet a solid plan is already in place.

With 12 million customers. Alltel is the fifth-largest wireless company behind AT&T Inc. (NYSE: T), Verizon Wireless, Sprint Nextel Corp. (NYSE: S) and T-Mobile USA. It owns wireless liceneses giving it coverage area bigger than the larger four carriers, which is a huge attraction for the private equity firms who already are drawn to the red-hot wireless industry.

The upside is great for this deal since people are dropping land line telephones and moving to the wireless and Internet telephony.

Now it's time to execute.

Alltel will be more competitive in private hands originally appeared on BloggingStocks on Mon, 21 May 2007 11:16:00 EST. Please see our terms for use of feeds.

Last week, it certainly looked like the buyers of Qantas Airways -- Texas Pacific Group, Allco Equity Partners, and Onex Corp. -- did not have enough shareholder support for the $9 billion transaction.

Well, things can certainly change quickly and it appears that a U.S. investor has saved the day. This is according to a report in Bloomberg.

The conventional wisdom was that the tough hurdles of the deal would be the Australian government and unions. Actually, they proved fairly easy compared to some tough shareholders who want to maximize their returns.

Then again, Qantas is a great franchise and continues to grow. So why not try to get top dollar?

So it's going to be a long weekend for Qantas and its determined buyers. Although, this is still not a done deal. Now, in the next stage, Qantas will need to get 70% acceptance on the tender.

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

Deft maneuvers on the Qantas deal originally appeared on BloggingStocks on Sat, 05 May 2007 13:10:00 EST. Please see our terms for use of feeds.

TXU's CEO: The $279.3 million 'success fee' originally appeared on BloggingStocks on Tue, 01 May 2007 15:15:00 EST. Please see our terms for use of feeds.

Texas Pacific looks to cash out originally appeared on BloggingStocks on Tue, 01 May 2007 10:22:00 EST. Please see our terms for use of feeds.

Private equity to take Neiman Marcus public? originally appeared on BloggingStocks on Wed, 18 Apr 2007 12:48:00 EST. Please see our terms for use of feeds.

On March 30, private equity firms Silver Lake and Texas Pacific Group completed the buyout for Sabre Holdings. The company has a variety of travel assets, such as Travelocity, Sabre Travel Network and Sabre Airline Solutions.

The deal required $5.4 billion in financing (including fees). Here's the break-down:

Deal background:

Over the past few years, there has been lots of dealmaking in the travel industry. But perhaps the factor that encouraged Sabre to sell out was Blackstone's $4.3 billion buyout of Travelport in June.

By September, Sabre's bankers - Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) - started to place calls to several private equity firms. There was also interest from a strategic party.

By December, Sabre received two formal bids. But it was the offer from Silver Laek/TPG that was the most attractive. The price was for $32.75 per share.

According to the valuation from Goldman Sachs, here's how the deal stacks up with other transactions:

For more news and views about private equity, please see BloggingBuyouts.

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

Sabre Holdings buyout a done deal originally appeared on BloggingStocks on Thu, 05 Apr 2007 17:09:00 EST. Please see our terms for use of feeds.

With the hoopla of the upcoming Blackstone IPO, KKR has not been getting much attention. Maybe that has been a good thing.

You see, according to a report from the AP, KKR has already scored $104.5 billion buyout deals this year (the recent $28 billion deal for First Data (NYSE: FDC) was a big help).

Even in the crazy world of private equity, this is stunning. After all, the #2 is the Texas Pacific Group, which has "only" $49 billion in deals for 2007.

Interestingly enough, the IPO process could be slowing down the activity for Blackstone -- at least for the next couple months. And with increased regulations, the drag could continue.

At the same time, KKR needs to be cautious. It's taken on a lot of volume and as valuations get steeper, the risks get more serious.

For more news & views about private equity, please see BloggingBuyouts.

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

KKR: $100 billion in buyouts and counting originally appeared on BloggingStocks on Wed, 04 Apr 2007 12:28:00 EST. Please see our terms for use of feeds.

Apollo Management LP may become the next private equity company to sell shares of itself to investors, according to the Wall Street Journal (subscription required).

Goldman Sachs Group (NYSE:GS) and JPMorgan Chase (NYSE: JPM) have been retained to "explore" a potential public offering for a small percentage of Apollo valued at about $1.5 billion, the paper said, quoting "people close to the investment banks."

Interestingly, Apollo is downplaying the Journal's story. That makes me think that these people "close to the bank" probably work for one or both of them. Perhaps Apollo is being stubborn and Goldman Sachs and JP Morgan decided to nudge them along by leaking details of their potential deal to the press.

This happens more often than you think. My guess is that either a banker or a flack are the people in question here. I've been part of the negotiations that occur between these sources and reporters over the name they should be called in a merger story. Sometimes, they can become so convoluted that your head starts to spin.

If the Apollo deal happens, other private equity IPOs would follow. Quoting "people familiar with the matter", the Journal reported that bankers are pushing KKR to sell shares of itself to the public. Perhaps those same people who are trying to nudge Apollo are doing the same thing to KKR. If that's so, you can bet that other big private equity shops such as Texas Pacific Group and Carlyle Group will follow.

This is starting to get really interesting.

Apollo may be next private equity IPO originally appeared on BloggingStocks on Tue, 03 Apr 2007 07:05:00 EST. Please see our terms for use of feeds.

Goldman Sachs Group Inc. (NYSE:GS) is planning to raise $19 billion to $20 billion for the largest corporate buyout fund ever.

This isn't a total shock. As Reuters points out, rival bankers have argued that Goldman was excluded from the Blackstone Group IPO because it's viewed as too much of a competitor. Goldman Chief Executive Lloyd Blankfein disputes this characterization.

Last month, Goldman joined forces with Kohlberg Kravis Roberts & Co. and Texas Pacific Group for the $45 billion TXU buyout, the largest ever.

Buyout funds are surging in popularity because of the growing demand by large investors for alternatives to stocks and bonds

But this is far from a sure thing.

``They have been leaders in identifying new trends and clearly this is where they feel their profit margins have the most growth opportunity,'' said Financial Advisory Service portfolio manager Douglas Ciocca told Bloomberg News. ``But this is risky if it decreases their liquidity.''

It will be interesting to watch to see how private equity firms and rivals on Wall Street react to Goldman's move.

Meanwhile, I bet hotel rooms are booking up fast near Goldman's headquarters in New York from companies both large and small eager to be acquired.

Goldman Sachs plans huge LBO fund originally appeared on BloggingStocks on Wed, 28 Mar 2007 11:15:00 EST. Please see our terms for use of feeds.

Back in December, Sabre Holdings (NYSE: TSG) announced a $4.45 billion buyout. The buyers included Silver Lake Partners and Texas Pacific Group (TPG). The price tag was a 30% premium over the past 60 trading days.

As almost ways happens, Sabre got served. There was a class-action suit as well as a derivative action lawsuit.

Did it increase the stock price? No.

But I'm sure it was lucrative for the attorneys.

This week, Sabre settled the litigation. Yes, this is something that seems to always happen. The suits are often nuisances and need to get cleared up before a deal gets done.

Although, one of the suits resulted in a reduction for the termination fee payble for TPG and Silver Lake. The fee will drop from $135 million to $80.

That's certainly a positive.

But, for the most part, I think these suits are really a nice gig for plaintiffs attorneys to rack up the fees. Add 'em to the big list of beneficiaries of the boom in private equity.

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

Private equity boom helps plaintiffs attorneys, too originally appeared on BloggingStocks on Tue, 27 Mar 2007 00:40:00 EST. Please see our terms for use of feeds.

There has been lots of private equity interest in the health care sector. Some of the notable deals include the buyouts of HCA and Triad.

The latest deal comes from the Texas Pacific Group (TPG). The firm has agreed to pay $945 million for the Surgery Division of HealthSouth Corp. (NYSE: HLS). The division has 139 outpatient surgery centers and three surgical hospitals across 35 states [revenues were not disclosed].

Interestingly enough, HLS will keep an equity sliver worth about $25 million to $30 million.

Basically, it's a sign that HLS sees potential in the division - but it also must deal with restructuring its operations. Might as well allow TPG to use its magic on the division, huh?

In fact, the deal will go a long way in paying down HLS's debt load.

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

Texas Pacific Group pays a healthy $945 million for surgery division originally appeared on BloggingStocks on Mon, 26 Mar 2007 17:45:00 EST. Please see our terms for use of feeds.

Taking over an airline is always difficult. Besides dealing with a tough business, there is also the politics.

In the case of the $9 billion buyout for Qantas Airways Ltd. (ASX:QAN), the buyers, including Texas Pacific Group, were able to get buy-in from the necessary governmental authorities.

That looked like it would be the biggest hurdle, right?

Maybe not. According to a story in The Age, there are still some more issues.

A big shareholder -- Balanced Equity Management -- basically wants a higher price. And why not? Equity in Australia has been red hot.

It's a gutsy strategy, though. If the deal falls through, Qantas shares are probably going to be lower than current levels. Keep in mind that there are a lot of hedge funds in the stock and they may dump their shares if the deal implodes. In fact, on the recent news, the stock price of Qantas fell 3%.

