Magazine

Closing Bell: Tyson Foods


Long live King Henry! On Sept. 13, two key partners of Kohlberg Kravis Roberts, the buyout firm founded by Henry Kravis and his cousin George Roberts in 1976, announced that they will retire at yearend to start their own fund. The departures of B-school roommates Ned Gilhuly, 45, and Scott Stuart, 46, sparked some speculation over who will succeed Kravis and Roberts, both 61.

But their exits are actually one of the clearest signs yet that buyout king Kravis isn't leaving anytime soon. And why should he? Kravis is putting the final touches on a fund of about $5 billion for investing in Europe. He's opening offices in Hong Kong and Tokyo.

Besides, with private equity transactions all the rage, buyout firms soon may be able to get the financing to do deals not just worth billions -- but tens of billions of dollars. Perhaps that's why Kravis continues to show up early at work every day. "[Kravis] is going 100 miles per hour," says Stuart. Doesn't sound like a man heading toward retirement.

The bridesmaid is finally a bride. After losing out in the bidding for such plum targets as FleetBoston Financial (BAC) and MBNA (KRB), Wachovia (WB) finally caught the bouquet with its Sept. 12 deal to acquire Westcorp (WES) for $3.9 billion. In winning Westcorp and its WFS Financial (WFSI) auto-lending subsidiary, the Charlotte (N.C.)-based bank solves a big problem it shares with its rivals: what to do with all the deposits it has attracted from consumers looking for a safe place to park their cash. Having been unable to persuade depositors to become customers for its loan products, Wachovia is using the Westcorp deal to vault it into the ranks of the largest auto lenders.

Gillette (G) one-upped rival Schick (ENR) and its four-bladed Quattro razor on Sept. 14 when it unveiled the world's first five-bladed razor, known as Gillette Fusion. Men will have to pay dearly to trade up to Fusion when it goes on sale in both manual and battery-powered versions early next year. A four-pack of Fusion cartridges will cost at least $12, a 30% premium over Gillette's current top-of-the-line blades. Still, there's every reason to believe Fusion will become a huge hit. Consumer testing on 9,000 men found they preferred Fusion by a 2-to-1 margin over Mach3Turbo. And Gillette promises Fusion's launch will be backed by the biggest marketing program in its history, though it didn't reveal what it will spend on the campaign.

Ford Motor (F) took another step in its ongoing restructuring, selling Hertz to a private equity group. Clayton, Dubilier & Rice, Carlyle Group, and Merrill Lynch Global Private Equity (MER) bought the nation's No. 1 car rental company in a deal valued at $15 billion, including debt. Ford walks away with $5.6 billion in cash -- about what Wall Street expected -- to beef up its balance sheet. Thus ends Ford's on-again, off-again Hertz saga. Ford bought its first stake in 1987 and by 1994 owned the whole company. In 1997, Ford sold a minority interest in a public offering, but in 2001 it bought the stock back. In June, Ford said it would spin off part of Hertz in an initial public offering and sell the rest later. By selling Hertz outright, Ford collects the cash sooner.

Cable operators are joining the rush to build Wi-Fi networks in towns across the U.S. to offer customers Internet access anywhere, even outside their homes. On Sept. 14, Wi-Fi equipment maker Tropos Networks teamed up with major cable equipment vendor Scientific-Atlanta (SFA) to sell cable operators the systems they need to offer such broadband services. Companies such as Time Warner Cable (TWX) are considering jumping into the business. Such a move could put Bell companies on the defensive. The local phone companies offer high-speed Internet access services that compete with cable-modem offerings.

-- Lehman Brothers (LEH) reported a 74% jump in net income for the third quarter.

-- Creditors of US Airways (UAIRQ) approved its bankruptcy reorganization plan.

-- Apparel and hospitality union UNITE Here is leaving the AFL-CIO.

Tyson Foods (TFN) fell 2.2%, to 17.65, on Sept. 14 -- leaving it nearly 8% below its July 20 peak -- amid investor concerns that earnings at the meat and poultry producer will suffer from Hurricane Katrina. On Sept. 6, Tyson warned that storm damage will reduce profits by up to $20 million.


Video Game Avenger
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus