Barbarians Calling; Corporate Raiders Set Their Sights on Europe, Fueling a Private-Equity Boom That Is Ruffling Feathers and Reshaping Big Companies

By Vencat, Emily Flynn | Newsweek International, March 26, 2007 | Go to article overview

Barbarians Calling; Corporate Raiders Set Their Sights on Europe, Fueling a Private-Equity Boom That Is Ruffling Feathers and Reshaping Big Companies


Vencat, Emily Flynn, Newsweek International


Byline: Emily Flynn Vencat

Europeans have always been unsettled by brass-knuckles capitalism. So it's no surprise that a recent rash of multibillion-dollar private-equity bids have caused quite a stir. Over the last few weeks, firms like Britain's J Sainsbury supermarkets and Alliance Boots pharmacy chain have become targets for American leveraged-buyout firms like Kohlberg Kravis Roberts and Blackstone, as well as homegrown players like the U.K.'s Permira. Unionists, who regularly grouse about buyout-related job cuts, have begun lobbying governments to cut the tax breaks raiders get on their massive loans. Last month, banner-toting protesters at private equity's annual conference in Frankfurt gave funds a clear message: "Slam the door as you leave the EU!"

No chance of that. Last year European private-equity funds raised $114 billion, more than double the 2004 figure. This year the number will likely rise to $130 billion. While the biggest deals are still done in the United States experts say Europe is quickly becoming one of private equity's favorite stomping grounds. Deals are cheaper, and the upside can be much higher. Not only does corporate Europe have more fat to strip, European integration has opened up the possibility for major cross-border mergers and takeovers. "Fund managers are scouring the earth for the best value deals," says Ric Lewis, CEO of Curzon Global Partners, an international private-equity fund, "And today they're finding them in the European Union."

The buyouts are increasingly controversial: German politicians routinely rail against "vulture" capitalists, and even business-friendly British Prime Minister Tony Blair recently warned funds they need to "behave responsibly." Still, there's no doubt that private equity is already bolstering corporate returns across the continent.

The chief targets so far include telecommunications and media firms, particularly those that were formerly state owned. Over the last two years, private-equity firms like 3i and Permira have snatched up VNU in the Netherlands, Eircom in Ireland, ProSienbenSat in Germany and TDC in Denmark, which remains, at [euro]13 billion, the largest European leveraged buyout ever. Industry analysts say the ailing Vodafone--the world's largest mobile operator--could be next. Already, the deals have broken down industry barriers and pushed the "bundling" of services like telephone calls, TV and broadband. As private-equity funds strip away noncore businesses and refocus the companies, experts say Europe will also likely end up with more TV channels, and lower phone bills.

Another popular play is in retail, where raiders are spinning off the real-estate portfolios of big chain stores. If the J. Sainsbury buyout comes through in mid-April, analysts say the company might sell off its stores, then lease them back, freeing up somewhere between [pounds sterling]5 billion and [pounds sterling]7.5 billion of cash. That could be used to move into nonfood sales (helping it to compete with bigger U.S. players like Wal-Mart). If the plan goes through, it will follow similar private-equity deals involving Nordea, Scandinavia's largest bank, and French department-store chain Printemps.

Private-equity financiers say these sorts of deals will help make Europe more competitive. But some shareholders aren't so sure. The J. Sainsbury deal has provoked controversy, in part because company CEO Justin King, who stands to profit from the buyout, has also had a big hand in orchestrating it (the U. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Barbarians Calling; Corporate Raiders Set Their Sights on Europe, Fueling a Private-Equity Boom That Is Ruffling Feathers and Reshaping Big Companies
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.