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

Qantas buyout hits turbulence originally appeared on BloggingStocks on Fri, 23 Mar 2007 14:57:00 EST. Please see our terms for use of feeds.

It must be something in the water, but Blackstone Group LP's workers produce nine times the profit as their counterparts at Goldman Sachs Group Inc. (NYSE:GS), according to an analysis by Bloomberg News.

Blackstone's 770 workers produced an average of $2.95 million in net income last year compared with $360,000 at Goldman Sachs which has about 31,000 workers, Bloomberg says. This raises some interesting questions about how the market will value the New York-based hedge fund company.

If investors value it like Goldman, it will trade at about 10 times earnings with a market capitalization of $23 billion while a Fortress Investment Group LLC (NYSE:FIG) multiple would value Blackstone at about $29 billion, Bloomberg News says. Goldman's market capitalization is $87 billion and Fortess Investment Group's is $37 billion.

Blackstone, though, will trade at a premium to both companies -- at least at first -- because its performance has been amazing over the past few years.

Continue reading Blackstone's workers generate nine times as much profit as Goldman's

Blackstone's workers generate nine times as much profit as Goldman's originally appeared on BloggingStocks on Fri, 23 Mar 2007 14:11:00 EST. Please see our terms for use of feeds.

Texas Pacific Group's (TPG) David Bonderman and KKR's Henry Kravis got a civic lesson yesterday. These buyout wizards met with the Texas House Committee on Regulated Industries on the issue of TXU (NYSE:TXU). Four proposed board members of TXU were there too: Don Evans, former U.S. Secretary of Commerce; James Huffines, Chairman of Plains National Bank Central Region; Ambassador Lyndon Olson, a former member of the Texas Legislature; and William Reilly, former Administrator of the U.S. Environmental Protection Agency.

The message: don't pass legislation that would require a regulatory review of the mega deal.

Hey, but don't politicians like to intervene -- especially when it concerns what consumers may ultimately pay?

Definitely. And it does look like the legislation is getting traction.

This does not mean the deal is doomed. Basically, it looks like TPG and KKR will need to make even more concessions, such as selling off assets and not piling debt on the regulated business units. TXU will also need to report its quarterly filings to the SEC.

The big problem is that the legislation will probably delay the process even more. And that's why TXU's stock has been lagging.

While the buyout offer is $69.25, TXU's stock is currently trading at $63.90.

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

More cracks in the TXU deal originally appeared on BloggingStocks on Wed, 21 Mar 2007 12:07:00 EST. Please see our terms for use of feeds.

Over the past few months, there has been a ton of takeover talk about Palm Inc. (NASDAQ: PALM). The company is certainly attractive. It has lots of cash and a strong global footprint. Today there was a report in Unstrung that says a deal could be wrapped up this week.

The buyers may actually be two major private equity firms: Texas Pacific Group and Silver Lake Partners. Of course, Palm would be a nice fit for a strategic party like Motorola Inc. (NYSE: MOT) or Nokia Corp. (NYSE: NOK). In fact, a deal with Motorola may actually quell some of the ardor of its big shareholder, Carl Icahn.

To add even more drama, Palm is going to report its earnings on the 22nd. Unstrung says the offer for Palm is likely to be above $20. And, given all the suitors, I think a high price is likely. Currently, Palm is trading at $19.01.

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

Palm's stock goes mobile again on takeover speculation originally appeared on BloggingStocks on Tue, 20 Mar 2007 13:22:00 EST. Please see our terms for use of feeds.

Airline acquisitions are always difficult, especially when some of the buyers are foreigners. That was the situation in the proposed $8.7 billion buyout of Qantas. One of the buyers includes the Texas Pacific Group.

In fact, Qantas is a crown jewel of Australia (a company that has posted profits for the past 13 years -- which is certainly a big feat for an airline). So, it would make sense that the regulatory approval would be quite difficult, right?

Well, according to the Wall Street Journal [a paid service], the Australian government granted approval to the deal. True, there are some conditions, such as keeping domestic routes and not off-shoring certain types of jobs.

But, for the most part, this looks like a done deal.

Basically, as private equity firms get bigger and bigger, they need to strike deals in foreign markets. However, many countries impose stiff barriers. For example, this is the case in Europe.

But, as for Australia, it looks like things are wide open for deal-making.

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

Qantas deal cleared for takeoff originally appeared on BloggingStocks on Wed, 07 Mar 2007 08:00:00 EST. Please see our terms for use of feeds.