Author: Reuters News

Activist investor Carl Icahn and Southeastern Asset Management Inc, two of Dell Inc’s largest shareholders, have proposed an alternative to a $24.4 billion buyout deal led by founder Michael Dell, the Wall Street Journal reported.

(Reuters) – Activist investor Carl Icahn and Southeastern Asset Management Inc, two of Dell Inc’s largest shareholders, have proposed an alternative to a $24.4 billion buyout deal led by founder Michael Dell, the Wall Street Journal reported.

Icahn and Southeastern, both vocal opponents of the deal, proposed giving Dell shareholders the option to keep holding stock in the company and take an additional $12 a share in cash or stock in a letter to Dell’s board Thursday night, the paper said.

The letter said Icahn and Southeastern together hold 13 percent of Dell’s stock. The duo have argued that the buyout effort from Michael Dell and private-equity firm Silver Lake Partners significantly undervalues the company, according to the paper.

In April, Blackstone pulled out just a month after it launched a challenge to the billionaire’s attempt to take Dell private. Icahn and Blackstone each offered alternatives that would keep part of the company public.
Representatives for the PC maker could not immediately be reached for comment by Reuters outside of regular U.S. business hours.

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U.S. private equity firm TPG Capital raised about $300 million by selling its roughly 10 percent stake in Indian commercial vehicle financier Shriram Transport Finance Co Ltd to India’s Piramal Group, generating a near seven times return on a 2006 investment, Reuters is reporting.

(Reuters) – U.S. private equity firm TPG Capital raised about $300 million by selling its roughly 10 percent stake in Indian commercial vehicle financier Shriram Transport Finance Co Ltd to India’s Piramal Group, generating a near seven times return on a 2006 investment.

Piramal Enterprises said it bought a 10 percent stake in Shriram Transport through a block deal for about 16.52 billion Indian rupees ($305.21 million), or 723 per share.

Ajay Piramal, chairman of Piramal Enterprises, told reporters the stake was bought from TPG.

TPG, which manages about $55 billion globally, invested a little more than $100 million in Shriram Transport’s parent company, Shriram Group, in 2005. A year later it took a 20 percent stake in Shriram Transport against its investment in Shriram Group, valued at 113 rupees per share, according to a source with direct knowledge of the matter.

TPG declined to comment.

In February, TPG sold half its stake in Shriram Transport to a clutch of institutional investors and raised about $305 million.

Piramal is primarily engaged in the pharmaceutical industry and has interests in financial services and manages a property fund.

Shares in Shriram Transport were up as much as 5.7 percent, to 776.50 rupees, after the deal.

UBS advised Piramal on the deal.

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Bankers are looking towards the U.S. debt market to raise 900 million euros ($1.18 billion) for a buyout of industrial ceramics firm CeramTec, spurning Europe where risky debt is in shorter supply, bankers said on Thursday. U.S. specialty chemicals company Rockwood Holdings Inc has put Germany-based CeramTec up for sale in an auction process run by Lazard. CeramTec has a price tag of around 1.4 billion euros, bankers said. The U.S. market for riskier debt is more liquid than Europe’s, making it easier to raise large amounts at competitive rates. A U.S. financing can be “covenant-lite”, a structure that offers little or no protection for lenders via financial tests.

(Reuters) – Bankers are looking towards the U.S. debt market to raise 900 million euros ($1.18 billion) for a buyout of industrial ceramics firm CeramTec, spurning Europe where risky debt is in shorter supply, bankers said on Thursday.

U.S. specialty chemicals company Rockwood Holdings Inc has put Germany-based CeramTec up for sale in an auction process run by Lazard. CeramTec has a price tag of around 1.4 billion euros, bankers said.

The U.S. market for riskier debt is more liquid than Europe’s, making it easier to raise large amounts at competitive rates. A U.S. financing can be “covenant-lite”, a structure that offers little or no protection for lenders via financial tests.

CeramTec would be the latest leveraged loan financing to go to the U.S. market following animal identification company Allflex, German insulation firm Armacell and others.

The shift of leveraged financing deals from Europe to the U.S. is causing growing concern among European bankers who are losing out on a growing amount of work.

“It is a real concern for European bankers that companies are opting to go to the U.S. to finance deals. But the allure of the U.S. is that you can get higher leverage and covenant-lite debt packages,” one of the bankers said.

COVENANT CONCERNS

Three private-equity bidders – Bain Capital, BC Partners and Cinven – have been asked to submit final-round offers on June 10 after they made it through a second round of bidding in April, bankers said.

Permira, TPG Capital, France’s Wendel and Chicago-based GTCR had shown interest in CeramTec but are no longer involved in the process, they added.

Bain, BC Partners and Cinven declined to comment. Rockwood was not immediately available to comment.

Bankers are working on debt packages of around 900 million euros, or 6.5 to 6.75 times CeramTec’s annual EBITDA of around 135 million euros. The debt could be raised in the U.S. as a covenant-lite loan rather than Europe, according to the bankers.

Covenant-lite financing has been a staple feature of the U.S. market since 2005, peaking at $47.9 billion at the height of a buyout boom during the second quarter of 2007 and still raising $42.5 billion in the fourth quarter of 2012.

Despite large volumes in the United States, covenant-lite deals have mostly been shunned in Europe’s more conservative loan market.

CeramTec, founded in 1903, makes ceramics used in thousands of products from filters for water treatment to electronic components in factory robots. It had sales of $548 million in the 12 months to September 2012.

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Drug researcher Quintiles Transnational Holdings raised a more-than planned $947 million in its IPO, the latest listing from a private equity-backed company, writes Reuters. Strong investor demand for the deal helped Quintiles, which is backed by Bain Capital and TPG Capital, price 20 percent more shares than expected at the top end of the range and pushed up pricing a day early, writes Reuters.

Reuters – Drug researcher Quintiles Transnational Holdings raised a more-than planned $947 million in its IPO, the latest listing from a private equity-backed company as record highs for U.S. stocks encourage more exits from investments.

Strong investor demand for the deal helped Quintiles, which is backed by Bain Capital LLC and TPG Capital LP, price 20 percent more shares than expected at the top end of the range and pushed up pricing a day early, according to people familiar with the deal.

Other public floats from private equity-backed companies this year have included Norwegian Cruise Line Holdings Ltd , SeaWorld Entertainment Inc, Pinnacle Foods Inc and Intelsat SA.

The Durham, North Carolina-based conductor of clinical trials is also the largest of eleven IPOs pricing this week, which could mark the highest weekly IPO volume since late 2007, according to market data firm Ipreo.

It priced 23.7 million shares at $40, compared with its plan to price 19.7 million shares at $36 to $40.

Other deals which have priced this week include residential mortgage company PennyMac Financial Services Inc and biotech company Receptos Inc.

Bain and TPG became the lead investors in Quintiles in January 2008 after One Equity Partners sold its stake in the company. Britain’s 3i Group Plc and Singapore’s Temasek Holdings are also investors in Quintiles.

Quintiles sold 13.1 million shares in the IPO. The company’s founder and executive chairman Dennis Gillings and the private equity firms sold the remaining 10.6 million shares.

It will use IPO proceeds to pay outstanding debt, to terminate a management agreement with its private equity sponsors and for general corporate purposes.

Quintiles generated adjusted earnings before interest, tax, depreciation and amortization of $177.5 million on revenue of $4.9 billion in the year ended Dec. 31, 2012.

The company’s rivals include Covance Inc, ICON and Parexel International, according to Morningstar.

Morgan Stanley, Barclays and JPMorgan are the lead underwriters on the offering.

Quintiles will list its shares on the New York Stock Exchange under the symbol Q.

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Blackstone Group LP plans to sell the 23.4 million shares of General Growth Properties Inc. it holds in four funds that were used to help the mall company emerge from bankruptcy more than two years ago, Reuters reported. The sale essentially means Blackstone has exited General Growth, according to a filing with the Securities and Exchange Commission. Factoring in the cost of the shares, which also included 5 million warrants and later the spin-off of Rouse Properties Inc , the fund’s investment effectively was about $8.50 and $9 per share. Based on the price of General Growth on Tuesday, the sale would translate into a gross profit of between 154 percent and 169 percent.

(Reuters) – Blackstone Group LP plans to sell the 23.4 million shares of General Growth Properties Inc it holds in four funds that were used to help the mall company emerge from bankruptcy more than two years ago, General Growth said on Tuesday.

The sale essentially means Blackstone has exited General Growth, according to a filing with the Securities and Exchange Commission.

Factoring in the cost of the shares, which also included 5 million warrants and later the spin-off of Rouse Properties Inc , the fund’s investment effectively was about $8.50 and $9 per share. Based on the price of General Growth on Tuesday, the sale would translate into a gross profit of between 154 percent and 169 percent.

“Blackstone has a finite timeline on its investment,” Green Street Advisors analyst Cedrik Lachance said. “I think it’s harvesting the profits from a highly successful investment.”

Blackstone began selling its funds’ shares in August last year. It later sold back the warrants to General Growth in January.

General Growth shares were down 2 percent, or 47 cents, at $22.86 in afternoon trading.

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Sumitomo Mitsui Banking Corp. said it agreed to acquire as much as 40 percent of Indonesian lender BTPN, giving the Japanese bank a foothold in the fast-growing Southeast Asian economy, Reuters reported. SMBC’s pursuit of Indonesia’s seventh-biggest bank underscores a sustained push abroad by Japanese companies to beat sluggish growth in their home market. SMBC will first buy 24.26 percent of BTPN for 6,500 rupiah per share, a 14 percent premium to BTPN’s last traded price – paying 9.12 trillion rupiah ($937 million) according to Reuters calculations. It is buying most of it from TPG Capital, which acquired 71.6 percent of Bank Tabungan Pensiunan Nasional Tbk PT in 2008.

(Reuters) – Sumitomo Mitsui Banking Corp (SMBC) said it agreed to acquire as much as 40 percent of Indonesian lender BTPN, giving the Japanese bank a foothold in the fast-growing Southeast Asian economy.

SMBC’s pursuit of Indonesia’s seventh-biggest bank underscores a sustained push abroad by Japanese companies to beat sluggish growth in their home market.

SMBC will first buy 24.26 percent of BTPN for 6,500 rupiah per share, a 14 percent premium to BTPN’s last traded price – paying 9.12 trillion rupiah ($937 million) according to Reuters calculations.

It is buying most of it from TPG Capital, which acquired 71.6 percent of Bank Tabungan Pensiunan Nasional Tbk PT (BTPN) in 2008.

For TPG, the partial sale is another example of a profitable exit from a financial services related business in Asia. TPG and its Indonesian affiliate North Star paid about $195 million for the stake in 2008.

SMBC will raise its stake in the Indonesian lender to 40 percent as long as it wins regulatory approval, the Japanese bank said in a statement on Wednesday.

The purchase represents one of the most expensive bank deals in Asia, being struck at a price-to-book ratio of about 4.5, based on Reuters calculations.

SMBC is a unit of Japan’s third-largest lender by assets, Sumitomo Mitsui Financial Group Inc (SMFG). It was unclear how TPG plans to exit the rest of its stake in BTPN.

Established in 1958, BTPN operates as a commercial bank with a market value of $3.45 billion, and has more than 19,000 employees and over 10,000 branches.

SMBC’s move was first reported by Reuters earlier this month.
(By Taiga Uranaka and Denny Thomas)

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Quicksilver Resources is withdrawing its IPO due to the weak prices of natural gas liquids and as it had sold 25 percent of its Barnett Shale holdings to Tokyo Gas Co, writes Reuters. Quicksilver unveiled IPO plans last year, but held back due to weak market conditions.

Reuters – Quicksilver Resources Inc reported a loss for the fifth straight quarter due to weak prices for natural gas liquids, and said it would withdraw the $250 million initial public offering of a master limited partnership (MLP).

The MLP held proved reserves of 430.4 billion cubic feet of natural gas equivalent in the Barnett Shale in Texas.

Quicksilver said it was withdrawing the IPO due to the weak prices of natural gas liquids and as it had sold 25 percent of its Barnett Shale holdings to Tokyo Gas Co. ID:nGNXUXSPAa]

Quicksilver unveiled IPO plans for the MLP last year, but held back due to weak market conditions.

Many energy companies have turned to tax-efficient corporate structures called MLPs, which rely on easy access to capital markets to fund growth. Such partnerships are typically made up of assets such as pipelines or long-lived oil and gas fields that generate steady cash flows.

Weak prices for natural gas have weighed on producers for well over a year, prompting them to search for liquids such as propane and crude oil.

However, the prices of oil and natural gas liquids have also dipped in the recent past.

Average realized prices for natural gas liquids, including hedging, fell 36 percent for Quicksilver in the first quarter.

The company’s production fell 5 percent to 357.5 million cubic feet of natural gas equivalent per day (mmcfe/d), led by a sharp drop in its oil and natural gas liquids output. Natural gas production fell slightly.

The company expects second-quarter production to fall further to 282 – 288 mmcfe/d.

Quicksilver said first-quarter production from its operations in the Barnett Shale fell in comparison to the fourth quarter due to decreased capital activity.

Debt-heavy Quicksilver has been looking to rope in outside partners to fund drilling and improve its liquidity position. The oil and gas producer has been looking for other joint venture options in the Barnett Shale as well as in the Horn River basin in British Columbia.

The company said on Tuesday it had amended its credit agreements on April 30, resulting in “a decreased borrowing base, relaxed financial covenants and additional flexibility to support it efforts to reduce leverage.”

The company had $1.6 billion in net debt as of April 30, more than three times its market capitalization of $462.2 million.

Adjusted loss for the first quarter was 4 cents per share. Analysts were expecting the company to post a loss of 1 cent per share, according to Thomson Reuters I/B/E/S.

Net loss was $59.7 million, or 35 cents per share. Net loss in the year-ago period was $212 million, or $1.24 per share. The company said it had restated its results for the year-ago quarter.

Revenue for the quarter fell more than 20 percent to $132.6 million, and missed analysts’ expectations of $147.66 million.

Quicksilver shares, which have fallen 40 percent in the past one year, were down 1 percent on Tuesday at $2.64 on the New York Stock Exchange.

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Online food delivery business Foodpanda has raised $20 million to continue expanding its delivery service worldwide. The startup emerged out of Berlin-based accelerator Rocket Internet and this round was led by Investment AB Kinnevik and Phenomen Ventures. Foodpanda is based in Berlin.

VentureBeat – Online food delivery is a competitive space, with numerous startups trying to edge out the competition.

Foodpanda, based in Berlin, has raised $20 million to continue expanding its delivery service around the globe. In the past few months, Foodpanda and its affiliated brand hellofood entered 15 new countries, and it’s now active in 27 different markets. It also released iPhone and Android apps. This funding will fuel that growth and support Foodpanda’s quest to become the dominant global food delivery service.

The company operates like Seamless or GrubHub. Customers enter their city and browse through delivery options in that region. Before ordering, they can check out ratings, estimated delivery time and fees, look through the menu, and then place the order online. The approach is not only convenient for customers, but also helps restaurants increase their sales and distribution.

There is a massive market for the taking here, and Foodpanda is not the only one trying to capitalize on the opportunity. Foodpanda faces competition from fellow food delivery startups Delivery Hero (also based in Berlin) and London-based Just-Eat, which have each raised over $100 million in venture capital. However, these companies are active in 12 and 14 countries respectively, with a focus on Europe. Foodpanda’s focus is on emerging markets in South America, Asia, Africa, and Eastern Europe, and in a statement issued this morning, the company said it is the leading food delivery app in most of these areas.

This financing will support Foodpanda as it adds more restaurants, countries, and customers into its systems. The startup emerged out of Berlin-based accelerator Rocket Internet, and this round was led by Investment AB Kinnevik and Phenomen Ventures. Foodpanda is based in Berlin.

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Apollo Global Management‘s cornerstone investors and two of its founders are selling a slice of their shares, writes Reuters. Cornerstone investors Abu Dhabi Investment Authority and California Public Employees’ Retirement System, which invested a combined $1.2 billion in Apollo in 2007, have each registered to sell stakes currently worth up to $203.4 million, writes Reuters.

Reuters – Apollo Global Management LLC’s (APO.N) cornerstone investors and two of its founders are selling a slice of their shares, demonstrating how going public makes it easier for dealmakers at alternative asset managers to cash out on their holdings.

Cashing out, even in part, can be a sensitive issue among some private equity investors, who pay attention to how much fund managers earn and how they are remunerated because their interests are best aligned when both sides make a lot of money when deals work out. Part of how much fund managers make and their long-term commitment to the firm hinge on their ownership.

Cornerstone investors Abu Dhabi Investment Authority (ADIA) and California Public Employees’ Retirement System (CalPERS), which invested a combined $1.2 billion in Apollo in 2007, have each registered to sell stakes currently worth up to $203.4 million, a Tuesday filing with the U.S. Securities and Exchange Commission showed.

Marc Rowan and Joshua Harris, who together with Chief Executive Leon Black founded Apollo in 1990, have registered to sell stakes currently worth up to $120.1 million and $60.1 million respectively, the filing shows.

The stock sales, which in total amount to up to 24.3 million shares or about 6.5 percent of Apollo’s total equity, come as Apollo’s shares ended trading on Tuesday near an all-time high, buoyed by the rising value of its funds and asset sales that have allowed it to boost dividends.

Apollo went public in March 2011, following stock market flotations by peers Blackstone Group LP (BX.N) in 2007 and KKR & Co LP (KKR.N) in 2010. Although its founders face restrictions on when they can sell shares, the initial public offering has made it easier for them to cash out should they wish to do so.

Rowan, 51, and Harris, 48, took $114.5 million apiece in 2012 dividends thanks to their individual 15.8 percent stakes in Apollo.

If their ownership is reduced significantly, they will get less of the profits when deals work out for their investors, though this is not immediately on the horizon as their planned share sales will only reduce their stakes marginally to as low as 14.6 percent and 15.2 percent respectively.

Rowan, Harris, Black and other Apollo employees have committed a combined $1 billion of their own money to the company from its inception through the end of last year.

An Apollo spokesman declined to comment on behalf of Rowan, Harris and the firm.

Still the sales may focus the minds of investors on future share sales. The registration of shares for sale on Tuesday was possible because a two-year lock-up on Apollo’s partners for selling up to 7.5 percent of their equity expired in March 2013. Rowan registered on Tuesday to sell all of the equity he was allowed to do so while Harris used about half of his allowance.

The next lock-up, that applies to 15 percent of the equity, expires in March 2014. Following the expiration of two more lock-ups, Apollo’s dealmakers will be allowed to sell all their stakes by March 2017. Black, who is Apollo’s largest shareholder with a 24.9 percent stake, did not register to sell any of his shares on Tuesday. Nine other Apollo partners and one Apollo director did.

A lock-up also applies to the stakes of ADIA and CalPERS. On Tuesday they each registered to sell up to a quarter of their 8 percent stakes in Apollo. Following the expiration of two more lock-ups by March 2017 they will also be allowed to sell all of their stakes.

Apollo had $114.3 billion of assets under management as of the end of March. Its assets include corporate loans and bonds, private equity investments and real estate holdings.

Rowan and Harris each had an estimated net worth of $2.1 billion as of the end of March, according to Forbes. Black was worth $4.3 billion.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc, Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co and Morgan Stanley & Co LLC are acting as joint book-running managers for the offering. The co-managers for the offering are Bank of America Merrill Lynch, Barclays Capital Inc, Deutsche Bank Securities Inc, UBS Securities LLC, Wells Fargo Securities, LLC and Apollo Global Securities LLC.

(Reporting by Greg Roumeliotis in New York; Editing by Edwina Gibbs)

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China Mengniu to pay $410 mln for stake in KKR’s Modern Dairy
China Mengniu Dairy Co Ltd‘s deal to buy a $410 million stake in China’s largest unpasteurised milk producer is a strategic move to rebuild trust after a series of scandals left local brands’ reputations in tatters, writes Reuters. Mengniu said on Wednesday it would buy 26.92 percent of China Modern Dairy Holdings Ltd from private equity firms KKR & Co LP and CDH Investments.

Reuters – China Mengniu Dairy Co Ltd’s deal to buy a $410 million stake in China’s largest unpasteurised milk producer is a strategic move to rebuild trust after a series of scandals left local brands’ reputations in tatters.

Mengniu, twice hit by accusations it sold tainted milk, said on Wednesday it would buy 26.92 percent of China Modern Dairy Holdings Ltd from private equity firms KKR & Co LP and CDH Investments. The deal will lift Mengniu’s stake in China Modern to about 28 percent.

For Mengniu, whose liquid milk products rank first in China by sales volume, the purchase is an attempt to ensure control over its milk supplies and win confidence among consumers in a market that is growing at about 20 percent a year.

For KKR, the storied New York private equity firm, the deal is another lucrative transaction following its relatively late arrival in Asia in 2007. After Modern Dairy’s 2010 IPO and the current deal, KKR will have almost tripled its original investment, according to a person with direct knowledge of the matter.

“It is a deal which benefits all parties, of which the private equity funds are seen to be the biggest winner,” Sunwah Kingsway Group Research analyst Steve Chow said.

“Chinese dairy products makers are racing to secure reliable and high-quality raw milk sources, in particular from overseas.”

Mengniu’s main competitor, Inner Mongolia Yili Industrial Group, has gone overseas to secure quality milk. It was granted approval to build an infant milk formula plant in New Zealand last month.

DISCOUNT MILK

Headquartered in China’s eastern province of Anhui, Modern Dairy sells almost all its raw milk products to Mengniu.

The HK$2.45 per share purchase price is a 12.1 percent discount to Modern Dairy’s previous closing price – a rarity in M&A where acquisitions usually come with a roughly 25 percent premium.

Modern Dairy’s share price has soared since the end of last year, from HK$2 to HK$2.79 at Tuesday’s close. Speculation about talks between Mengniu and Modern Dairy first surfaced in last August.

“The increase of Mengniu’s stake in Modern Dairy is to secure both quality and quantity of raw milk sources,” Sun Yiping, chief executive officer of Mengniu said in a press release.

Shares in Modern Dairy fell nearly 12 percent to HK$2.46 on Wednesday, while Mengniu Dairy’s stock rose 1.6 percent. The Hang Seng index was 0.62 percent higher in intra-day trade.

Standard Chartered said in a research note that part of KKR’s rationale for accepting a discount was to build a long-term relationship with COFCO, the state-owned enterprise which is the top shareholder in China Mengniu.

In addition, KKR has already earned a “quite reasonable” return on its investment, the bank added.

KKR and China-focused private equity firm CDH bought stakes in Modern Dairy after the country’s milk industry was battered by a 2008 scandal involving chemical-laced products. KKR paid $150 million in cash for a 34.5 percent stake, which it sold down to 24 percent after Mengniu’s 2010 IPO. CDH paid $50 million for its holding.

Mengniu was one of about 20 companies implicated in that scandal, when the lacing of milk with the industrial chemical melamine killed at least six children and sickened nearly 300,000 people. The company now says that enhancing the quality of its milk supplies is a key focus for management.

Mengniu teamed up with Danish-Swedish dairy group Arla Foods in June last year to develop dairy products in China, in another bid to regain consumer confidence.

But late last year Mengniu apologised after a government quality watchdog found that some of its products contained aflatoxin, a substance produced by food fungus that can cause severe liver damage, including liver cancer.

It is not alone in facing quality-control problems. China’s Bright Dairy & Food Co Ltd recalled batches of sour milk in September last year after it received hundreds of customer complaints, while Inner Mongolia Yili Industrial Group recalled baby formula tainted with “unusual” levels of mercury in June.

China’s dairy market is still relatively young, with consumption of dairy products growing at an annual compound rate of 20 percent, a stark contrast to U.S. and European markets where demand has been shrinking in the past decade.

STOCKSM&AMARKETSMUTUAL FUND CENTERET

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Warren Buffett’s Berkshire Hathaway Inc,  the largest investor in DaVita HealthCare Partners Inc, has entered an agreement allowing it to nearly double its stake in the largest U.S. operator of dialysis clinics to 25 percent, Reuters is reporting.

(Reuters) – Warren Buffett’s Berkshire Hathaway Inc, the largest investor in DaVita HealthCare Partners Inc, has entered an agreement allowing it to nearly double its stake in the largest U.S. operator of dialysis clinics to 25 percent.

According to a regulatory filing, the companies on Tuesday entered a “standstill” agreement, which is often used to prevent unsolicited takeovers, indicating the maximum percentage of shares that Berkshire can own.

DaVita shares rose $3.84, or 3.3 percent, to $121.40 in after-hours trading after the agreement was disclosed.

Berkshire owned about 15 million DaVita shares, or 14.2 percent, as of March 4, according to another regulatory filing.

These shares were worth about $1.76 billion, based on Tuesday’s closing price of $117.56 for DaVita. That price gave DaVita a market value of about $12.4 billion.

Buffett’s company ended March with $49.1 billion of cash, of which $12.1 billion is being used to help fund the pending purchase of ketchup maker H.J. Heinz Co (HNZ.N: Quote, Profile, Research, Stock Buzz)
DaVita has long been a favorite investment of Ted Weschler, one of two portfolio managers Buffett hired to run portions of Berkshire’s $95.9 billion portfolio of equities.

Buffett recently gave Weschler and the other portfolio manager, Todd Combs, an additional $1 billion each to invest.

Within the last five years, Berkshire has held stakes exceeding 20 percent in railroad operator Burlington Northern Santa Fe Corp, which it later bought, and credit rating company Moody’s Corp (MCO.N: Quote, Profile, Research, Stock Buzz), whose shares it has recently been selling.

Separately, Denver-based DaVita reported on Tuesday an adjusted first-quarter operating profit excluding a legal reserve of $196.9 million, or $1.84 per share. Analysts on average expected $1.79 per share, according to Thomson Reuters I/B/E/S.

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Online gambling company Betfair raised its profit forecast and cost savings target on Tuesday, making its case for independence as it tries to stave off a $1.4 billion takeover by private equity firm CVC Capital Partners, writes Reuters. Betfair last month rejected a potential offer of 880 pence per share from CVC, saying the price was too low and had too many strings attached, writes Reuters.

Reuters – Online gambling company Betfair raised its profit forecast and cost savings target on Tuesday, making its case for independence as it tries to stave off a $1.4 billion takeover by private equity firm CVC Capital Partners.

Betfair last month rejected a potential offer of 880p per share from CVC, saying the price was too low and had too many strings attached. Its shares rose more than two percent to 863.5p after its trading statement, still below the offer price.

Chief Executive Breon Corcoran, who joined from Irish bookmaker Paddy Power last year, declined to comment directly on the takeover but said his strategy was beginning to pay off.

Under Corcoran, Betfair has withdrawn from markets such as Greece and Germany where regulations are not clear cut or tax rates punitive and has cut 500 jobs as part of a 30 million pound ($46.6 million) cost saving programme.

Betfair’s technology allows gamblers to bet online against one another at their own prices. It is also offering more conventional sports betting with odds set centrally to compete with rivals in an expanding yet highly competitive sector.

“The business is making excellent progress. We had a stronger than expected finish to FY 13 and momentum is strong,” Corcoran told reporters.

“Recent performance indicates that our strategy is working and that the combination of the exchange and sports book can be very potent,” he added.

DECLINE AFTER FLOTATION

CVC, the largest shareholder in Formula One motor racing, believes that it could turn Betfair around more quickly by taking it private. It often leaves management in place once it has done a deal.

CVC has joined forces with investors Richard Koch and Antony Ball who own 6.5 percent of Betfair. It has until May 13 to make a formal offer, although this deadline can be extended.

The company floated in 2010 at a price of 13 pounds per share. The stock has tumbled since then, with analysts saying the company had failed to clearly identify whether it was a technology or gambling business.

Analysts welcomed the statement from Betfair which was hurriedly compiled after its financial year ended on April 30.

“Management has made a good case for the defence with encouraging early signs of the strategy paying off in the UK and opportunities from regulatory changes in Italy, Spain and the US,” said Ivor Jones of Numis Securities. He increased his recommendation on the stock to “Buy” from “Add” and set a price target of 1,100p.

Betfair forecast underlying profit of 73 million pounds on revenues of 387 million for the year to end April. Previous guidance had been for profit of 65-70 million pounds and revenues in a range of 370-385 million, the company said.

Betfair raised its cost savings target to 30 million pounds from a previous 20 million.

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Hertz Global Holdings‘ private equity investors Clayton, Dubilier & Rice, Carlyle Group and Bank of America Merrill Lynch have sold off their remaining shares in the car rental agency for $1.24 billion, writes Reuters. CD&R, Carlyle and Bank of America Merrill Lynch sold 49.8 million shares for $24.96 each. Before the sales, CD&R and Carlyle were the second and third largest shareholders in Hertz, respectively, according to Thomson Reuters data.

Reuters – Hertz Global Holdings Inc said on Monday that private equity firms Clayton, Dubilier & Rice and Carlyle Group, as well as Bank of America Merrill Lynch, have sold off their remaining shares in the car rental agency for $1.24 billion.

CD&R, Carlyle and Bank of America Merrill Lynch sold 49.8 million shares for $24.96 each, Hertz said in a press release. Before the sales, CD&R and Carlyle were the second and third largest shareholders in Hertz, respectively, according to Thomson Reuters data.

Bank of America Merrill Lynch, CD&R and Carlyle Group bought Hertz from Ford Motor Co in December 2005 for $5.6 billion. Including debt, the deal was worth $15 billion. Hertz did an initial public offering the following year.

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Business software maker BMC Software Inc, whose anemic growth has been a source of frustration for its largest shareholder, said it would be taken private by a group led by Bain Capital and Golden Gate Capital for about $6.9 billion, Reuters reported.

(Reuters) – Business software maker

Elliott Management, which owns 9.6 percent of BMC and had been pushing for a sale for more than a year, had argued that BMC’s management was neglecting the huge opportunity to expand into the fast-growing cloud computing market.

“Going private will be very positive for them because it will enable them to make the changes that were necessary, that were much difficult when you are a public company,” Lazard Capital Markets analyst Joel Fishbein said.

BMC has some catching up to do in a market now dominated by Salesforce.com Inc and where Oracle Corp, SAP AG and Microsoft Corp are investing heavily.

BMC’s revenue is expected to have grown just 3 percent in the year ended March 31 to $2.23 billion, after growth of just 5 percent the previous year. BMC reports fourth-quarter results on Tuesday.

Elliott, Paul Singer’s activist hedge fund, succeeded in adding two directors to BMC’s board last year after a proxy battle.

The offer price of $46.25 per share represents a premium of less than 2 percent to BMC’s Friday close of $45.42.

The stock has risen 4.5 percent since March 21, when Reuters reported that private equity groups were looking to buy the company.

BMC shares were trading at $45.50, up 8 cents, by midday on the Nasdaq.

BMC has two main divisions. The enterprise services management business manages networks, databases and storage and brings in nearly two-thirds of total revenue, but has stagnated over the years.

The mainframe services management unit, which helps automate data center operations, has grown slowly but is a cash cow that could help the new owners maximize profits.

The private equity group also includes GIC Special Investments Pte Ltd, part of Singapore’s sovereign wealth fund, and Insight Venture Partners, a New York investment firm that focuses on software and internet businesses.

“I think they will streamline the business, focus on the higher growth areas, either divest or spin off some of the unproductive businesses,” Fishbein said, adding that he expects it will take 12-18 months to “right-size” the business.

Under the sale agreement, Houston-based BMC has a “go-shop” provision that allows it to seek alternative proposals within 30 days. Analysts said it was unlikely BMC would get better offers.

BMC, which also competes with CA Inc and Compuware Corp, said the deal is expected to close later this year. Credit Suisse, RBC Capital Markets and Barclays have agreed to provide debt financing for the deal.

Morgan Stanley & Co LLC and BofA Merrill Lynch were financial advisers to BMC, while Wachtell, Lipton, Rosen & Katz was legal counsel.

Qatalyst Partners, Credit Suisse, RBC Capital Markets and Barclays served as financial advisers to the buyers, while Kirkland & Ellis LLP acted as legal counsel.

Sidley Austin LLP was legal adviser to GIC and Willkie Farr & Gallager LLP was legal adviser for Insight Venture Partners.

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Earthbound Farm Organic, the largest grower of organic produce in the United States, is exploring a sale of the company, Reuters is reporting. Earthbound Farm, which is backed by Kainos Capital, has hired Barclays to sell the company, Reuters says.

(Reuters) – Earthbound Farm Organic, the largest grower of organic produce in the United States, is exploring a sale of the company, according to four sources familiar with the matter.

The San Juan Bautista, California-based company, whose investors include private equity firm Kainos Capital, has hired Barclays to sell the company in a deal that could be worth $600 million to $700 million, the sources said on Monday.

The sale process is in the early stages, the sources said. The company has roughly $75 million in annual earnings before interest, taxes, depreciation and amortization (EBITDA), the sources said.

In 2012, revenue topped $460 million, according to Moody’s.

Fresh produce is typically regarded as a lower-margin business compared with processed foods because fresh goods are perishable and have high distribution costs.

However, recent deals in the organic foods sector have commanded high multiples. In July 2012, high-end juice maker Bolthouse Foods was acquired by Campbell Soup Co for $1.6 billion, about 11 times EBITDA.

That compares with a multiple of around 9 for recent transactions in the food and beverage sector, according to accounting and consulting firm Grant Thornton.

Earthbound Farm and Kainos Capital could not be reached for comment. Barclays declined to comment.

Dallas-based Kainos Capital is a new firm made up of executives from HM Capital’s food and consumer products group. HM Capital, a private equity firm, said last year that it was winding down. HM Capital acquired about 70 percent of Earthbound Farm in July 2009.

Earthbound Farm grows and packages items including salads, vegetables and fruit. Founded in 1984 on a 2.5-acre backyard garden in Carmel Valley, California, it has since expanded to 26,000 acres.

The company was the first to sell pre-washed bagged salads, which are now available in 75 percent of all U.S. supermarkets, including retailers such as Costco Wholesale Corp, Walmart Stores Inc and Whole Foods Market Inc.

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Private equity firms TPG Capital and Warburg Pincus LLC are exploring a sale or a public offering of Neiman Marcus Group Inc, according to a Bloomberg News report late on Sunday.

(Reuters) – Private equity firms TPG Capital and Warburg Pincus LLC are exploring a sale or a public offering of Neiman Marcus Group Inc, according to a Bloomberg News report late on Sunday.

The private equity firms, which bought the Dallas-based retailer in 2005 for $5.1 billion, have interviewed banks and are about to hire Credit Suisse Group AG (MLPN.P) to run the dual track process, according to the report, which cited two people familiar with the situation.

A Credit Suisse spokesman declined to comment. E-mails to Warburg, Neiman Marcus and TPG were not immediately returned.

TPG and Warburg are in the early stages of exploring their options and if they do not find a buyer or demand is weak for an IPO, they may decide to pursue a dividend recapitalization instead, according to the report.

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The head of the U.S. Securities and Exchange Commission’s national examination program is leaving the agency, in what marks the latest major personnel change since Mary Jo White took over as head of the SEC last month, the SEC said Thursday. Carlo di Florio, who was hired more than three years ago to help revamp the agency’s examinations program in the wake of the Bernard Madoff scandal, is leaving to lead a new risk and strategy division at the Financial Industry Regulatory Authority, the Wall Street industry-funded brokerage watchdog. He will be replaced by Andrew Bowden, who currently serves as deputy director of the SEC’s Office of Compliance, Inspections and Examinations.

(Reuters) – The head of the U.S. Securities and Exchange Commission’s national examination program is leaving the agency, in what marks the latest major personnel change since Mary Jo White took over as head of the SEC last month, the SEC said Thursday.

Carlo di Florio, who was hired more than three years ago to help revamp the agency’s examinations program in the wake of the Bernard Madoff scandal, is leaving to lead a new risk and strategy division at the Financial Industry Regulatory Authority, the Wall Street industry-funded brokerage watchdog.

He will be replaced by Andrew Bowden, who currently serves as deputy director of the SEC’s Office of Compliance, Inspections and Examinations (OCIE).

“Carlo has been an outstanding leader of the National Exam Program and has made a lasting impact on the SEC by working with his team to comprehensively strengthen the agency’s examination program,” said White in a statement.

Di Florio was the second high-profile SEC official to announce his departure on Thursday, and the latest in a string of major staffing changes within the agency.

Earlier in the day, the SEC said it was also losing 13-year veteran David Bergers, who heads the Boston Regional Office and was also serving as deputy director of the Enforcement Division.

Last month, White also appointed former federal prosecutors Andrew Ceresney and George Canellos to serve as co-directors of the Enforcement Division, as well as White House attorney Anne Small to be the new general counsel.

She is said to still be reviewing candidates for top positions in the Trading and Markets Division. Candidates include Joseph Lombard, an attorney who once advised former SEC Chairman Arthur Levitt, and Virtu Financial LLC executive Chris Concannon.

MAJOR SHAKE-UP

Di Florio was first named director of the OCIE in January 2010.

At the time the SEC was still under the gun for missing the red flags about Bernard Madoff’s $65 billion Ponzi scheme.

The year prior, the SEC’s then-Inspector General David Kotz had released a scathing investigative report which found that SEC examiners had missed numerous opportunities to uncover Madoff’s fraud because they were too inexperienced and narrowly focused in their reviews.

At one point, the report also found that two different examinations were going on at the same time in different offices. The examiners only learned of the duplication after hearing it from Madoff himself.

Di Florio was credited with breathing new life into the examinations program.

He nationalized the examinations structure at the SEC to help improve communications and the flow of information, and created a risk-focused examinations strategy.

He also took a similar approach that former SEC Enforcement Director Robert Khuzami took when revamping the Enforcement Division by creating specialized working groups for derivatives, hedge funds, private equity, valuation, structured products, and market structure, among others.

In a separate announcement Thursday, FINRA said di Florio will start his new job on June 24.

This is the second time this week that FINRA has snagged an SEC alumnus for a new position there.

On Tuesday FINRA said it hired Jonathan Sokobin, who once served as acting director of the SEC’s division of risk, strategy and financial innovation and most recently held a high-level position at an office in the U.S. Treasury Department.

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Singapore state investor Temasek Holdings Pte Ltd is in talks to buy a stake worth around $500 million in London-based financial data provider Markit Group, Reuters reported.

(Reuters) – Singapore state investor Temasek Holdings Pte Ltd is in talks to buy a stake worth around $500 million in London-based financial data provider Markit Group, a source familiar with the deal said.

If talks are a successful, a deal could happen over the next “few months”, the source told Reuters. He declined to be identified because the talks are not public.

Temasek has in the past made money by investing in companies before they are listed and this investment follows the same pattern, the source said, hinting that Markit Group may eventually sell shares to the public.

Temasek will likely buy the stake from financial institutions that already own part of Markit Group, the source said.

There has been speculation in the British press that Markit may decide to list on the stock market. However the Financial Times quoted officials there as saying they have not made any decision to pursue a public listing.

Markit Group began life in 2001, working out of a barn in St. Alban’s, a commuter town 20 miles north of London. Founded by Canadian Lance Uggla, the group provides financial data and trade processing services, primarily for the credit market.

Temasek, which manages a portfolio of $160 billion, has heavily invested in financial services, which account for 31 percent of its assets.

“An investment in Markit would be an indirect exposure to the financial services industry, which is core for Temasek,” said Song Seng Wun, an economist at CIMB.

A Temasek spokesman said in a statement it does not comment on market speculation. The news was first reported by Sky News.

A spokeswoman for Markit declined to comment.

Private equity firm General Atlantic (GA) took a minority stake in the company in January 2010. GA reportedly bought a 7.5 percent stake for $250 million, valuing the company at $3.3 billion. The rest of the company is owned by its employees, private investors and various financial institutions.

Uggla formed the company with a group of colleagues who had worked together in credit trading at Canada’s TD Securities. According to its website it now employs more than 2,800 people and is headquartered in London.

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Activist investor Edward Bramson has raised his stake in UK private equity company 3i to 4.9 percent, piling pressure on Chief Executive Simon Borrows just weeks before he marks his first year in charge of the troubled firm. Sherborne Investors, the investment vehicle run by the media-shy entrepreneur, now controls just over 47.5 million shares in 3i, acquired at a cost of around 127 million pounds ($197 million), Sherborne said in a statement on Friday. New Yorker Bramson is famous for forcing through management shake-ups at his target companies and raised 207 million pounds in November to buy shares in an unspecified listed company it considered undervalued.

(Reuters) – Activist investor Edward Bramson has raised his stake in UK private equity company 3i to 4.9 percent, piling pressure on Chief Executive Simon Borrows just weeks before he marks his first year in charge of the troubled firm.

Sherborne Investors, the investment vehicle run by the media-shy entrepreneur, now controls just over 47.5 million shares in 3i, acquired at a cost of around 127 million pounds ($197 million), Sherborne said in a statement on Friday.

New Yorker Bramson is famous for forcing through management shake-ups at his target companies and raised 207 million pounds in November to buy shares in an unspecified listed company it considered undervalued.

In 2011 Bramson led a boardroom coup at British firm F&C Asset Management, ousting the chairman and pursuing a root-and-branch shake-up of the 144-year old company after years of share price underperformance.

Within weeks of Sherborne’s fundraising he set his sights on 3i, already in the throes of an extensive turnaround plan after a phase of poor share price performance and weak results from its buyout business.

Since appointing Borrows last May, 3i has cut jobs and streamlined strategy to focus on its northern European roots in an effort to prop up its stock value, which has rebounded by more than 70 percent in the past 12 months.

3i shares were down 0.2 percent at 332.5 pence by 0909 GMT on Friday, having risen by 53 percent this year.

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Hugo Boss said on Friday private equity firm Permira has now committed itself to holding on to its remaining shares in the German fashion house for nine months, compared with six months previously, Reuters reported. The news comes after Hugo Boss said earlier on Friday that Permira was selling a further 10 percent stake in Hugo Boss, reducing its holding to about 56 percent and cashing in on an investment whose share price has doubled since it first invested in 2007.

(Reuters) – Hugo Boss said on Friday private equity firm Permira has now committed itself to holding on to its remaining shares in the German fashion house for nine months, compared with six months previously.

The news comes after Hugo Boss said earlier on Friday that Permira was selling a further 10 percent stake in Hugo Boss, reducing its holding to about 56 percent and cashing in on an investment whose share price has doubled since it first invested in 2007.

Permira was not immediately available for comment. (Reporting by Maria Sheahan; Additional reporting by Arno Schuetze; Editing by Peter Dinkloh)

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