Tuesday, 18 November 2008

More companies may go private in new year - could the NYT Company be one of them? And might they have to write down the value of About.com?

I've been blogging with increased regularity now for some time on the very real possibility of the NYT Company going public-to-private.

If you think it's just the rantings of some nutter in the Auvergne, read this.

More companies may go private in new year
By Simon MeadsReuters
Monday, November 17, 2008
LONDON: A dearth of capital provided by banks may drive public companies into the arms of cash-rich private equity firms and could help rekindle the moribund market for public-to-private buyouts.
Private equity companies say there have been some signs of revival in the market, which has been virtually shut for more than a year, as institutional investors seek a way out of companies whose share prices have dropped.
There has been a pickup in business in just the past couple of weeks, with two public-to-private deals going into the due diligence phase, said Andrew Roberts, a private equity partner at the law firm Travers Smith.
A slow drip-feed of liquidity back into the system next year could give more impetus to the market for mergers and acquisitions, Roberts said.
"It's still going to be relatively small deals, in the hundreds of millions rather than the billions," he said.
In the first nine months of 2008, there were only 15 public-to-private buyouts in Britain, according to figures from the Center for Management Buyout Research.
The £2 billion, or $3 billion at current exchange rates, buyout of Emap, a media company, was the largest. It was one of only three buyouts worth more than £1 billion.
This contrasts with the 24 public-to-private deals made last year, including the European high-water mark deal - the £11.1 billion takeover of Alliance Boots by a consortium led by Kohlberg Kravis Roberts.
And there is a precedent for a rise in this type of deal after a sharp fall in asset values. Toward the end of the dot-com boom, there were 46 public-to-private deals in 1999 and 42 in 2000, accounting for 28 percent and 39 percent of total buyout deal value, respectively. That total includes other deals between private equity firms and buyouts by privately held companies.
Private equity firms have to put in more of their own money when buying a company with borrowed cash, and the size of such leveraged deals has dropped drastically after the credit crunch slammed the door shut on credit markets.
Private equity firms are hoping tight financing conditions may bring back the heady days. With markets for initial public offerings shut and a mountain of refinancing awaiting already tight corporate debt and loan markets, companies have few options.
"Large shareholders are hugely important in these types of deals," said Roberts, the private equity partner at Travers Smith.
In London, the FTSE 100-share index has slumped by more than a third already this year and large institutional investors are set to dominate shareholder registers as the hedge fund industry shrinks and retail investors continue to stay away.
"Now that prices have come down on the listed market, it will open up the possibility of doing public-to-privates," said Richard Chapman, a partner at the private equity firm ECI Partners. "You also have willing vendors."
"There is a desire by institutional investors to pull out of the smaller and midcap companies."
Sam Hart, an analyst with the brokerage firm Charles Stanley, said he believed that investors in any quoted company would be extremely pleased to see interest from private equity firms.
"I'm sure they would look extremely favorably on any approach, and as long as the offers they were making for companies represented a reasonable premium to the current share price, I would have thought they would be quite inclined to accept those offers," he said.
But, Chapman said, although there is room for a pickup in public-to-private buyouts, activity may not restart until 2009, after banks complete reporting 2008 balance sheets and there is an easing of bank debt.


And if you think some of my posts about About.com have been off-the-mark (I think the NYT Company overpaid for an out-of-date, distinctly uncool, ageing demographic, behind the Internet curve dot com company) then you might like to check in on this little gem about companies having to write down the value of assets on their books, bought when times were good and money was cheap: http://www.iht.com/articles/2008/11/17/business/deal18.php

Of course, if they are looking at a public-to-private, that wouldn't be such a bad thing would it?

Meanwhile they plan to merge iht.com into www.nytimes.com, effectively wiping value off the balance sheet - given how much they (overpaid) for the IHT when times were good and money was cheap. WaPo must be delighted.


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The Oxford Times

Ian Walthew

'I read
A Place in My Country with absolute unalloyed delight. A glorious book.'
Jeremy Irons (actor)

‘Ian Walthew was a newspaper executive with a career that took him round the world, who one day did a mad thing. He saw a for-sale sign on a cottage in the Cotswolds, bought it, resigned and moved in. For the first few weeks he just lay on the grass in a daze. Then he started talking to his neighbours and digging into the rich history of this beautiful part of England. Out of his inquiries grew this affecting and inspiring memoir.What sets it apart from others of its ilk is the author’s enviable immunity to cliché and his determination to love his homeland better than he used to.
His elegiac account of relearning how to be an Englishman should be required reading for anyone who claims to know or love this country. Financial Times


Ian Walthew

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