Short diary since economics is not my forte. Local AZ business, Petsmart, the 36th largest employer in Arizona, was sold to a London based Partnership, BC Partners "in what could be the largest private-equity deal of the year."
With the sale, another [AZ] homegrown public company will be controlled out of state....
Arizona had six of the nation's largest publicly traded companies as tallied by the Fortune 500 in 2013. With PetSmart going private and US Airways merged with Fort Worth-based American Airlines, the state now has four.
PetSmart agreed on Sunday to sell itself to a group led by the investment firm BC Partners for about $8.7 billion, months after the retailer came under pressure from two hedge funds.
So the way, I inderstand it, and please correct me if I am wrong. Jana Partners, a hedge fund, acquired almost 10% of PetSmart stock, giving them power to pressure the company. Which they did.
In July 2014
.....controversial hedge fund Jana Partners announced plans to shake-up PetSmart, while revealing a large stake in the retailer. Jana has pushed for radical changes at other retailers like Walgreen recently, as a means to boost stock prices over a short time frame.
Jana "indicated it plans to have discussions with the PetSmart board and management to review strategic alternatives such as a sale of the company, improving operating performance and the company's capital structure, and how to return significant capital to shareholders." Jana also suggested it may seek to make changes to PetSmart's board...... PetSmart announced it would consider all options, including a sale.
The Motley Fool asks:
Jana is investing in PetSmart because it feels the stock is undervalued, but should it really be pushing PetSmart to change its business?
In August 2014 the NYTimes reported blackmail by Jana Partners
"Tension between the company and Jana nevertheless remains high.......the hedge fund said that it had received an anonymous package containing what it said was a confidential internal document outlining the retailer’s plans. Jana urged PetSmart to release the information, allowing for the redaction of sensitive information for competition’s sake, or risk the hedge fund releasing it."
Motley Fool says:
PetSmart is not a bad business by most measures. It simply had a bad first quarter, as most retailers did. For the quarter earnings rose 6.1%, and sales were up 1.1% year over year, but comparable sales slipped. Jana describes itself as "event driven," meaning it looks for unique opportunities to swoop in and unlock value in a business. Is one bad quarter enough of an "event," for Jana to have a say at PetSmart's table?
Under the deal’s terms, the consortium will pay about $83 a share in cash, about 6.8 percent higher than PetSmart’s closing price on Friday and about 39 percent higher than the closing price on July 2, the day before Jana emerged as a shareholder.
Read the Motley Fool Article to see how Jana Partners rolls. Profit above all else. Every penney will be squeezed out of PetSmart.
To the wealthy, there's never enough money. Greed is good.
References:
Aug. 18, 2014 NYTimes
http://dealbook.nytimes.com/...
August 19, 2014
http://dealbook.nytimes.com/...
Dec. 14, 2014, NYTimes
http://dealbook.nytimes.com/...
Dec. 14, 2014, AZ Republic
http://www.azcentral.com/...
July 2014 The Motley Fool
http://www.fool.com/...