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Cerberus Capital Management

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Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the USA. The firm is based in New York City, and run by 64-year-old financier Steve Feinberg. Former U.S. Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.

History

Founded in 1992, Cerberus (named for the legendary three-headed dog in Greek mythology that guarded the gates of Hades) invests primarily in companies which are near bankruptcy in hopes to make the businesses it acquires profitable. Feinberg has stated to his employees that while the Cerberus name seemed like a good idea at the time, he later regretted naming the company after the mythological dog.

The company has been a voracious acquirer of businesses over the past several years and now includes sizable investments in sportswear, paper products, military services, real estate, energy, retail, glassmaking, transportation, and building products. Its holdings amounted to $24 billion in 2006. While many of its peers have bought out companies in order to strip assets and sell on for a profit, Cerberus builds its reputation on identifying firms that are undervalued, and assisting in rejuvenating them by working with current management.

On October 19, 2006, John W. Snow, President George W. Bush's second United States Secretary of the Treasury, was named chairman of Cerberus.

Notable acquisitions

  • Real Estate - Through investment affiliate Blackacre Capital, the company has been making direct equity, mezzanine, first mortgage, distressed and special situation investments in all asset types. It also controls Miami Beach.-based LNR Property, a large real estate development and investment firm through subsidiary Riley Property. Cerberus also controls Kyo-ya, a Japan based group of entities that owns several Starwood managed assets in California, Hawaii and Florida.
  • Retail - Cerberus purchased 655 of the 2,500 Albertson's, Inc., grocery stores, forming Albertsons LLC of Boise, Idaho, in June of 2006. They also own Mervyn's department stores, which was acquired from Target Corp. In June 2007, Cerberus acquired Torex Retail Plc., a retail solutions provider in troubled waters, for approximately 400 million US dollars.
  • Financial Services - General Motors sold a 51% stake in its GMAC finance unit to an investor group led by Cerberus Capital Management. GM expects to receive $14 billion over the next three years from the sale of General Motors Acceptance Corp. In December 2006, Cerberus acquired the Austrian bank BAWAG P.S.K. for a reported EUR3.2 billion. In August of 2007, Cerberus announced that it was closing one of their mortgage companies, Aegis Mortgage.
  • Firearms - Acquired Bushmaster Firearms, Inc., from Windham, Maine native Dick Dyke for an undisclosed sum in April 2006, and purchased Remington Arms in April 2007. Under Cerberus direction, Bushmaster Firearms acquired Cobb Manufacturing, a well-respected manufacturer of large-caliber tactical rifles in August 2007. Cerberus also announced the acquisition of DPMS Panther Arms in December 2007. Remington Arms is in the process of acquiring Marlin Firearms.
  • Entertainment - Acquired 6 television stations formerly owned and operated by CBS Corporation. The station group is called Four Points Media Group. As of September 1, 2007, the 6 stations are no longer listed on the CBS Television Station website. By the end of September 2007, all of the stations have launched new websites.

Broken Deal for United Rentals

In the summer of 2007, Cerberus agreed to buy 100% of United Rentals, the world's largest equipment rental company and traded on the NYSE. After the credit markets began to tighten in August, Cerberus attempted to reduce the deal price. United Rentals refused to reprice the deal, and in November sued in Delaware court for "specific performance" (i.e., a court mandate that Cerberus complete the deal). Cerberus took the position that the deal agreements capped its liability for walking away from the deal at $100 million. After a two-day trial, the Delaware Chancellor in a closely watched decision ruled for Cerberus, allowing it to pay United Rentals the agreed-upon $100 million "reverse termination fee" and terminate the merger agreement.

Notes & References

Notes
  1. The article requested can not be found! Please refresh your browser or go back. (C4,20070517,BUSINESS01,705170364,AR)
  2. "Euromoney Awards for excellence: Best Private Equity House 2007"
  3. Jonathan Cable and Marc Jones. Reuters. "Cerberus buys troubled Torex for 204 mln stg". 20 June 2007
  4. Shooting Wire
  6. CBS Television Stations
  7. http://blogs.wsj.com/law/2007/12/21/chancellor-chandler-hands-cerberus-a-big-win/
References

External links

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