Private equity interest in retail remains high long after the current wave of dealmaking began in 2005 with the $8.2 billion buyout of Toys R Us. Now, after two years, and six major buyouts of U.S. retailers later (see chart below), PE firms are fanning out beyond the U.S. and in to Europe and even Australia, where a bidding war for Coles Group Ltd. could lead to the country's largest buyout at A$20 billion ($16 billion). It should come as little surprise that the sponsors of the Toys R Us deal are leading the push abroad. For example, Kohlberg, Kravis, Roberts & Co. is bidding on Alliance Boots plc and Coles. Meanwhile, TRU co-sponsor TPG Capital made a run along with Blackstone and CVC Capital for J Sainsbury plc, but the group backed away when it was clear the Sainsbury family was seeking more than the consortium was interested in paying. To be certain, firms have still found a few U.S. deals to pursue. Last month, KKR agreed to buy Dollar General Corp., the pioneer of the dollar store concept, for about $7.3 billion, including debt. Plus, with U.S. retailers like The Gap, and Value City on the block, more U.S. deals are bound to come.
At The Deal's PC Symposium April 23 and 24th, the retail/consumer sector will command its own panel. The Carlyle Group's Pauline Brown, LNK Partners' Henry Nasella, Brentwood Associates' Anthony Choe and Vestar Capital founder Daniel O'Conner will discuss PE funding trends in retail and perhaps reveal future targets.—Matthew Wurtzel
| A look at select retail deals |
| Date acquired |
Company/
industry |
Sponsor(s) |
Enterprise value ($mill.)
At the time of acquisition |
| Recent LBOs |
| July '05 |
Toys "R" Us Inc.
Toys retailer |
Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co., Vornado Real Estate, Gordon Brothers |
$8,200 |
| Oct. '05 |
Neiman Marcus Inc.
High-end department stores |
Texas Pacific Group, Warburg Pincus |
5,100 |
| April '06 |
Burlington Coat Factory Warehouse Corp.
Apparel retailer |
Bain Capital Partners LLC |
2,037 |
| Oct. '06 |
Michaels Stores Inc.
Arts-and-crafts retailer |
Bain Capital Partners LLC, Blackstone Group LP |
6,300 |
| July '06 |
Petco Animal Supplies Inc.
Pet supplies retailer |
Leonard Green & Partners, Texas Pacific Group |
1,900 |
| Pending LBOs |
| March '07 |
Dollar General Corp.
Discount retailer |
Kohlberg Kravis Roberts & Co. |
7,300 |
NA = Not priced
NM = not material (Hexion figures factor in pending dividend recap)
Source: The Deal, Fitch Ratings |
See recent story about Coles from TheDeal.com
See recent story about J. Sainsbury from TheDeal.com
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