Private ownership becoming more attractive

Aug 29 2006 by Nic Paton Print This Article

The tougher governance environment for public companies in the U.S. is encouraging more big name firms to consider going private.

A report in the newspaper USA Today has said there is a growing trend for larger public companies to see going back into private ownership as an attractive alternative, with even giants such as Ford looking at it as an option.

The average take-private deal this year was worth $1.7 billion, up 87 per cent from 2005 and more than triple 2004's average, according to statistics from analyst Thomson Financial.

This year had already witnessed several large take-private transactions, including hospital operator HCA, energy company Kinder Morgan, broadcaster Univision and concessionaire Aramark, it added.

More than 80 formerly public companies had already gone private this year, on pace to be the busiest year since at least 2000.

The total value of the deals, $136.5 billion, was already a record and well above the $94.7 billion of 2005, said the paper.

The option of going private was available to more large companies because there were now private-equity firms with enough cash to buy almost any company, it added.

"Once you're private, you can make the tough decisions and really do the kind of things you need to do," Allen Stern at Imperial Capital told the newspaper.

  Categories: