Bloomberg Businessweek Europe - 07.10.2019

(nextflipdebug5) #1
◼ FINANCE Bloomberg Businessweek October 7, 2019

28


PE firm Sun Capital Partners Inc. in a 2005 LBO.
“When they took over, our payroll got drastically
cut, our retirement plan got cut, and we saw a lot of
turnover among executives,” she says.
One of Sun Capital’s first moves as owner was to
monetize Shopko’s most valuable asset, its real estate,
by selling it for about $800 million and leasing back
the space to its stores. That generated a short-term
windfall but added to Shopko’s long-term rent costs.
“A lot of stores that were once profitable started to
show lower profits because they had to start paying
rent,” Van Beckum says.
In 2019, Shopko said it could no longer service its
debt and filed for bankruptcy, ultimately shuttering
all of its more than 360 stores. Van Beckum was asked
to stay on as a manager during her store’s liquidation
and was promised severance and a closing bonus in
return, she says. Weeks later, she received an email
telling her that her severance claim wouldn’t be paid.
Sun Capital has said money has been contributed to

the bankruptcy plan that can pay such claims.
Private equity and hedge funds gained control of
more than 80 retailers in the past decade, accord-
ing to a July report by a group of progressive orga-
nizations including Americans for Financial Reform
and United for Respect. And PE-owned merchants
account for most of the biggest recent retail bank-
ruptcies, including those of Gymboree, Payless, and
Shopko in the past year alone. Those bankruptcies
wiped out 1.3 million jobs—including positions at retail-
ers and related jobs, such as at vendors—according
to the report, which estimates that “Wall Street firms
have destroyed eight times as many retail jobs as they
have created in the past decade.”
Whether LBOs perform poorly because of debt,
business strategy, or competition from Amazon
.com Inc., research shows they fare worse than their
public counterparts. A July paper by Brian Ayash
and Mahdi Rastad of California Polytechnic State
University examined almost 500 companies taken

1999 2004 2008

A Crushing Tide of Megadeals
Around 2007, private equity buyouts of
more than $2 billion got so numerous
that we can hardly fit them on the page.
The financial crisis interrupted the flow,
but only temporarily. Here’s a look at two
decades of deals. ——Tom Maloney

Zeneca Specialties

United Biscuits

MascoTech

Veba Electronics

Hibu

Eircom

Cognis Deutschland

Unique Pub Finance

ZF TRW Automotive Holdings

Smurfit Kappa

Sydney Airport

SoftBank Telecom

Ondeo Nalco

Debenhams

S&N Retail

CGX Energy

Warner Music Group

Extended Stay America

UGS

Panamasat

GSW Immobilien

LNR Property

Automobile Association

Metro-Goldwyn-Mayer

Boise Cascade

Truvo Luxembourg

Intelsat Investments

NHP

Saga

Masonite International

Select Medical

Maxeda

Chilcott UK

FIS Data Systems

Insight Communications

Amadeus Global Travel Distribution

Toys “R” Us

Wyndham International

InterGen Investors

Neiman Marcus Group

Viterra

Bluestem Group

Avago Technologies

Hertz

La Quinta

Somerfield

TDC

Suntory Beverage & Food Europe

Dunkin’ Brands

Woba Dresden

MeriStar Hospitalit

Dubai Aerosp ce Enter i

AWAS Aviatio Capital Designated Activity

Albertsons
Fairmont Hote s & Resorts

Sensata Technologies

LHR Airports

Nielsen

Education Management
CarrAmerica Realty

Associated British Ports Holdings

Kerzner International
Trizec Properties

West

Kinder Mo gan Kansas

ARAMARK

SSP Group
General Healthcare Group

Gambro

Travelport

Michaels Stores

Berry Global Group
Univision Communications

Old AII

Caudwell Group

Kabelcom

Solocal Group

Casema
HCA

Duquesne Light Holdings

Momentive Performance Materials
NXP USA

Capio Group Services
Four Seasons Health Care

Intrawest

IHeartCommunications

Four Seasons Holdings

OSI Restaurant Partners

Solocal Group

AWG Parent
E ergia Group NI Holdings

Caesars Entertainment

Biomet
Realogy Group

Adesa

Beechcraft

BAWAG PSK Bank fuer Arbeit und Wirtschaft und Oe

Sabre Holdings

Equity Office Properties Trust

Trusted Media Brands

e Ashikaga Bank

Gavilon Group

Biffa

CHC Helicopter

Angel Trains

Expro International Group

ConvaTec

Weather Group Televisio

Xella International

SeaWorld Parks & Entertainment

IQVIA

CBR Service

Pinnacle Foods Group
Edgars Consolidated Stores

Laureate Education

Catalent Pharma Solutions
Molnlycke Health Care

Alliance Atlantis Communications

ServiceMaster

Spirit Finance

ista International
Claire’s Stores

Dresser

Dollar General

Alliance Boots Holdings

Avaya
Hugo Boss

Ceridian

Valentino Fashion Group

EMI Group
CDW

Bausch & Lomb
Alltel

US Foods
VWR International
Actavis Group
Pegasus Aviation Finance

First Data
Tribune

Tervita

Allison Transmission Holdings
Brake Bros

The Automobile Association and Saga
Guitar Center

Scandlines
Nuveen Investments

Spire Healthcare
HD Supply

Applus Servicios Tecnologicos
Elis

Univar
Sequa

Legacy Hotels Real Estate Investment Trust
Williams Scotsman International

Manor Care
Park Hotels & Resorts

Puget Energy

Kelda Group
Abbot Group
Ascential Group

Goodman Global
Arysta LifeScience

Energy Future Holdings

The $48 billion buyout of TXU
remains the biggest ever;
renamed Energy Future Holdings,
the utility went bankrupt in 2014

The fall of Bear
Stearns marks
the start of the
financial crisis

Dunkin’ went public
in 2012, earning a
fat profit for its PE
owners
Free download pdf