Markets took off yesterday shortly after the morning bell, as positive manufacturing reports for the U.S. and China bolstered investor confidence. The ISM Index found U.S. manufacturing
grew in August to 56.6, up from 55.5 the previous month. The rally l
Money-manager Barry Ritholtz has a message for the National Association of Realtors, the trade group that always puts a sunny spin on the outlook for the housing market, no matter how horrific the facts may be:
You’re making the problem
Ritholtz, wh
Investors felt better about the economy on Wednesday after the August ISM manufacturing index improved compared with July. Forecasters were looking for a decline, and when that didn’t happen, stocks took off.After so many disappointing data points this su
Burger King agreed to be bought by investment firm 3G Capital for $3.26 billion. The deal represents a 46 percent premium to Burger King’s share price before news of the deal talks emerged on Wednesday. *View article *View WSJ article on how tasty a Burger King deal is
Hewlett-Packard raised its offer by $3 to $33 per share for 3Par. Shortly after, Dell announced it is bowing out of the bidding war for the data storage company. *View article
China is stepping up attempts to hamper BHP Billiton’s $39 billion hostile offer for Potash Corp, amid worries about future supplies of fertilizer it needs to rapidly boost food production. There is a report that China’s state-run Sinochem has hired HSBC to advise it on options and another which says China is considering launching an anti-monopoly investigation into the deal. *View article *View factbox on Potash supply and demand
Worldwide M&A volume last month was the largest in over a year. Get a snapshot of the deal activity in this PDF.
Live video of Thursday’s Financial Crisis Inquiry Commission testimony from Fed Chairman Ben Bernanke and Federal Deposit Insurance Corp Chairman Sheila Bair.
It’s easy to see why private equity firms might salivate at the prospect of another bite at Burger King. The fast-food chain has made a fortune for a trio of buyout barons who acquired the company in 2002 and flipped it onto public markets four years later. But Burger King won’t be another LBO whopper.
Back then, nobody wanted Burger King. The business was in the hands of Diageo, the booze behemoth desperate to divest itself of any assets that couldn’t be consumed at a cocktail party. Not only did it have to cut the price from $2.3 billion to $1.5 billion, it guaranteed all the buyout’s debt at advantageous rates.
Diageo’s backing allowed TPG, Bain and Goldman Sachs to buy Burger King with just a sliver of equity — only 14 percent of the purchase price, or $210 million. Though they’ve since sold off chunks of their stake and harvested dividends from Burger King, they are still sitting on stock worth nearly four times the entire original investment.
Flash forward to the new and improved Burger King. With talk of a buyout spicing up the shares, plus about $1.8 billion of net debt, the company now sports an enterprise value of around $4.3 billion. That suggests a valuation of at least 9.5 times JPMorgan’s 2011 estimate for earnings before interest, tax, depreciation and amortization.
By contrast, the TPG-led crew paid just a little over five times Burger King’s 2002 EBITDA, according to the prospectus for its 2006 initial public offering. Moreover, without the backing of a sugar daddy like Diageo behind the debt, a new owner would need to inject at least twice as much equity as TPG, Bain and Goldman did.
That makes the next bite of Burger King look gristly. Sure, further expansion abroad remains an option if the international success of McDonald’s is anything to go by. And a revamped menu might help sales. But most of the costs have already been picked through and revenue growth from consumers eating cheap food in the weak economy has started to level off. Today’s Burger King just isn’t the value meal on which TPG, Bain and Goldman have already feasted.
In the past few months, traders have been scrutinizing an index of leading economic indicators published by the Economic Cycle Research Institute (ECRI) for signs of what will happen with the economy.
After hitting a multi-year high earlier this year,
As the November mid-term elections come ever closer, more pundits are predicting that the Democrats will get clobbered. The consensus is that they’ll lose control of the House of Representatives. Some folks think they’ll even lose the Senate.And what will
August proved to be a cruel month on Wall Street. The Dow Jones Industrial Average lost
4.3% in the month, and the S&P 500 was down 4.7%. The Nasdaq was even worse, losing 6.2%. All in all, it was the worst August since 2001.”We’re in a range-