Deal volume continues freefall, rebound prospects still distant. (Banking & Finance: Special Report - To Deal or Not to Deal).Local merger and acquisition activity fell 10 percent in the fourth quarter of 2002 compared with a year earlier, capping off an abysmal a·bys·mal adj. 1. Resembling an abyss in depth; unfathomable. 2. Very profound; limitless: abysmal misery. 3. Very bad: an abysmal performance. year in which deal volume fell each quarter. Though investment bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. expect a strong turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. anytime soon, many believe that M&A activity is finally at rock bottom. There were 90 deals announced in the last three months of the year that involved an L.A. County-based buyer or seller, down from 99 in the fourth quarter of 2001, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Mergerstat.com. All told, 402 local deals were announced in 2002, down 16 percent from 477 in 2001. Of those 402, prices were disclosed for 156, for an aggregate value of $29 billion. That's down from $35.9 billion in 2001. "I don't see a big pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their in activity coming soon," said James Freedman James Freedman may refer to:
1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have going to get much worse." There is no shortage of explanations for the dearth of investment banking activity. For more than a year, bankers have pointed to the ailing economy, stingy stin·gy adj. stin·gi·er, stin·gi·est 1. Giving or spending reluctantly. 2. Scanty or meager: a stingy meal; stingy with details about the past. lending institutions Noun 1. lending institution - a financial institution that makes loans financial institution, financial organisation, financial organization - an institution (public or private) that collects funds (from the public or other institutions) and invests them in and lagging Lagging Strategy used by a firm to stall payments, normally in response to exchange rate projections. stock market as deal killers. Now, the threat of war with Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. makes the economic climate that more difficult. "Until we get a better sense of what's going on What's Going On is a record by American soul singer Marvin Gaye. Released on May 21, 1971 (see 1971 in music), What's Going On reflected the beginning of a new trend in soul music. with this war, the market will be apprehensive," said Jeff McKenzie, managing director at Los Angeles investment bank Houlihan Lokey Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. & Zukin. The local falloff fall·off n. A reduction or decrease: a falloff in car sales. Noun 1. falloff - a noticeable deterioration in performance or quality; "the team went into a slump"; "a gradual slack in mirrors a national trend. There were 7,411 domestic and cross-border deals announced in 2002, according to Mergerstat, down 13 percent from 8,545 in 2001. Aggregate value for the deals in which price was announced was $441.6 billion, down from $683 billion in 2001. The Mergerstat data covers publicly announced mergers and acquisitions involving businesses with deals of $1 million or more, and 10 percent or more equity sought. The figures reflect only the base equity price of the transactions and not the liabilities, and they exclude the exchange of business assets, private placements, spin-offs and open market transactions. Dodging the bullet Despite a falloff in both the number and value of local deals, investment bankers said Los Angeles has weathered the storm better than other regions, in part because of its healthy supply of private companies. "At private companies you generally have entrepreneurs who own a very large percentage of the business, so they tend to sell when they want to retire, more so than they think it's the ultimate time," McKenzie said. "Public companies feel they need to sell somewhere near a historical high." Of the 402 L.A. deals in 2002, only four were worth north of $1 billion. The two biggest involved defense giant Northrop Grumman Northrop Grumman Corporation (NYSE: NOC) is an aerospace and defense conglomerate that is the result of the 1994 purchase of Grumman by Northrop. The company is the third largest defense contractor for the U.S. Corp.'s pursuit of TRW TRW The Real World (TV reality show) TRW The Right Way TRW Tactical Reconnaissance Wing TRW The Retriever Weekly (University of Maryland, Baltimore, MD) TRW Thompson Ramo Wooldridge Inc Inc. Northrop's $6.7 billion acquisition of TRW closed in early December December: see month. , and was preceded by Northrop's announced $4.7 billion sale of TRW's automotive unit to Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, . That deal has not yet closed. (While the two deals involve the same business unit, they are counted as two deals since both are commissionable transactions for investment bankers.) The TRW deals accounted for 40 percent of the year's total deal value. The next biggest deal was Los Angeles Spanish-language broadcaster Univision  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. Communications' $3 billion purchase of Hispanic Hispanic Multiculture A person of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race Social medicine Any of 17 major Latino subcultures, concentrated in California, Texas, Chicago, Miam, NY, and elsewhere Broadcasting Corp., based in Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. . That deal is expected to close, but it faced significant regulatory hurdles in its early stages. The only other billion-dollar deal was Dole dole, distribution to the poor, usually of food or money. In medieval times doles were usually from bequests of money or land, and the income was given to charity or distributed to the local poor at funerals. Food Co. Chairman David Murdock's $1.4 billion offer to take Dole private, which has been approved by shareholders but has not yet closed. Currency declines As the fall off in stock prices takes many public companies off the block for the time being, it also has hindered public companies' acquisition efforts. That's because public companies often issue some stock when making acquisitions, and with many companies trading at or near historical lows, a stock-driven deal could further dilute di·lute v. To reduce a solution or mixture in concentration, quality, strength, or purity, as by adding water. adj. Thinned or weakened by diluting. share values. And with the steady decline in share values over the last couple of years, target companies are seen as skittish skit·tish adj. 1. Moving quickly and lightly; lively. 2. Restlessly active or nervous; restive. 3. Undependably variable; mercurial or fickle. 4. Shy; bashful. about taking those shares. "When the market is down, everyone feels less comfortable using stock as currency," McKenzie said. Investment bankers said larger deals are becoming a rarity not only because of the falling stock market, but because a generally weak economy has cut into most companies' returns. Now, bankers are sorting deals into two piles piles: see hemorrhoids. : strategic buyers, such as a rival companies, and financial buyers, such as private equity funds. "On the strategic side, a lot of buyers have had problems and so they've retrenched until they get their own house in order," Freedman freed·man n. A man who has been freed from slavery. freedman Noun pl -men History a man freed from slavery Noun 1. said. "On the financial side, we're getting calls every day." Regardless of buyer, even an average deal can be more difficult these days. Banks are more stringent about how much they will lend, and as profit margins slip many bankers are second-guessing deals once they have been initiated. "Let's say you're going to buy somebody's business and the guy says I'm going to make $100 million this year. But then as you watch every month, it becomes evident he's going to make $60 million. That makes you start to rethink re·think tr. & intr.v. re·thought , re·think·ing, re·thinks To reconsider (something) or to involve oneself in reconsideration. re the metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. , or even if you want to do the deal at all," said Peter Nolan, a managing partner at Los Angeles private firm investor Leonard Green & Partners.
Local M&A Activity
Top 50 mergers and acquisitions announced in 2002 involving L.A.
companies, based on deal size.
Deal Size (base)
Announced Closed (equity millions) Buyer
22-Feb-02 11-Dec-02 6705.01 Northrop Grumman
19-Nov-02 4725.00 Blackstone Group
12-Jun-02 2961.04 Univision Communications
22-Sep-02 1438.80 Private Group Led By
David H. Murdock
03-Jun-02 17-Jan-03 754.76 USA Interactive
31-May-02 29-Jul-02 742.00 Macerich
14-Jun-02 02-Jan-03 729.40 Cardinal Health
02-Apr-02 691.58 Quest Diagnostics
11-Apr-02 31-Aug-02 635.25 Golden Gate Capital/
Whitney & Co.
13-Dec-02 620.33 Computer Sciences
13-Dec-02 537.27 SAVIA SA de CV/
Fox Paine & Co.
31-Jan-02 22-Aug-02 484.84 Lyondell Chemical
09-Jul-02 385.00 Staples
20-Aug-02 31-Oct-02 365.68 Unocal
27-Nov-02 23-Jan-03 350.00 Evercore Partners
02-Jan-02 02-Jan-02 282.50 First Data
04-Nov-02 09-Dec-02 250.00 General Electric
19-Jul-02 02-Aug-02 250.00 First Data
06-Nov-02 31-Jan-03 215.76 Pan Pacific Retail
Properties
01-May-02 01-May-02 160.07 Hilton Hotels
16-Sep-02 157.45 Goldman Sachs Group
28-Mar-02 19-Apr-02 146.30 On Assignment
24-Dec-02 139.02 Entravision
Communications
14-Feb-02 26-Jul-02 133.55 Private Group Led By
Haimovitz./Capital Comm.
12-Sep-02 28-Oct-02 130.00 L-3 Communications
19-Mar-02 130.00 GUS PLC
11-Mar-02 23-May-02 121.41 ValueClick
18-Oct-02 18-Oct-02 100.00 Leonard Green & Partners
25-Oct-02 25-Oct-02 100.00 ITLA Capital
18-Mar-02 18-Mar-02 81.00 International Rectifier
06-Sep-02 06-Sep-02 78.00 Walt Disney
16-Dec-02 75.84 K2
20-May-02 20-Jun-02 72.50 Pactiv
20-Mar-02 23-Aug-02 72.27 Hawthorne Financial
06-Aug-02 01-Nov-02 66.33 UnionBanCal
16-Jul-02 03-Sep-02 59.80 Catapult Communications
02-Aug-02 02-Aug-02 59.30 Group 1 Automotive
22-Oct-02 06-Dec-02 58.50 BAE Systems
18-Jan-02 27-Mar-02 57.42 Converge Global
26-Aug-02 26-Aug-02 57.20 Riverdeep Group
11-Jul-02 11-Jul-02 57.00 Nationwide Health
Properties
09-Feb-02 28-Oct-02 55.42 JAKKS Pacific
28-Jan-02 28-Feb-02 53.84 Curative Health Services
15-Apr-02 50.10 International Rectifier
28-May-02 21-Jun-02 49.00 ARAMARK
03-Jan-02 28-Jan-02 47.63 Digital Insight
13-Feb-02 47.50 Entravision
Communications
07-Oct-02 07-Oct-02 46.00 John Wood Group
11-Oct-02 46.00 Elementis
19-Jun-02 03-Jul-02 45.56 Globe International
Announced Buyer City Seller
22-Feb-02 Los Angeles TRW Inc.
19-Nov-02 New York Northrop Grumman Corp.
12-Jun-02 Los Angeles Hispanic Broadcasting
Corp.
22-Sep-02 Dole Food Co.
03-Jun-02 New York Ticketmaster
31-May-02 Santa Monica Westcor Realty
14-Jun-02 Dublin, Ohio Syncor International
02-Apr-02 Teterboro, N.J. Unilab
11-Apr-02 San Francisco Herbalife International
13-Dec-02 El Segundo DynCorp.
13-Dec-02 San Pedro Seminis
Garza Garcia, Mexico
31-Jan-02 Houston Occidental Petroleum
(Equistar Chemicals)
09-Jul-02 Framingham, Mass. Freeman Spogli
(Medical Arts Press)
20-Aug-02 El Segundo Pure Resources
27-Nov-02 New York Weider Health & Fitness
(Weider Publications)
02-Jan-02 Greenwood Village, Colo. Cardservice International
04-Nov-02 Fairfield, Conn. Metro-Goldwyn-Mayer
(Bravo)
19-Jul-02 Greenwood Village, Colo. PayPoint Electronic
Payment Systems
06-Nov-02 Vista Center Trust
01-May-02 Beverly Hills Hilton Waikoloa Village
16-Sep-02 New York National Golf Properties
28-Mar-02 Calabases Health Personnel Options
24-Dec-02 Santa Monica Big City Radio
(KSYY-FM/KLUU/FM/KVYY-FM)
14-Feb-02 Clark (Dick) Productions.
12-Sep-02 New York Northrop Grumman
(displays/electronic
devices)
19-Mar-02 Manchester, England Homestore Inc.
(ConsumerInfo.com)
11-Mar-02 Westlake Village Be Free
18-Oct-02 Los Angeles Phoenix Scientific
25-Oct-02 La Jolla Imperial Credit
Industries
(Lewis Horwitz)
18-Mar-02 El Segundo European Semiconductor
Manufacturing
06-Sep-02 Burbank Forward Broadcasting
(WEVD-AM)
16-Dec-02 Los Angeles Rawlings Sporting Goods
20-May-02 Lake Forest Winkler Forming
20-Mar-02 El Segundo First Fidelity Bancorp.
06-Aug-02 San Francisco Valencia Bank & Trust
16-Jul-02 Mountain View Tekelec (Network
Diagnostics)
02-Aug-02 Houston Miller Automotive Group
22-Oct-02 London Condor Pacific
Industries
18-Jan-02 Santa Monica TeleWrx
26-Aug-02 Dublin, Ireland Gores Technology
(Broderbund)
11-Jul-02 Newport Beach American Retirement
(5 assisted living
centers)
09-Feb-02 Malibu Toymax International
28-Jan-02 Hauppauge, N.J. Apex Therapeutic Care
15-Apr-02 El Segundo Koninklijke Philips
Electronics
(TechnoFusion)
28-May-02 Philadelphia Hilton Hotels
(Harrison Conference
Centers)
03-Jan-02 Calabases Virtual Financial
Services
13-Feb-02 Santa Monica Emmis Communications
(KXPK, Denever)
07-Oct-02 Aberdeen, Scotland Bender Machine/Thomason
Mechanical
11-Oct-02 Staines, England Occidental Petroleum
(Chromium Chemicals)
19-Jun-02 Port Melbourne, Kubic Marketing
Australia
Source: Mergerstat.com
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