2005 was a big year for Texas mergers
DAVID KOENIG
Associated Press
DALLAS - From energy to retail, 2005 was a busy year for mergers and acquisitions, with several well-known Texas companies - ConocoPhillips, 7-Eleven, Neiman Marcus, Wyndham and LaQuinta hotels - at the center of some the biggest deals.
"What's driving this is the huge amount of money available for buyouts," said Charles Nathan, co-head of the merger-and-acquisitions practice at New York law firm Latham & Watkins LLP. "We're in the middle of a cycle that's going to last a couple more years."
Houston-based ConocoPhillips Co. announced Dec. 17 that it had agreed to buy another oil and natural gas producer, Burlington Resources Inc., for $35.6 billion, making the deal one of the largest in the energy industry in several years.
A day earlier, the Bass family of Fort Worth, which made millions in the energy business over the last 60 years and billions on the stock market, sold one of its last remaining ties to oil and gas, the pipeline company Sid Richardson Energy Services Co., to Scranton, Pa.-based Southern Union Co. for $1.6 billion in cash.
Both deals were driven by high energy prices - and the belief they will stay high - which raised the value of independent oil and gas producers.
"The headline is not the Bass deal or the ConocoPhillips deal," said Kenneth M. Stern of FTI Consulting, which advises energy companies. "It's that mergers and acquisitions are in full swing. We're going to see more deals."
A couple iconic Texas retailers were also among companies sold this year.
In November, Seven-Eleven Japan Co. paid about $1.38 billion for the 27.3 percent of the Dallas-based chain that it didn't already own. The move was designed to make 7-Eleven more competitive by boosting investment in merchandising, store renovations and distribution. The parent company operates or franchises about 5,800 stores in the United States and Canada and licenses more than 22,000 worldwide, making it the largest convenience store chain in the world.
Luxury retailer Neiman Marcus was sold for $5.1 billion in a deal approved in October to private-equity firms Warburg Pincus and Texas Pacific Group, which outbid two other teams of buyout firms for the 35-store chain. Neiman Marcus also operates 13 Last Call outlets and two Bergdorf Goodman stores in New York City.
Besides snapping up Neiman Marcus, Texas Pacific, which is led by former Bass family investment adviser David Bonderman and has offices in Fort Worth and San Francisco, joined with six other buyout firms in an $11.3 billion takeover of software maker SunGard Data Systems - one of the largest private leveraged buyouts ever.
One of the losing bidders for Neiman Marcus, the Blackstone Group, paid about $2.3 billion for Dallas-based hotel operator La Quinta Corp., paying a 37 percent premium over La Quinta's share price before the deal was announced in November. Just a few months earlier, New York-based Blackstone purchased another Dallas-based chain, Wyndham International Inc., for $1.44 billion, then turned around and sold it to Cendant Corp.
Analysts said both deals reflect the hot market for hotels. Marc Falcone of Deutsche Bank predicted more deals as the industry continues to consolidate, and he added that private-equity firms remain interested bidders.
Buyout firms also swooped in on some smaller public companies, such as Dallas-based clothing maker Haggar Corp., which sold for $212 million to buyout specialist Infinity Associates LLC, which was joined in the purchase by Perseus LLC, a bank and private equity-fund manager in Washington and New York, and Hong Kong-based manufacturer Symphony Holdings Ltd.
Texas Pacific, Blackstone and other private-equity firms are swimming in cash because institutional investors such as pension funds are pouring money into them, seeing them as a better alternative to relatively low interest rates and U.S. stock markets that have mostly treaded water the past two years.
And even when the buyout firms don't have the capital, those low interest rates provide a ready source of cheap cash. Leveraged-buyout deals totaled about $109 billion this year, or 11 percent of all merger-and-acquisition activity by value, according to Thomson Financial.
This year's $1 trillion in U.S. deals was an increase from about $824 billion last year and $550 billion in 2003, according to research firm Thomson Financial.
Acquisitions of Texas-based companies doubled in value this year, to 724 deals worth $112.6 billion through Dec. 20, behind only California and New York, Thomson said.
In 2006, analysts expect consolidations in the airline industry, which has several carriers under bankruptcy protections, including Delta Air Lines Inc., Northwest Airlines Corp. and UAL Corp.'s United Airlines.
While none of those airlines are based in Texas, three others are - Southwest Airlines Co., Houston-based Continental Airlines Inc. and American Airlines, the largest U.S. carrier and a unit of Fort Worth's AMR Corp. Only Dallas-based Southwest has been consistently profitable since the beginning of 2001.
Michael Linenberg, an analyst with Merrill Lynch, said fundamentals in the airline business are starting to improve, including fewer seats, higher fares, and possibly lower fuel costs. The result, he said, could be a round of consolidation not seen among airlines since the 1980s.
DAVID KOENIG
Associated Press
DALLAS - From energy to retail, 2005 was a busy year for mergers and acquisitions, with several well-known Texas companies - ConocoPhillips, 7-Eleven, Neiman Marcus, Wyndham and LaQuinta hotels - at the center of some the biggest deals.
"What's driving this is the huge amount of money available for buyouts," said Charles Nathan, co-head of the merger-and-acquisitions practice at New York law firm Latham & Watkins LLP. "We're in the middle of a cycle that's going to last a couple more years."
Houston-based ConocoPhillips Co. announced Dec. 17 that it had agreed to buy another oil and natural gas producer, Burlington Resources Inc., for $35.6 billion, making the deal one of the largest in the energy industry in several years.
A day earlier, the Bass family of Fort Worth, which made millions in the energy business over the last 60 years and billions on the stock market, sold one of its last remaining ties to oil and gas, the pipeline company Sid Richardson Energy Services Co., to Scranton, Pa.-based Southern Union Co. for $1.6 billion in cash.
Both deals were driven by high energy prices - and the belief they will stay high - which raised the value of independent oil and gas producers.
"The headline is not the Bass deal or the ConocoPhillips deal," said Kenneth M. Stern of FTI Consulting, which advises energy companies. "It's that mergers and acquisitions are in full swing. We're going to see more deals."
A couple iconic Texas retailers were also among companies sold this year.
In November, Seven-Eleven Japan Co. paid about $1.38 billion for the 27.3 percent of the Dallas-based chain that it didn't already own. The move was designed to make 7-Eleven more competitive by boosting investment in merchandising, store renovations and distribution. The parent company operates or franchises about 5,800 stores in the United States and Canada and licenses more than 22,000 worldwide, making it the largest convenience store chain in the world.
Luxury retailer Neiman Marcus was sold for $5.1 billion in a deal approved in October to private-equity firms Warburg Pincus and Texas Pacific Group, which outbid two other teams of buyout firms for the 35-store chain. Neiman Marcus also operates 13 Last Call outlets and two Bergdorf Goodman stores in New York City.
Besides snapping up Neiman Marcus, Texas Pacific, which is led by former Bass family investment adviser David Bonderman and has offices in Fort Worth and San Francisco, joined with six other buyout firms in an $11.3 billion takeover of software maker SunGard Data Systems - one of the largest private leveraged buyouts ever.
One of the losing bidders for Neiman Marcus, the Blackstone Group, paid about $2.3 billion for Dallas-based hotel operator La Quinta Corp., paying a 37 percent premium over La Quinta's share price before the deal was announced in November. Just a few months earlier, New York-based Blackstone purchased another Dallas-based chain, Wyndham International Inc., for $1.44 billion, then turned around and sold it to Cendant Corp.
Analysts said both deals reflect the hot market for hotels. Marc Falcone of Deutsche Bank predicted more deals as the industry continues to consolidate, and he added that private-equity firms remain interested bidders.
Buyout firms also swooped in on some smaller public companies, such as Dallas-based clothing maker Haggar Corp., which sold for $212 million to buyout specialist Infinity Associates LLC, which was joined in the purchase by Perseus LLC, a bank and private equity-fund manager in Washington and New York, and Hong Kong-based manufacturer Symphony Holdings Ltd.
Texas Pacific, Blackstone and other private-equity firms are swimming in cash because institutional investors such as pension funds are pouring money into them, seeing them as a better alternative to relatively low interest rates and U.S. stock markets that have mostly treaded water the past two years.
And even when the buyout firms don't have the capital, those low interest rates provide a ready source of cheap cash. Leveraged-buyout deals totaled about $109 billion this year, or 11 percent of all merger-and-acquisition activity by value, according to Thomson Financial.
This year's $1 trillion in U.S. deals was an increase from about $824 billion last year and $550 billion in 2003, according to research firm Thomson Financial.
Acquisitions of Texas-based companies doubled in value this year, to 724 deals worth $112.6 billion through Dec. 20, behind only California and New York, Thomson said.
In 2006, analysts expect consolidations in the airline industry, which has several carriers under bankruptcy protections, including Delta Air Lines Inc., Northwest Airlines Corp. and UAL Corp.'s United Airlines.
While none of those airlines are based in Texas, three others are - Southwest Airlines Co., Houston-based Continental Airlines Inc. and American Airlines, the largest U.S. carrier and a unit of Fort Worth's AMR Corp. Only Dallas-based Southwest has been consistently profitable since the beginning of 2001.
Michael Linenberg, an analyst with Merrill Lynch, said fundamentals in the airline business are starting to improve, including fewer seats, higher fares, and possibly lower fuel costs. The result, he said, could be a round of consolidation not seen among airlines since the 1980s.
