today’s top stories from The Deal

MONDAY NOVEMBER 23, 2015 VOLUME 26 ISSUE 226

Bloated inventories could turn the year’s busiest shopping weeks into a nightmare for these 10 retailers

By Richard Collings, Jamie Mason and Lisa Allen

FULL STORY >

close print back < Index > cover search view 2 the d aily deal Monday November 23 2015 INDEX

TOP STORY Exit ramp: Poseidon Containers page 19 Unusually warm fall weather, online competition and a con- sumer still strapped for disposable income could make the CAPITAL CALLS busiest weeks of the year nightmarish for retailers with bloated When Parthenon Capital-backed consumer lender LoanDepot inventories, according to a research firm that has identified the pulled its initial public offering due to market conditions on Nov. 10 most likely to default page 4 12, it became the 24th PE-backed company to postpone or with- draw an IPO in 2015, the highest total in three years page 20 activism A growing number of companies are complaining that lax SEC m&a disclosure rules allow activists to conduct stealth attacks on Auction news from WorkWell Medical, BNC Bancorp, Viawest management by posing as passive investors page 9 and Cypress Energy page 21

Large-cap Target of the Week: Danaher page 10 rules of the road EU Competition Commissioner Margrethe Vestager is going Update: Fossil fastens “wearable technology” maker Misfit to after corporate tax dodgers with a vengeance, starting with itself, and reaches for pizza, as the two list and Fiat Finance and Trade, for sweetheart arrange- members look to small deals to jump-start stalled growth ments with national tax authorities deemed to be illegal govern- page 11 ment subsidies page 22

The Watch List: A roster of companies that might soon rank safe harbor among the top targets pages 12-13 the Chinese government first began encouraging the populace to drink wine made from grapes instead of rice two decades ago, the crosshairs and now the newly wealthy are buying up Bordeaux chateaus at The Deal’s weekly rankings of the top 10 most likely activist an intoxicating pace page 24 rargers pages 14-15 movers & shakers Personnel changes at Sierra Ventures, Advent International, Can an investment firm that counts a scallop harvester, a Simpson Thacher, Gibson Dunn and other firms page 25 bowhunting and archery accessories provider, a maker of running performance products and a supplier of behavioral feedback services to children among its portfolio companies be said to Tell us what’s on your mind page 26 have a plan? Sure, if the firm’s name is Bregal Partners page 16 company index private briefing page 27 E-geneology company Ancestry.com’s own history may soon need rewriting, as it has produced such a satisfactory return TheDeal.com that its parent, Permira, may find it’s about time to exit page 18 Links to current content click here

close print back < Index > cover search view $5.3 billion $650 million $950 million $173 Million Take-private by Perpetual Convertible Senior Secured Preferred Stock Credit Facilities Initial Public Offering Senior Unsecured Notes

Financial Advisor Joint Bookrunner Joint Bookrunner Joint Bookrunner Joint Bookrunner Joint Lead Arranger August 2015 August 2015 July 2015 July 2015

$341 million UNDISCLOSED $4.1 BILLION $1.1 BILLION Sale by by Senior Secured First Lien Merger with Term Loan Financing for Golden Gaming

Financial Advisor Lead Left Bookrunner Financial Advisor Financial Advisor Joint bookrunner Lead Arranger July 2015 July 2015 June 2015 May 2015

$1.4 BILLION UNDISCLOSED $15.6 billion $5.1 billion Acquisition by Acquisition by Financing of acquisition Project Financing Of by consortium led by Freeport LNG’s BC Partners Three Liquefaction Trains Financial Advisor Financial Advisor Joint Bookrunner Joint Bookrunner Financial Advisor Joint Lead Arranger May 2015 May 2015 April 2015 March 2015

Advisory | Capital Markets | Principal Investing macquarie.com/whiteboard

close print back < Index > cover search view 4 the d aily deal Monday November 23 2015 TOP STORY A season of excess by richard collings. jamie mason Segall knows his way around distressed Because of the cost, Nowitz explained, and lisa allen retailers, as Versa Capital’s portfolio in- retailers need to shed leases, and while The holiday shopping season for a large cludes retail banners such as Wet Seal and some landlords have been willing to adjust swath of retailers is, unsurprisingly, the Avenue, both of which it bought out of leases, it is difficult to do outside of court. “I most important time of the year when they bankruptcy protection. Segall said every would expect to see a lot more of that activ- go into the black as a result of generating year there are bankruptcy filings after the ity in Chapter 11,” he concluded. most of their cash. holidays, as a lack of sales over time takes Instead of malls, consumers are gravitat- For the most troubled of retailers, how its toll, and yet retailers simultaneously ing to shopping centers that feature their fa- they perform during the Yuletide season are in their best cash position because they vorite discounters such as TJX Cos.’s (TJX) can even determine whether or not they can have liquidated most of their inventory and T.J. Maxx and away from the department avoid bankruptcy, and how much time they haven’t paid their vendors yet. stores such as Macy’s Inc. (M), for exam- have left to effect a turnaround. Segall is not alone in his assessment. ple, which as an anchor to traditional malls This season, apparel retailers in particu- “I think that the first half of next year will were historically a big draw. lar may find themselves under more pres- be very active, as we are seeing indications While Macy’s, Inc. (JWN) sure. That’s because shoppers have delayed that business is soft in the numbers that and Wal-Mart Stores Inc. (WMT) aren’t their seasonal purchases for a myriad of retailers have been reporting,” said Schaef- examples of distressed retailers, they are reasons such as unusually warm weather. fer. He said there are several stores that are emblematic of the difficult environment While retailers love to blame the weath- on the edge of filing, and if they have a bad that is going on right now, Segall explained, er for why business is soft, it is applicable Christmas, they are likely doomed. adding that there have been changes in in some markets, since it has been so warm Raoul Nowitz, managing director at technology, consumer spending habits and this fall and no one was buying, said Peter Solic Capital Advisors LLC, also believes economic insecurity. Schaeffer, a principal at GlassRatner Ad- we’ll see more retail bankruptcy filings in It’s not just that malls have fallen out of visory & Capital Group LLC. Consumers the coming months, likely after the holidays. favor, or even that more people are shop- haven’t been shopping for warm clothes this “I don’t see it slowing down at all over the ping online, but that consumers are also fall, so retailers are “stuffed with goods,” next 18 months,” he said, adding, “it’s been gravitating away from clothes to spend their he said. Fewer purchases at the start of the fairly steady, and it might hold to at least last hard-earned dollars on Apple Inc.’s (AAPL) season means that retailers sell less goods at year’s clip, potentially a bit more.” latest iPhone or on food, such as grabbing a full price and end up with excess inventory Mall-based stores continue to face the burger at the upstart chain Shake Shack that has to be heavily discounted. same challenges this year that they have Inc. (SHAK). “Retailers love when it’s cold in October. over the past few years, particularly apparel People are also spending more on their You can make money when it’s cold in Oc- banners. pets, which in recent years have taken on tober. After that you have to mark things “Mall-based retailers are absolutely af- the role of close family members, and on down,” Schaeffer said, noting that regular fected by the quality of the malls that they home improvement with the likes of Home priced items usually represent 20% of a re- are in,” Segal said. “It is almost impossible Depot Inc. (HD) reporting a same store tailer’s business. That in turn leads to lower for a retailer to overcome a dead or dying sales hike of 5.1% for the third quarter end- margins and less profits. mall and the impact this has on its own rev- ed Nov. 1. “I think its going to be a tough Christ- enue, he noted. While shoppers spend more on the above mas. Consumer sentiment toward shopping Similar to the plethora of malls, the U.S. categories, that compounds the competi- isn’t robust and the internet has a negative generally is over-retailed, with more square tiveness of areas such as apparel. effect on sales,” since you don’t get incen- footage of retail space per capita than any According to industry sources and credit tive shopping and it is a replacement for the other country. “Many modern retailers ratings agencies, a top 10 list of some of the shopping done in stores, not in addition, are struggling with very large stores, or more troubled retailers heading into Black Schaeffer explained. Online shopping also too many stores and not enough purchas- Friday this year include Gymboree Corp., reduces impulse buys, which many retailers ing taking place in those stores. The reality J. Crew Group Inc., Pacific Sunwear of have traditionally leaned on to boost sales. here is that, as a result of the internet com- California Inc. (PSUN), Claire’s Stores Expect to see more restructuring activ- petition, there is a clear need to reduce fixed Inc., Aeropostale Inc. (ARO), Toys “R” Us ity after this holiday season than what oc- costs,” Nowitz said. Inc., J.C. Penney Co. (JCP), Sears Hold- curred in a similar period a year prior, said “The cost of physical facilities is one of ings Corp. (SHLD), Hhgregg Inc. (HGG) Greg Segall, chairman and CEO of Philadel- the largest costs in retail. As a consequence and Bebe Stores Inc. (BEBE). phia-based private equity investment firm it’s very hard for the mall-based retailers to Versa Capital Management LLC. compete,” he said. CONTINUED >

close print back < Index > cover search view 5 the d aily deal Monday November 23 2015 TOP STORY

< PREVIOUS Shopworn In the meantime, pay-in-kind or PIK Gymboree Corp. has the highest probability of default among troubled retailers According to Rapid toggle notes, issued by Ratings International, Company Financial Health Rating Score J.Crew’s parent holding a provider of quantita- company, Chinos In- Gymboree Corp. 13 tive analytics related termediate Holdings A to companies’ financial J. Crew Group Inc. 18 Inc., are also trading at health, all the above Pacific Sunwear of California Inc. 22 a distressed level of 33.5 companies have a fi- Claire's Stores Inc. 24 cents on the dollar as of nancial health rating of Nov. 13. Aeropostale Inc. 26 below 40, which means The $500 million of that they all face at least Toys 'R' Us Inc. 27 7.75% senior unsecured a high risk probability J.C. Penney Co. Inc. 28 PIK toggle notes due for default over the next 2019 were issued to back Sears Holdings Corp. 31 12 months. a dividend payment to James Gellert, chair- Bebe Stores Inc. 36 J.Crew’s PE owners. man and CEO of Rapid Hhgregg Inc. 39 Chinos will make its Ratings, said his firm’s Very High Risk 0 - 19 upcoming May 2 inter- High Risk 20 - 39 system analyzes more Medium Risk 40 - 59 est payment by again Low Risk 60 - 79 than 70 financial ratios, Very Low Risk 80 - 100 paying in kind instead focusing on the interre- Rapid Ratings’ Financial Health Rating measures a company’s probability of default based on 73 financial Source: Rapid Ratings International Inc. of with cash, which will lationships of revenue, and operating ratios, reflecting probability, cost structure, capital structure and liquidity. increase the size of the liquidity, cost structure PIK toggle notes by more efficiency and profitability among other ing to data provided by Bloomberg. That’s than $20 million, according to an 8-K filed metrics to arrive at a score, which it calls a a whopping multiple of debt to Ebitda of with the Securities and Exchange Commis- Financial Health Rating. about 13.2 times. sion on Oct. 30, another poor harbinger. Factors such as the introduction of a Because of its precarious financial posi- As mall traffic struggles, so do retail well-received product, a trend a company tion, the retailer’s 9.125% senior unsecured chains such as Hoffman Estates, Ill.-based has introduced or positive same stores sales notes of nearly $350 million due in 2018 are accessories retailer Claire’s, which in the growth, if consistent, are not directly in- trading at very distressed levels of 32.15 past has relied on impulse purchases from cluded in the algorithm. But the foundations cents on the dollar as of Nov. 13, showing a the teen demographic. As a result, the acces- of these, and how well positioned a compa- lack of confidence in the company’s future sories chain has been hit hard due to declin- ny is to capitalize on them, are reflected in by bond traders. That’s bad news for Gym- ing mall traffic and a lack of teens browsing a company’s myriad ratios and performance boree’s owner, private equity firm Bain their stores, limiting impulse buys. Claire’s categories when analyzed against millions Capital LLC, which led a leveraged buyout did not respond to a request for comment. of company years in Rapid Ratings’ data. of the retailer five years ago. Gymboree did The retailer, backed by PE firm Apollo One of the more troubled companies on not respond to a request for comment. Global Management LLC, has an un- the list is San Francisco-based children’s Another struggling apparel retailer, J. wieldy balance sheet, consisting of approxi- clothing chain Gymboree. Crew has taken large asset impairment mately $80 million in cash and about $2.5 Industry sources say the children’s seg- charges over the last year as poor results billion in debt, but only close to $220 million ment is the most competitive it has ever have made the flagship brand less valuable. in Ebitda over the last 12 months as of Aug. been as discount department stores such as Industry sources say the brand is valu- 1, according to data provided by Bloomberg. Target Corp. (TGT) and e-commerce play- able enough that its PE backers: Leonard That’s a debt to Ebitda multiple of 11 times. er Zulily have aggressively made inroads Green & Partners LP and TPG may either Claire’s $320 million in 7.75% senior unse- into the space. The amount of competition inject new capital from their own pockets, cured notes due 2020 are also trading at a has also hurt close competitor Children’s swap debt for equity or bring in new inves- very distressed level of 31.5 cents on the dol- Place Inc. (PLCE), whose stock is trading tors. J.Crew declined to comment. lar as of Sept. 24. near its 52-week-low. Regardless, some action will likely be re- Sears, despite its continuous presence on Gymboree’s balance sheet shows why it quired, as the company has only about $40 death watch lists over the years, has proven is in trouble, with only about $20 million in million in cash and approximately $1.55 the most difficult to fell as it conducts what cash, approximately $1.21 billion in debt and billion in debt, while generating “adjusted” industry observers describe as a slow liqui- $90 million in adjusted Ebitda generated Ebitda of about $190 million as of Aug. 1, dation. The battered department store chain (Ebitda is usually adjusted for items consid- according to data provided by Bloomberg. sold most of its remaining assets consisting ered to be noncash or non-recurring) over That’s an unhealthy debt to Ebitda multiple the last 12 months, all as of Aug. 1, accord- of close to 7.9 times. CONTINUED >

close print back < Index > cover search view 6 the d aily deal Monday November 23 2015 TOP STORY

< PREVIOUS swiftly declining, down 6% for the quarter floating stock is being sold short. ended Aug. 1. In response, hhgregg’s CEO Dennis of real estate to a REIT, Seritage Growth Also hurting sales is increased compe- May said, “We remain on track to meet or Properties (SRG) earlier this year, raising tition due to attempts at revivals of brands exceed our three key financial objectives $2.7 billion. That cash is buying the Hoff- such as Hang Ten and online retailers such for the year, which are focused on driving man Estates-based company extra time, but as Swell.com and the introduction by sports improvements for comparable store sales, likely only delaying the inevitable. Telling- apparel behemoths Nike Inc. (NKE) and cost savings and positive Ebitda for the - ly, about 53.5% of Sears’ floating shares are Under Armour Inc. (UA) of their own surf cal year.” currently shorted. offerings. The company did not respond to a He also said in the e-mailed response As of Aug. 1, Sears had nearly $1.82 bil- request for comment. that the company is “pleased with the con- lion in cash, but about $3.14 billion in debt, Pacific Sunwear is not the only troubled tinued traction in our net sales during the and it has negative Ebitda of close to $740 retailer attempting to appeal to a more second quarter driven by delivering on our million over the last 12 months, according youthful demographic. Aeropostale, like fiscal 2016 revenue generation initiatives.” to data provided by Bloomberg. It also has Pacific Sunwear, has also seen its stock “In addition, we have continued our cost pension obligations of almost $2.26 billion. plummet from its 52-week-high of $4.39 savings efforts and remain on track to meet A Sears spokesman countered the poor per share, to more recently trade between our plan to save $50 million in fiscal 2016. assessment, citing credit ratings agency 60 cents to 70 cents per share. Aeropostale The steady progress we have made with Moody’s Investors Service Inc. revi- declined to comment. our transformation plan has positioned our sion in August of the department store op- Holly Etlin, a managing director at turn- company well as we embark on the holiday erator’s outlook to stable, noting the report around advisory firm AlixPartners LLP, season,” he concluded. specifically said “following the conclusion notes that the market for teen-aged and Wayne, N.J.-based Toys “R” Us, backed of the REIT transactions and extension of younger clothing that Aeropostale caters by PE firmsKKR & Co. LP (KKR) and Bain Sears asset-based revolver to 2020 the com- to is particularly challenged. “There’s been Capital as well as Vornado Realty Trust, pany has meaningfully improved its liquid- a shift in consumer behavior in their core has had its share of troubles and is prepar- ity profile.” customer away from apparel and toward ing to abandon some of its flagship stores, “Sears Holdings is highly focused on electronics and experiences,” said Etlin. including its Times Square location, just as restoring profitability to the company and There are very few retailers who are doing the holiday season approaches. through the second quarter of this year well in that space,” she said. The competition is as strong as ever, we delivered four consecutive quarters of Despite an overhaul of the logo and some as discounters such as Wal-Mart and e- year-over-year Ebitda improvement,” the of the chain’s stores, Aeropostale has been commerce juggernaut .com Inc. spokesman said, as it continues to trans- unable to effect the turnaround that its continue to aggressively target the toy cat- form itself to a more “member-centric in- competitor American Eagle Outfitters egory. tegrated retailer.” The Sears spokesman Inc. (AEO) has achieved in recent months, Toys “R” Us must contend with the on- concluded: “We are confident that we have although its competition has dwindled as a slaught with only about $420 million in the financial flexibility to continue to fund result of a number of retailers in the catego- cash, compared with about $5.28 billion in our transformation while meeting all of our ry already filing for bankruptcy. As a result, debt and adjusted Ebitda of nearly $680 mil- financial obligations. In the second quar- 21.4% of the New York-based teen retailer’s lion over the last 12 months, all as of Aug. 1, ter, we substantially completed the capital floating shares are being shorted. according to data provided by Bloomberg. structure adjustments we laid out in August Aeropostale’s balance sheet, which con- That makes its debt to Ebitda multiple about 2014, which substantially enhanced our li- sists of nearly $90 million in cash, as of Aug. 7.1 times, below investment grade. quidity.” He added that Sears also reduced 1, but about $140 million in debt, won’t be Bond traders don’t seem overly overjoyed its net debt and unfunded pension obliga- of much help. What is particularly alarming at the company’s prospects, as its $450 mil- tions by the end of the second quarter by is negative “adjusted” Ebitda of close to $70 lion in 10.375% senior unsecured notes due about $1.6 billion. million over the last 12 months, according 2017 are trading at 80 cents on the dollar, Like so many of its competitors in the to data provided by Bloomberg. indicating distress. surf space, Anaheim, Calif.-based Pacific Other endangered retailers include elec- A Toys “R” Us spokeswoman said the Sunwear is also in danger of a wipe-out. Its tronics retailer hhgregg, based in Indianap- company disagreed with the assessment, stock is trading at a fraction of its 52-week- olis. Although the company has no debt and noting it has hired Dave Brandon, an expe- high of over $3 per share, hovering around roughly $30 million in cash as of Sept. 30, rienced executive, as its new CEO in July. 30 cents per share just during the past week. according to data provided by Bloomberg, it The spokeswoman said the decision to As of Aug. 1, the clothing retailer had more has negative Ebitda of nearly $4 million. close the FAO Schwarz and Toys “R” Us than $10 million in cash, about $100 million The company’s stock, furthermore, is stores was because of continuing rent esca- in debt, but only approximately $4 million trading at less than half its 52-week-high of lations in midtown Manhattan. in adjusted Ebitda. More importantly, Pa- $8.22 per share, sitting at just under $4 per cific Sunwear’s same store sales are also share. And close to 27.3% of the company’s CONTINUED >

close print back < Index > cover search view 7 the da ily deal Monday November 23 2015 TOP STORY

< PREVIOUS But the enormous amount of debt the ing Cache Inc., which filed for Chapter 11 company took on to fund its turnaround on Feb. 4, and C. Wonder LLC, which filed “These closures provide the opportunity puts it in a precarious position. on Jan. 22. USA Discounters Ltd. also filed to realize meaningful savings, as the compa- As of Oct. 31, J.C. Penney had almost for bankruptcy protection on Aug. 24. ny has incurred annual 4-wall Ebitda losses $640 million in cash, and even generated “There is a great effort to work things of approximately $22 million between the adjusted Ebitda of about $620 million over out, outside of court, but it depends on what two stores,” she wrote in an e-mail. the last 12 months, but carried nearly $5.28 the ownership and lenders are looking to She added that the company’s trailing billion in debt, according to data provided get out of the company and what their tol- 12-month adjusted Ebitda was $724 million by Bloomberg. That’s a debt to Ebitda mul- erance is. There are some companies where as of the end of the second quarter, exclud- tiple of almost 7.5 times. the owners aren’t willing to put in any new ing the cost savings that will be generated While the company’s performance is money and the lenders aren’t willing to ex- by closing the two stores. She added that improving, it remains vulnerable to both a tend their debt,” he said. Toys “R” Us through the second quarter had recession, or on the other hand, to a signifi- “I am not sure that I am seeing some- liquidity of about $1 billion, noting, “And, cant rise in interest rates. thing right now that will change what has while the company had $5.3 billion in debt, The retailer’s $400 million in 5.65% se- been happening,” Indyke said, adding that over $500 million is related to its revolving nior unsecured notes due 2020 indicate the consumer is buying and there is greater credit facilities which are used to support slight distress as they trade at 86.75 cents employment so people have more dispos- seasonal working capital needs.” on the dollar. It should be noted that bond able income than they did a few years ago, “Additionally, over $2.1 billion of debt traders have more confidence in the $220 but not so much as to spend it both via e- is at non-recourse property companies. million in 7.95% senior unsecured notes due commerce and in brick-and-mortar stores. Further to this, we have disclosed that our 2017, as they trade at 102 cents on the dollar. The year has already seen several retail- (trailing twelve month) net leverage has im- Yet investors are not so keen on the stock, as ers go belly up. Los Angeles-based retailer proved by (two times) to 6.7” times as of the about 31.8% of the company’s floating shares American Apparel Inc. and private equity- end of the second quarter.” are shorted. J.C. Penney did not respond to backed City Sports Inc. filed for Chapter 11 The spokeswoman concluded by saying, a request for comment. on Oct. 5, only a few weeks after surfwear “The company has no significant debt ma- “To keep its momentum, JCP’s going to retailer Quiksilver Inc. also filed. turities in 2016 and has a successful track need to show a great holiday season. This RadioShack Corp. filed for Chapter 11 record of refinancing its debt. With regards market is finicky and JCP’s recent stron- on Feb. 5 and sold a large portion of its as- to bonds, ongoing market volatility has im- ger stock performance can turn on a dime sets to an affiliate of hedge fund Standard pacted debt prices across the broad universe if they don’t show promising holiday sales,” General LP. Wet Seal and Frederick’s of of high-yield issuers.” said Gellert. A strong holiday season would Hollywood Inc. also went through bank- Meanwhile, Brisbane, Calif.-based Bebe, help J.C. Penney go into 2016 with a reason- ruptcy, and Body Central Corp. liquidated a mall-based women’s clothing chain asso- ably strong valuation, which would help if it through an assignment for the benefit of ciated with the Millenium’s first decade and needed more capital, Gellert added. creditors on Jan. 9. the Kardashians, is also troubled despite no Schaeffer said J.C. Penney is likely to be There has been bankruptcy and restruc- debt, as same store sales for its first quarter viable for the time being, but has the poten- turing activity among supermarkets, in- ended Oct. 3 declined 4.1%. Bebe needed tial to file for bankruptcy, as it has not con- cluding Fresh & Easy LLC, Haggen Hold- better news, considering that it has only quered all of its problems, namely, that it is ings LLC and Great Atlantic & Pacific $50 million cash, roughly, and negative ad- positioned in the middle, between luxury Tea Co. justed Ebitda nearing $10 million over the and discount, similarly to Macy’s. For retailers who do file for bankruptcy, last 12 months, according to data provided Retail, despite a stable economy in recent beware. AlixPartners’ Etlin believes one of by Bloomberg. years, has seen a fairly steady flow of bank- the most significant trends in retail restruc- Investors are not entirely confident in ruptcy filings, so seeing any of the above turing is the high rate of liquidation in bank- what some industry observers character- banners succumb, particularly Gymboree ruptcy. She attributes that tendency partly ize as a third attempt at a turnaround, with or Claire’s, would not be surprising. to changes in 2005 to the U.S. Bankruptcy 22% of the company’s floating stock short- Jay Indyke, a partner at Cooley LLP’s code that sped up the restructuring time- ed. Bebe did not respond to a request for and chairman of its corporate restructuring line in a way that favors landlords over their comment. and bankruptcy practice, said that which tenants. In October, AlixPartners published Last on this list, and perhaps the least companies end up filing for bankruptcy a survey of resolved bankruptcies from the endangered, is Plano, Texas-based J.C. may depend on how aggressive its lenders beginning of 2006 to June 30 among com- Penney. Granted, the department store re- are and what kind of mistakes the company panies with more than $50 million in liabili- tailer is doing better relative to its terrible makes. Indyke said midsized retailers are ties, and discovered that 55% of those filings performance in recent years, damage that struggling the most. ended in liquidation. In other industries, as was largely inflicted on the watch of former He cited several bankruptcy filings this few as one in twenty bankrupt companies CEO Ron Johnson. year among middle market retailers, includ- may liquidate, the report noted. n

close print back < Index > cover search view THE DEAL ECONOMY EVENT Predictions & Perspectives for 2016 WATCH THE LIVE VIDEO STREAM Underwriters

December 3, 2015 Presented by

The Deal Economy Event is Fast Approaching! Don’t wait to reserve your space for our annual forecasting conference. Streaming live on December 3rd watch the deliberations of the most influential investors and senior dealmakers as they discuss the outlook for dealmaking in 2016. • Chief Justice Leo E. Strine, Jr., Delaware Supreme Court • Bill McNichols, Senior Vice President Corporate Development & Business Alliances, Starbucks Coffee Company • Philip A. Canfield, Managing Director, GTCR

REGISTER HERE

This Year’s Guest Speakers

OFFICIAL BROADCAST PARTNER Jorge Espinel Todd B. Sisitsky James J. Cramer Spotify TPG Capital CNBC; TheStreet, Inc.

THE DEAL IS A BUSINESS UNIT OF To learn how your organization can support and participate in this exclusive gathering, please contact Emily Newman at 212-321-5565 or by email at [email protected].

close print back < Index > cover search view 9 thedai ly deal Monday November 23 2015 ACTIVISM

Disclosure tactics enable activists’ stealth attacks Corporate attorneys have long complained that many insurgents have posed as passive investors

by ronald Orol in for a targeted company—until the activist is BLOOMBERG In February, H Partners Management ready to pounce. LLC issued a letter to Tempur Sealy Inter- The 13D filings impose many more de- national Inc. (TPX) raising concerns about mands on the activist. In addition to pro- “mismanagement” and “value destruction” viding an explanation about their inten- at the mattress maker. tions, 13D filers must update their public In the letter, H Partners’ Usman Nabi disclosures informing companies and other noted that he met with Tempur Sealy’s investors every time they increase or de- then-board chairman in 2013 to express his crease their stake by 1%. Alternatively, 13G concerns and to ask for a board seat. filers must amend their filings only once a The letter was attached to a Schedule 13D year if there have been any changes to their filing, a required public securities report for ownership. funds owning 5% or more of a company and Corporate attorneys also complain that whose managers have some sort of activist even when activists are submitting 13D fil- intentions. ings they often aren’t following the letter of In it, funds are required to provide a the law when it comes to providing the level number of details—most importantly, they of detail required in the “purpose of trans- must fill out a section, titled “Item 4. Pur- action” section. pose of Transaction,” with details about “I see it as a strategic move on the activ- why they bought their shares and what ist’s part,” said Sanjay Shirodkar, a former sorts of communication they intend to have SEC staffer in the division of corporation fi- with the company and others. nance who is now of counsel at DLA Piper. pershing square’s bill ackman However, prior to filing a 13D report on “Companies deserve to know if the activist Feb. 10, H Partners had been submitting dis- has some serious intentions as soon as the them to clarify why it had previously chosen closures on a much less detailed so-called activist knows what their plans are.” to file on a 13G even though they had been passive Schedule 13G filing that can be used According to SEC rules adopted in 1998, “requesting a seat on the board of directors as an alternative for passive investors with funds and individuals can take advantage for the company for several years.” (Under more than 5% stakes. Unlike the 13D, it of the passive 13G short-form regime when pressure from H Partners, Tempur Sealy’s doesn’t require the investor to explain why they own more than 5% and have no plans CEO and two directors stepped down in they own the stake. to acquire, affect or influence “control” of May. Since then, the stock has risen from But H Partners’ revelation this year that the company. about $60 a share to nearly $80.) it had been seeking a board seat at Tempur However, sources familiar with the SEC But don’t expect any fines for violations Sealy in 2013—long before it filed a 13D—has tell The Deal that the agency has had a dif- of the disclosure in the near-term. The per- agitated some corporate defense attorneys. ficult time differentiating between a valid son familiar with the SEC acknowledged They acknowledge that there was noth- 13G filer, who is simply trying to increase that the agency to date hasn’t brought any ing illegal about the fund’s filing approach. shareholder value, with someone who is cases against funds for failing to convert to Nevertheless, those lawyers contend that engaging with the purpose of seeking stra- a 13D filing—though she didn’t rule it out as the fund was engaging in the kind of insur- tegic options such as a sale of the company. a possibility. gent-type activities that should require ear- “Because it is so difficult to pinpoint, the DLA Piper’s Shirodkar said he is sur- lier reporting in a more detailed 13D filing. commission hasn’t offered extensive guid- prised to see that the SEC hasn’t launched Beyond H Partners, corporate attorneys ance on this,” said a person familiar with an enforcement action on a failure to con- for years have complained that activist the SEC. vert. He argues that an enforcement action funds and other disgruntled managers have Despite the difficulty, the commission could be employed as part of a broader effort made passive 13G filings when they should has privately asked a number of funds to con- to drive home the message that investors be reporting under the 13D regime. The in- vert from a 13G to a 13D, often in response to seeking some element of control at a compa- tent, they said, of reporting via 13G is to con- corporate complaints. When it came to the ny must file 13Ds. The lack of enforcement duct a stealth attack by providing the least Tempur Sealy insurgency, the SEC followed amount of information possible about plans up H Partners filings with a letter urging CONTINUED >

close print back < Index > cover search view 10 the dail y deal Monday November 23 2015 ACTIVISM

< PREVIOUS worked on 13G rules in the agency’s M&A control effort down the road. office. “A 13G filer can have discussions with actions, he suggests, have emboldened ac- Activist fund Starboard Value LP, ac- the board and make suggestions to outline tivists to file 13Gs when they should be em- cording to a securities lawyer, always files their views about how the company can ploying 13Ds. 13Ds when the fund crosses the 5% owner- maximize shareholder value including sug- “You look at the facts and circumstances ship threshold. That may be, in part, because gestions regarding board representation around what the SEC has been doing and it would be hard to believe Starboard’s Jeff without crossing the line,” he said. “Where you wonder why there hasn’t been more Smith would ever be considered a passive we believe you draw the line is when those pressure by the SEC to enforce the 13D dis- investor. According to FactSet, Starboard suggestions rise to the level of threats like, closure regime,” Shirodkar said. “Clients and its predecessor, Ramius LLC’s activist ‘We recommend you think about including ask me if there is anything we can do, and fund, have engaged in 59 proxy fights and us for a board seat, and should you not, we I tell them that there haven’t been any en- 122 insurgency campaigns since 1994. think we can win a proxy contest.’” forcement actions in this area so there isn’t However, others think there are ways to- H Partners, he argued, was fully within much we can do.” day to differentiate between 13G and 13D fil- its right to make 13G filings in 2013 because One example cited by several securities ings. Andrew Freedman, partner at Olshan at that time they were just suggesting that lawyers involved a 13G filed at Family Dollar Frome Wolosky LLP, said he believes a Tempur Sealy consider them for a board Stores Inc. in 2011 by billionaire activist Bill fund crosses from a 13G to a 13D when it de- seat. “They had no intention of running a Ackman and his Pershing Square Capi- livers a message in the manner of a threat proxy contest at that time,” he said. tal Management. Ackman, who reported that may involve a potential director-elec- an 8.9% stake, wasn’t required to explain tion proxy fight or other type of change of CONTINUED > his intentions at Family Dollar at the time. Yet five days later he made a presentation at an Ira Sohn conference suggesting that the company was a prime target for a lever- Large Cap Target of the Week: Danaher aged buyout. Under pressure from activists, Family Dollar was acquired by Dollar Tree Loeb may push the $66 billion acquisition machine to do more than split Inc. (DLTR) in a deal that closed in July. Securities lawyer critics acknowledge that Ackman’s actions fit the technical con- Activist investor Third Point LLC Separately, another activist, Tom tours of the 13G rules. But, although it’s revealed that it has quietly taken Sandell, settled with Viavi Solu- unclear whether Ackman was among the a $191 million stake last quarter tions Inc. (VIAV) in October in a group pressing Family Dollar, many won- in Danaher Corp. (DHR), a $66 deal that called for the company, der how an activist who shakes things up billion market formerly known at company after company can ever be per- capitalization Danaher by the numbers as JDS Uni- mitted to file a 13G. company in the phase, to hire an DHR Peer average Ethan Klingsberg, partner at Cleary process of split- investment bank Gottleib Steen & Hamilton LLP in New ting itself into Market cap $66.70 $20.50 and conduct a York, said it strikes many observers as ab- two. Analysts ROIC 7.80% 7.70% strategic review. surd when a well-known activist files a 13G expect both Sales (per share) 8.90 0.34 Sandell, accord- because everyone knows the reputation companies, ing to sources, Est. P/E 22.60 24.2 and history of that activist. “In the board once they are thinks Danaher room one might say, ‘Ackman is my largest independent, to Source: Bloomberg could be inter- shareholder as a 13G filer but we may want focus on mak- ested in buying to adopt a poison pill because we know his- ing acquisitions before they contemplate Viavi or its test and measurements busi- torically what his investment can mean,’ ” capital distribution initiatives. That is ness. “I would be surprised if [Danaher] he said. unless Third Point’s founder, Dan Loeb, didn’t look at it,” said Brian Drab, analyst Other lawyers familiar with the rules decides to launch a campaign pushing for at William Blair & Co. Barring a Loeb said it was unclear whether a fund manager an alternative route. Loeb could press for campaign, expect more acquisitions to must switch to a 13D simply because they stock buybacks, a major dividend hike or come for both Danaher units. “Danaher have a history of activism in the past. “It is to try to further dismantle at least one of does M&A in my view better than any an interesting fact to consider and some- the post-spin companies. Its life sciences other industrial company,” Drab said. thing I believe the SEC would cite if they operations will also contain diagnostic “They make acquisitions and improve brought an action,” said James Moloney, a and dental segments, and those could be the margins of those units and that is the partner at Gibson, Dunn & Crutcher LLP split further under pressure from an in- primary use of their capital and it has in Irvine, Calif. Moloney, an ex-SEC staffer, surgent, analysts said. been for decades.” n —Ronald Orol

close print back < Index > cover search view 11 the d aily deal Monday November 23 2015 ACTIVISM

< PREVIOUS be updated when there is a material change Some, however, believe the SEC should in a fund’s plans. However, an adviser to consider a more aggressive approach to Nevertheless, some observers believe it activists argued that—except for requiring encourage useful Item 4 reporting. As an is high time the SEC issued some guidance a filing when the insurgent’s investment in- analogy, Shirodkar pointed out that many explaining what they think is proper when creases or decreases by 1%—the regulations corporations were comfortable providing it comes to shifting from a 13G to a 13D. Such are vague about what constitutes a material “boilerplate” submissions in their Man- a move would update rules the SEC issued change. agement Discussion and Analysis sections in 1998 that changed the passive-activist re- An activist who has previously disclosed of quarterly and annual reports until the porting regime. “It would help to get some that he may launch a proxy fight must up- SEC took some enforcement actions in the clarity on what is the definition of control date his filings immediately if the effort 1990s against a few corporations for failing and when does a fund that is suggesting a converts to a fully-fledged director-election to provide adequate disclosure. “It may take company consider its strategic alternatives battle, Klingsberg adds. “They can’t hide the same kind of enforcement actions to im- shift to have a control intent,” Shirodkar behind ‘constructivist’ labels and meaning- prove Item 4,” Shirodkar said. said. less boilerplate disclosure if their real plan Nevertheless, he added that to conduct He contends that the investment land- is different and involves replacing directors an effective enforcement action in this area scape has dramatically transformed since or forcing a sale of the company,” Klings- the SEC would have to prove that the activ- 1998, particularly when it comes to passive berg said. ists have specific intentions well beyond the institutional money managers, and that shift Nevertheless, Olshan’s Freedman de- generic boilerplate information provided in requires updated rules. “We think about fended the boilerplate nature that often Item 4 and that would be extremely diffi- long-term holders as passive but we are see- characterizes initial schedule 13D filings. cult for the regulators. ing some of these formerly passive institu- He argued that, in many cases, insurgent “The SEC would need to issue subpoenas tional investors such as CalSTRS pairing up investors at that point haven’t completed and get e-mails and presentations and see with activist hedge funds at times,” he said. their due diligence and are still developing that the activist had conversations about Some contend that the SEC may be tak- their plans and proposals. Once those are specific material intentions that they had ing a closer look at the 13G regime in light of crafted, he added, they often come in the not disclosed in the filings,” Shirodkar said. a spike in recent years of traditionally pas- form of a letter to targeted companies that Until the SEC is willing to make that ef- sive hedge funds that have demonstrated insurgents immediately attached to 13D fil- fort, expect more boilerplate and 13Gs to a willingness to be more actively involved ings. come. n at companies as activist investing becomes more widely embraced as a credible invest- ment style. These investors, one lawyer not- ed, may need to become more attuned to the Seeing growth in small deals 13G/D filing system. Beyond 13Gs, activists that do file 13Ds may not be providing as much informa- Shares of Watch List member Fossil cessories and provide a scalable cloud and tion as companies and the SEC would like. Group Inc. (FOSL) gave up about 30% app platform, and battery technology. A person familiar with the SEC noted that with its earnings report and announce- Urban Outfitters Inc. had a 1% in- the agency is “very concerned” about boil- ment of a $260 million acquisition of crease in net sales for its banners for the erplate Item 4 disclosure. “wearable technology” company Misfit third quarter of fiscal 2016, with increases In December 2014, Starboard Value si- Inc. on Nov. 12. A strong dollar negatively of 3% at Free People and 1% at Urban Out- multaneously filed two 13D filings atStaples impacted net sales by $55.7 million and re- fitters, while the Anthropologie Group Inc. (SPLS) and Office Depot Inc. (ODP), duced earnings per share by $0.40. was flat. But never mind, because they respectively, suggesting in both reports that Third-quarter sales decreased 8% com- bought a pizza business. The retailer an- it may take a variety of actions, which could pared with the third quarter of fiscal 2014. nounced a deal for the Vetri Family group include making recommendations about Worldwide sales decreased 14%, or $123.2 of casual restaurants including Pizzeria a “potential business combinations.” For million, because of a decline in the Fossil’s Vetri in the market. The re- most observers familiar with Starboard it multibrand licensed watch portfolio. The tailer’s shares dropped about 15% on the was clear the insurgent manager wanted to watch company’s profit margin is trailing minor purchase, about $20 million, but see Staples combine with Office Depot. Un- the industry average as is its growth rate. have recovered. The company said that it der pressure from Starboard, Staples in Feb- Fossil shares dropped from roughly $51 to was motivated by the increasing spending ruary agreed to buy Office Depot for $6.3 $36 following the announcement of the on casual dining and the opportunity to billion. But some wonder why Starboard Misfit transaction, which is expected to expand the Pizzeria Vetri concept. In fair- wasn’t required to be more specific about close by the end of the year. Fossil said the ness, there could be synergies. Urban Out- their intentions back in December. deal will expand its offering in traditional fiitters has sold T-shirts showing a picture The Purpose of Transaction section must timepieces and fashionable connected ac- of a slice. n —The Deal Staff

close print back < Index > cover search view 12 the dai ly deal Monday November 23 2015 ACTIVISM The Watch List A roster of companies that might soon rank among the top 10 potential activist targets

by the deal staff Campbell Soup Co. (CPB)—Packaged $18.9 million, or 5.4% of sales, compared Approach Resources Inc. (AREX)—On foods conglomerate based in South Plain- to $26.7 million, or 7.9% of sales, while net Nov. 4 the Fort Worth-based company field, N.J., on Sept. 28 changed its direc- income was $8.8 million, or $0.33 EPS, vs. posted a third-quarter loss of 14 cents per tor voting standard to majority, except in $12.2 million, or $0.45 EPS. share, beating analysts’ projections by a a contested election, where a plurality is penny, and saw production rise 9% quar- still needed and added a standard director Dawson Geophysical Co. (DWSN)—The ter-over-quarter and 17% year-over-year. resignation clause for a director not get- oil services company on Nov. 5 reported The company remains a levered play on ting a majority vote. a third-quarter loss of 13 cents per share, commodity improvement. or $2.9 million, on relatively flat sales of Comerica Inc. (CMA)—The Dallas-based $62.5 million. CEO Steve Jumper said on Astec Industries Inc. (ASTE)—Road ag- regional bank on Oct. 16 reported a beat on a conference call with analysts that there’s gregates supplier based in Chattanooga, earnings and a miss on revenue. While net “a glimmer of hope” for the second half of Tenn., has been hurt by low oil prices, revenue and net interest income were up next year and that the company continues curtailed mining and a strong dollar. Net year-over-year, net interest margin fell. to cut costs at the organization. sales for third-quarter 2015 were $211 mil- lion compared to $220 million for third- Contango Oil & Gas Co. (MCF)—Oil and Demand Media Inc. (DMD)—On Aug. quarter 2014, a 4% decrease. Earnings for gas explorer based in Houston on Nov. 3 6, Santa Monica, Calif.-based Demand third-quarter 2015 were $0.10 per share lost $185.7 million, or $9.79 per share, in Media reported third-quarter revenue of compared to $0.08 per share in third- the third quarter, versus net income of $29.8 million and adjusted Ebitda of -$2.8 quarter 2014, an increase of 25%. $3.7 million, or 19 cents per share, in the million, compared to $43.1 million in rev- same period last year. Its sales were $29 enue and $10.5 million in adjusted Ebitda Atwood Oceanics Inc. (ATW)—Only two million, versus $67.5 million in the third the same time a year before. of the company’s 13 rigs are contracted quarter of last year. Production came in at into 2017, which worries some analysts. the low end of analysts’ estimates. Seaport Denbury Resources Inc. (DNR)—On Atwood cut its dividend by 70%, to 7.5 Global Securities analyst Mike Kelly said Nov. 5, Denbury reported a third-quarter cents per share from 25 cents per share, that Contango’s cost-cutting campaign loss of $6.41 per share driven by impair- or an annual yield of 2% versus a previous should begin paying modest dividends go- ments. It repurchasing 4.4 million shares 7%, saving around $45 million in annual ing forward, and management’s focus re- in the quarter for $12 million, and has $210 cash flow. mains on keeping debt levels flat next year million remaining on its share repurchase in the face of a challenging commodity en- authorization. Bravo Brio Restaurant Group Inc. vironment. (BBRG)—The Columbus, Ohio-based res- Five Star Quality Care Inc. (FVE)— taurant chain said Nov. 5 that CEO Saed Cornerstone OnDemand Inc. (CSDO)— Newton, Mass.-based operator of senior Mohseni is resigning and will be replaced Santa Monica, Calif.-based cloud software living communities on Aug. 10 said Ebitda, by president and COO Brian O’Mally. The developer on Nov. 5 reported that revenue for the second quarter of 2015 was $5.9 company also said that revenue was up and earnings missed Wall Street’s expec- million as compared to $7.7 million for the year-over-year. The $150 million market tations. same period in 2014. capitalization chain announced a $15 mil- lion share buyback. CSX Corp. (CSX)—Rail operator will close Genesco Inc. (GCO)—Footwear retailer a yard in Tennessee that services coalfields on Nov. 3 said its Canadian subsidiary was Caleres Inc. (CAL)—The Clayton, Mo.- as coal volume continue declining. Third- going to acquire the 37-store Little Bur- based footwear retailer reported second- quarter EPS were 52 cents, compared to 51 gundy retail footwear chain in Canada quarter results on Aug. 27. Net sales were cents the prior year, on a 9% revenue de- from the Aldo Group Inc. virtually flat year-over-year at close to cline coming from a 3% decline in volume $640 million. Net earnings were $16.8 and lower fuel recovery. Gulf Island Fabrication Inc. (GIFI)— million, including a $5.3 million after-tax Gulf Island reported a net loss of $12.1 expense related to debt elimination, com- Cubic Corp. (CUB)—San Diego-based million, or 84 cents per share, on sales of pared to $18.1 million for the same period government technology provider on Aug. a year prior. 6 said adjusted third-quarter Ebitda was CONTINUED >

close print back < Index > cover search view 13 the d aily deal Monday November 23 2015 ACTIVISM

< PREVIOUS National Oilwell Varco Inc. (NOV)—On results that were worse than forecast. A Oct. 28, Houston-based National Oilwell strong dollar also hurt performance, driv- $67.5 million for its third quarter, versus Varco reported earnings per share of 61 ing shares down 35% in early November. net income of $7.6 million, or 52 cents per cents in the third quarter, above what ana- share, on sales of $118 million in the same lysts had expected. The company also re- Urban Outfitters Inc. (URBN)—Urban period last year. Some observers think that ported that sales declined over the second Outfitters said results for its third quarter the company will have to lay off employees quarter by 15% to $3.3 billion, below Wall ended Oct. 31 included net sales that were next year as its backlog dwindles and may Street’s projections. The company inti- up slightly to about $825 million from ap- ultimately have to restructure. mated to analysts that it was more inter- proximately $814 million for the same pe- ested in M&A than share buybacks. riod a year prior. Net income was also up ITT Corp. (ITT)—Industrial components Owens & Minor Inc. (OMI)—Medical slightly to close to $52 million compared maker based in White Plains, N.Y., on Oct. supplies distributor said Oct. 27 revenue about $47 million a year ago. Same store 30 said quarterly revenue declined 8%, cit- was up, as was operating earnings. sales increased 1%, while wholesale sales ing unfavorable exchange rates. ITT on were down 5%. Aug. 31 said it was acquiring components Sagent Pharmaceuticals Inc. (SGNT)— maker Wolverine Automotive Holdings Pharmaceutical company on Nov. 3 re- Weatherford International plc (WFT)— for $300 million to increase its exposure ported a beat on revenue and a slight miss On Oct. 27, Moody’s Investors Service in the automotive industry. on earnings. The company has been evalu- Inc. downgraded Weatherford to below ating strategic alternatives to optimize the investment grade due to a challenging Jacobs Engineering Group Inc. (JEC)— value of SCP, Sagent China Pharmaceuti- outlook that will result in weaker credit Engineering and construction company cals. metrics. on Oct. 8 said it would have a new leader- ship structure organized around its four ScanSource Inc. (SCSC)—Operating in- Whole Foods Market Inc. (W FM)—The business lines: petroleum and chemicals, come was $25 million compared to $40.4 grocery store chain reported an earnings buildings and infrastructure, aerospace million the year before, though that in- miss Nov. 4, reporting that profits were $56 and technology and industrial. The indus- cluded a $15.5 million legal recovery. million, or $0.16 per share, as compared to trial unit includes a life sciences unit. $128 million, or $.35 per share year-over- Syngenta AG (SYT)—Bloomberg, citing year. The company announced a $1 billion Jive Software Inc. (JIVE)—On Nov. 9, people familiar with the situation, report- share repurchase program and declared a Palo Alto, Calif.-based Jive said it lost 3 ed Nov. 12 that China National Chemical 4% increase in the quarterly dividend to cents per share in the third quarter, half of Corp. is in talks about a potential acquisi- $0.135 per share. expectations for a loss of 6 cents per share. tion of the Basel, Switzerland, agriculture The company also gave favorable guidance company. That follows a Wall Street Jour- Zions Bancorp. (ZION)—Zions, a region- for the fourth quarter. nal report on Nov. 5 that the company is in al Salt Lake City bank, issued earnings talks with DuPont about a possible combi- Oct. 19. EPS missed estimates by $0.01. In Kirkland’s Inc. (KIRK)—Home decor re- nation with the chemicals company’s agri- March the bank expanded its board to 13, a tailer reported results for the third quarter cultural business. move that could dilute the influence of any ended Oct. 31, saying net sales increased activist seeking to install a minority slate. 10.3%, while comparable store sales were Synopsys Inc. (SNPS)—Chip design soft- On Nov. 4, Zions added a new role of chief up 1.8%, including e-commerce, compared ware maker based in Ossining, N.Y., on technology strategist as part of a project to to a hike a year ago of 6.3%. The company’s Aug. 27 authorized its second accelerated replace the company’s loan servicing and stock is hovering near its 52-week low. share repurchase program of the year for deposit systems. n $100 million; an earlier one was for $180 Micron Technology Inc. (MU)—If Mi- million. On Oct. 12, CEO Mike Mack said cron continues to sink, pressure for a sale he was leaving at the end of the month, a How to use could mount. Micron reportedly was con- move seen as being in response to disgrun- the daily deal sidering a bid for SanDisk—it lost out to tled investors. digital Western Digital on that deal. Titan International Inc. (TWI)—The This version of The Daily Deal is based on Modine Manufacturing Co. (MOD)— tire maker on Nov. 6 said its financial eMprint. Readers can move around the Thermal management systems compo- statements from 2013 up to and including publication using the navigation bar at the nents maker based in Racine, Wis., on July June 2015 could not be relied on due to er- bottom of the screen. The index lists every 31 announced quarterly results saying rors in the way it accounted for its stake article and feature in the current edition sales and earnings were down, in line with in Russian tire maker Voltyre-Prom. The and serves as a map for the entire publica- its expectations. company also reported third-quarter 2015 tion. n

close print back < Index > cover search view 14 the dai ly deal Monday November 23 2015

THE CROSSHAIRS TOP 10 POTENTIAL ACTIVIST TARGETS

This Last Week week -32% - Ascena Retail Group Inc. (ASNA) On Nov. 2, Katie Bayne, a brand manager at Coca-Cola Co. was appointed to the board. On Oct. 8, Golden Gate Capital filed a 13D for its 9% stake, most of which it acquired from the Ann takeover.

P/E ROIC D/C I % MC 60DMA UPI 14.0 -11.4 19.1 7.1 $2.1B $22.10 23%

2 - Coach Inc. (COH) On Oct. 14, Coach said it hired two senior executives to improve its brand communications.

P/E ROIC D/C I % MC 60DMA UPI 16.0 13.0 26.3 0.9 $8.3B $10.15 -32%

3 4 Deckers Outdoor Corp. (DECK) Deckers’ shareholders approved the appointment of its board and executive compensation at its annual meeting held Sept. 10.

P/E ROIC D/C I % MC 60DMA UPI 9.7 12.9 4.0 2.4 $1.6B $7.40 -585%

4 6 Bed Bath & Beyond Inc. (BBBY) Profit margins have declined and anlysts have cautioned that discount coupons continue to pressure gross mar- gins.

P/E ROIC D/C I % MC 60DMA UPI 10.3 22.3 35.4 2.8 $8.9B $5.54 -13%

5 - Kohl’s Corp. (KSS) Kohl’s said that same store sales at the retailer were up 1% for the quarter ended Oct. 31, while overall sales were up 1.2% to more than $4.4 billion. Net income, however, was down 15%, dropping to $120 million from about $140 million.

P/E ROIC D/C I % MC 60DMA UPI 10.8 10.0 44.3 0.6 $9.0B $5.28 22%

CONTINUED > 60DMA: 60-day moving average UPI: Underperformance Index: (Percentage by which the company underperformed its peers) ROIC: Return on invested capital P/E: Forward Price/Earnings ratio D/C: Debt to capital ratio MC: Market capitalization I%: Percentage of insider shares outstanding

close print back < Index > cover search view 15 the d aily deal Monday November 23 2015 THE CROSSHAIRS

< PREVIOUS

This Last Week week 6 5 Michael Kors Holdings Ltd. (KORS) Michael Kors comparable store sales have been down and net income declining. Greenlight Capital has reported a stake on its 13F filing.

P/E ROIC D/C I % MC 60DMA UPI 9.5 40.0 0.0 3.6 $7.6B $5.26 -316%

7 7 Pier 1 Imports Inc. (PIR) On June 18, the retailer reported earnings: sales were up 3.1%, but revenue slightly missed analyst forecasts. Home furnishings retailer reported second quarter results Sept. 25 that missed analyst estimates. It also lowered its FY2016 outlook.

P/E ROIC D/C I % MC 60DMA UPI 10.8 13.0 38.0 4.5 $553M $4.84 -125%

8 2 Fossil Inc. (FOSL) Fossil announced on Nov. 12 a net sales decrease of 14% due to a decline in sales of its licensed watch brands, as well as due to currency issues. Net income was also roughly half of what it was year over year, at nearly $58 million compared to almost $104 million.

P/E ROIC D/C I % MC 60DMA UPI 8.1 17.5 39.0 14.1 $1.7B $4.46 -1219%

9 - Kirkland’s Inc. (KIRK) Kirkland’s reported results for the third quarter ended Oct. 31, saying net sales increased 10.3%, while comparable store sales were up 1.8%, including e-commerce, compared to a hike a year ago of 6.3%. The company’s stock is hovering near its 52-week-low.

P/E ROIC D/C I % MC 60DMA UPI 12.2 13.1 0.0 10.3 $229M $3.76 -1%

10 - Stage Stores Inc. (SSI) Stage Stores said comparable store sales were down 3.5% for the third quarter ended Oct. 31. The company reported a net loss of $9 million. Sales were also down by 3.5% to about $350 million.

P/E ROIC D/C I % MC 60DMA UPI 8.0 4.8 9.1 3.4 $203M $2.94 -124%

60DMA: 60-day moving average UPI: Underperformance Index: (Percentage by which the company underperformed its peers) ROIC: Return on invested capital P/E: Forward Price/Earnings ratio D/C: Debt to capital ratio MC: Market capitalization I%: Percentage of insider shares outstanding

close print back < Index > cover search view 16 the d aily deal Monday November 23 2015 PRIVATE EQUITY

more at the deal ripe PE candidates by industry pe auction bidder listings pe auctions latest sellers•assets Bregal plumbs the depths of subsectors for ideas Finding niche deals such as one for a scallop harvester defines the PE firm’s anti-generalist strategy

By Sarah Pringle been challenging, Bergmann You wouldn’t think that a pri- explained. vate equity firm that counts a “Bregal has a willingness scallop harvester, a bowhunt- to move extremely quickly ing and archery accessories and do so with a lot of certain- provider, a maker of running ty, which is huge in today’s performance products and a market where sellers have a supplier of behavioral servic- fair amount of leverage,” as- es to children among its port- serted a person familiar with folio companies as having a the company who requested plan, but that’s exactly what anonymity. Bregal Partners LP has. For instance, from the “When we left to start time Bregal had its first Bregal almost four years ago meeting with the company now, we left with the view then known as Shock Doctor that the fundamental view of Sports through the time it be- private equity had changed,” gan its due diligence, it took said Robert Bergmann, who, only about 17 days for a deal along with Scott Perekslis, to get done, Bergmann said. decamped from New York Tony Armand, the CEO of financial sponsor Centre the company that has since Partners Management bregal’s bergmann and perekslis been rebranded as United LLC to found their own firm. Sports Brand, described the “It’s increasingly difficult to be a general- Now Berg mann and Perekslis have added Shock Doctor sale process as a competitive ist.” a third managing partner, Charles R. Yoon, one that included somewhere between 30 That mindset is largely why at any given to the mix. On Sept. 21, Yoon joined Bregal and 40 offers. Despite the significant inter- time, Bregal has about seven to 10 very nar- after helming the consumer-retail team as est, however, Bregal stood out on a couple row industry subsectors that it’s highly en- a partner in the Boston office of Monitor fronts, he said. gaged in, Bergmann said. The firm typically Clipper Partners LLC, where he’d been “They clearly had done their homework spends six to 12 months developing the “ide- for a decade. in advance,” he said. “When we came to ation” around these very tapered sectors, In connection with Yoon’s appointment, the market, they were really well-versed frequently throwing out ideas that prove Bregal’s investors—a sixth-generation fam- in some of the macro trends. That allowed invalid—usually after determining there’s a ily foundation known as Cofra Holding them to be far more nimble.” lack of targets in the subsector, he said. AG—boosted its commitment to its existing Bergmann and Perekslis’ strategy and By the time Bregal is in a position to ex- fund by $100 million, to $600 million from level of involvement also played a role, Ar- ecute, it has the benefit of speed after hav- $500 million. mand said, explaining that Bregal came to ing spent so much time getting to know the Yoon, having known Bergmann and Per- the table with a vision for the next three to industry. ekslis for more than 15 years, is very much five years that included a very specific game “They’ll find really niche sectors that on the same page with them. plan around growth through acquisition. they want to play in and then they’ll be re- “There’s a lot of people chasing deals,” he When Breg a l boug ht Shock Doc tor Spor t s ally aggressive about it,” said Harris Wil- said. “We’d rather spend our time focusing in March 2014 for an undisclosed price, it liams & Co. director Ryan Budlong, who on these specific subsectors.” was generating in the midteens of Ebitda, advised the firm on the November 2014 cre- Bregal’s tendency to find deals through Bergmann said. Only about 18 months later, ation of its bowhunting and archery acces- research instead of having them brought the company is tracking a level of about $40 sories platform, Arcus Hunting LLC, and its to the firm has allowed it to be active at a subsequent add-on deals. time when deploying capital from PE has CONTINUED >

close print back < Index > cover search view 17 the d aily deal Monday November 23 2015 PRIVATE EQUITY

< PREVIOUS nity.” One example is Blue Harvest. Berg- added that, in addition to the duo’s ability mann said it took about three years of meet- to digest information very quickly, they also million in annual Ebitda, he said. ings with many companies before Bregal form significant and lasting relationships Helping fuel its rapid growth was Shock finally found a scallop harvesting company that prove beneficial. Doctor’s acquisition of McDavid Inc. on it believed in. What’s also helped is the Bregal Invest- April 22 for an undisclosed price, which It was on April 27 that Bregal announced ments connection. Bregal Partners is part of Bergmann said he knew was going to come the formation of Blue Harvest in connection a family of Bregal Investments private eq- available at some point when it bought with its purchase of eight Virginia-based uity funds and investment vehicles. Bregal Shock Doctor only about a year earlier. scallop vessels and related assets from Pea- Investments itself is part of Cofra Holding. United Sports on Oct. 26 announced an- body Corp. Taking the helm of Blue Harvest Since 2002, Bregal Investments has put other acquisition, buying Nathan Sports, a as its CEO was Jeff Davis, the former CEO more than $10.5 billion to work. maker of running performance products. of American , which coincidental- While that’s a heady amount, Bregal’s As in the case of United Sports—which in ly joined Bregal’s portfolio of investments typical investment range is $25 million less than two years has transformed from a in August. Davis was American Seafoods’ to $150 million in companies with Ebitda company concentrated on mouthguards for chief executive from 2000 to 2005. ranging from $10 million to $75 million athletes to a global entity offering all types “I’ve known Scott since 1998,” American and above. But the family foundation has of protective and performance gear for ath- ’s CEO Bernt Bodal said in a phone provided Bregal with a lot of flexibility in letic purposes—an important element to interview, pointing to the Bregal managing terms of its strategy and investment size, Bregal’s growth-oriented strategy is M&A. director’s significant knowledge of the sea- both Bergmann and Yoon explained. The firm identifies a strong list of potential food industry. “When we were looking [for “The LP allows us to fight in a great add-on targets by the time it makes its first a partner], it was a very natural choice. We weight [class],” Bergmann said. “Bregal can platform investment, Bergmann said, al- had gotten to know him personally and he’s upsize and play substantially larger.” lowing its platform investments to double a very good partner to work with.” Added Yoon: “This gives us the ability to or triple in size, often within just months. -based American Seafoods com- go small or big.” All seven of Bregal’s investments have pleted its recapitalization on Aug. 20 backed Typically, the maximum check would be at least two add-on deals, while some have by Bregal and Clackamas, Ore.-based sea- only about $90 million or so for a $600 mil- north of seven. food producer Pacific Seafood Group. lion fund the size of Bregal’s, whereas in the “What we’re doing is buying down the As Bodal noted, the American Seafoods past Bregal has committed an equity check multiple,” Bergmann said. “This becomes deal wasn’t Bregal’s first encounter with of about $150 million due to the backstop of an essential part of the strategy.” the fish harvester. Perekslis, then at Centre the family foundation, Bergmann said. If Besides United Sports, the firm’s port- Partners, assisted Bodal when he bought the firm needs to commit $200 million or folio includes a range of niche subsectors the company from Norwegian conglomer- so, Bergmann said he expects they could that fall into the broader consumer, food ate Aker ASA, which runs a fishing busi- find a way to do that. and retail, energy services and healthcare ness, in 2000. Perseklis is also a former “As a family foundation, the focus tends industries. There’s American Seafoods board director at American Shipping. to be on value creation and not necessarily a Group LLC, one of the largest seafood Like Bodal, the Bregal partners have of- quick flip,” Bergmann said, explaining that companies in the U.S; Arcus Hunting, a ten backed or worked with its executives this allows Bregal to be a bit a more creative platform that encompasses various bow- more than once. and long-term in its thinking. hunting and archery brands; Aqua Terra United Sport’s Armand had worked with The next subsector on Bregal’s agenda Water Management LP, which offers Bergmann and Perekslis years earlier when may be the optical niche within the con- water management services for saltwater he served as CEO of recreational and sport- sumer space, Yoon hinted. He said he has disposal facilities; Blue Harvest Fisher- ing goods company Bravo Sports, then a done a ton of work in branded performance ies LLC, a scallop harvester; Omniforce portfolio company of a Centre Partners. apparel and dermatology, among other LLC, a producer of athletic events across Blue Harvest’s Davis also had known things. five countries; and U.S. Community Be- the Bregal founders for more than 15 years, Bergmann asserted that the firm also havioral, a provider of behavioral services while AquaTerra’s Mark Harris, installed isn’t done in the consumer-focused health- to adults and children. after the investment, also had worked with care and seafood categories where it has It’s no wonder Bregal’s quest for a com- Bergmann perviously. found some other narrow subsectors. A pany that it’s targeted might take as long as “They’re more like business executives couple letter of intents for deals are already 12 to 36 months. That’s also why, unlike in than finance executives and that seems to signed, he noted. the case of United Sports, most of Bregal’s play well with managers and founders,” “We’re seeing a lot of opportunity to in- investments are proprietary and don’t at- said Harris Williams’ Budlong. vest in things that are not part of the normal tract as much buyer interest. The unnamed source, describing Berg- auction flow,” Bergmann said. “Some things don’t pop up,” Bergmann mann and Perekslis as both “wickedly It’s a boast few PE mavens can make said. “So we need to develop the opportu- smart” and “seemingly inexhaustible,” these days. n

close print back < Index > cover search view 18 the dai ly deal Monday November 23 2015 PRIVATE BRIEFING Ancestry.com’s history may be ready for a rewrite Sector’s growth suggests that the time for a sale may be approaching

by Jonathan Braude tential led to a so-called appraisal Ultimately, we’re all descended claim by Merion Capital LP and from Adam and Eve. Ancora Merger Arbitrage Fund Or, if you think Adam and Eve LP in the Delaware Court of Chan- might just be mythical, then from cery, seeking higher a price for some other “most recent common their shares than the Permira offer ancestor,” the official term used by in 2012. (Delaware Vice Chancellor genealogists to identify the person Sam Glassock III ruled in January from 2,000 B.C., or thereabouts, this year that the price had been who was the progenitor or progeni- fair value, after all). trix of everyone alive in the world And under Permira’s tutelage, today. Ancestry.com has continued to But for most of us, the keys to develop rapidly, without the con- our identity can be found by check- straints of public ownership. ing out more recent ancestors. And It has made what Ruder called that is what explains the popularity a “very interesting deal for con- of sites such as Ancestry.com and its tent” with the Mormon Church. network of national subsites in Aus- The Church of Jesus Christ of the tralia, Canada, the U.K and Ireland, France, financial sponsor, Permira could be ready to Latter-day Saints has collected a vast store Germany, Italy, Sweden and, now, Mexico. take the opportunity to flip the company at of genealogical records, for use in its con- Such fast-growing e-genealogy busi- the right price. It has already made nearly troversial habit of converting ancestors and nesses attract millions of family historians, all of its investment back through a series of relatives of its members after death. both amateur and serious, and that makes multimillion-dollar dividends, so any fur- Ancestry.com has also accelerated the them worth serious money. Ancestry.com is ther increase in value would be profit. expansion of the business into new coun- the leading provider of family history glob- Certainly, with its financial results hum- tries, upgraded its technology to develop ally and has a burgeoning business in per- ming, Ancestry.com’s value is similarly on a unified mobile and web-based platform, sonal DNA testing. It’s the biggest collector the rise. In October, the company reported and perhaps, most importantly, also devel- of subscriptions from avid family histori- financial results for the three months to oped its DNA testing program, which Ruder ans, too. Sept. 30. These included total revenues of said had been “really quite nascent” when Hence Ancestry.com Inc.’s December $171.5 million, compared with $154.7 mil- Permira first invested. 2012 acquisition by a consortium led by lion in the same quarter of 2014. Full-year Using cheek cells carried in customers’ British private equity shop Permira, which 2014 revenues were $619.5 million. Adjust- saliva, Ancestry.com can discover their took it private for a cool $1.6 billion at $32 ed Ebitda for the quarter was $67.4 million, ethnic background and attributes, and also a share. and the company generated a net loss of provide what Ruder described as “an ances- “Since we took it private, the company $0.6 million. try health experience, that opens up a much has grown very healthily and consistently The consortium that acquired Ancestry. larger market than the genealogy market.” in double-digit percentages on the top line com included Permira’s co-investing limited However, Ruder was careful to stress and Ebitda and capital growth well in ad- partners, who together own the majority of that the company had built up a “gold-plat- vance of that,” said Brian Ruder, head of the company. But Ancestry.com’s manage- ed privacy program” around the DNA busi- Permira’s Menlo Park, Calif., office, who led ment and its previous investor, Menlo Park ness, to ensure that clients’ personal infor- the transaction and now sits on the Ances- PE firm Spectrum Equity Investors LP, mation was protected. try.com board. also reinvested. Those projects were all management- One has to wonder if it’s time for Ances- Spectrum had already made a big return driven, but received enthusiastic back- try.com to undergo its own genealogical on its investment, staying on the sharehold- ing from Permira. “The company’s really change. er register even after taking the company thrilled with being private,” Ruder said. Ruder declined to comment on how long to its initial public offering in 2009 at just “It’s enabled [the management team] to be Permira would hold the business, or to dis- $13.50 a share. cuss rumors of a sale process. But like any Ancestry.com’s continuing earning po- CONTINUED >

close print back < Index > cover search view 19 the d aily deal Monday November 23 2015 PRIVATE BRIEFING

< PREVIOUS nimbler, faster on some of their projects, Exit ramp: Poseidon Containers without having to worry about what it might mean for the next quarter.” Shipping company’s hope for a 2016 IPO may be off course Requests for interviews with Ances- try.com CEO Tim Sullivan, CFO Howard Hochhauser or any of the company’s se- The CEO of Kelso & Co. LP- Arab Shipping Co and Zim nior management to discuss the company’s backed Poseidon Contain- Integrated Shipping Servic- three years as a portfolio company of Per- ers Holdings Corp. hardly es Ltd., and others, according mira were turned down on the grounds that sounds discouraged about to Poseidon’s F-1 filing. Posei- their schedules were too hectic over the having to abandon an initial don’s fleet of 19 containerships next several weeks. public offering in August. includes five Handymax ves- An Ancestry spokeswoman did offer the “We will come back to sels, two Panamax vessels and response that Permira had been “a strong the market when market conditions im- 12 Post-Panamax vessels. and supportive sponsor of Ancestry.” prove,” said George Giouroukos, who Poseidon was going to try to go public As recently as August, Ancestry.com helms the owner and operator of contain- even without a strong financial story. In LLC, as the Provo, Utah-based business is er ships. “It will probably be in the second the first three months of 2015, Poseidon now known, refinanced its debt, taking out half of 2016.” posted a net loss of $1.76 million and ad- new credit facilities consisting of a $735 Unfortunately, even then may not may justed Ebitda of $9.64 million on operat- million term loan facility and an $80 mil- be such a great time to go public. ing revenue of $22.04 million, compared lion revolving credit facility. It used part of Athens-based Poseidon filed its F-1 with net income of $5.81 million and ad- that sum to pay a cash dividend of $215 mil- with the Securities and Exchange Com- justed Ebitda of $16.19 million on operat- lion to its shareholders. mission on June 15. On July 21, it set the ing revenue of $29.91 million in the same Net long-term debt was $989.9 million range for its IPO at $14 to $16. Poseidon period a year ago. More recent financial at the end of September. On top of that is planned to offer 15.38 million shares, data isn’t available since Poseidon pulled $390.2 million in senior unsecured pay- which would have raised $230.7 million the IPO in August. in-kind notes payable to the shareholders’ at the midpoint, and another $34.61 mil- Foster Finley, a managing director at holding company for the business, Ances- lion if underwriters fully exercised their advisory firm AlixPartners LLP, said try.com Holdings LLC. option to buy up to an additional 2.31 mil- the maritime sector “is suffering through In May, Permira was reported to have lion shares. basically its weakest time since the indus- hired unnamed bankers to run an auction But on Aug. 13, Poseidon pulled the trialization of maritime shipping.” for the company that Reuters said at the offering. Demand wasn’t the problem. A “The demand for container shipping time could value the business at between source familiar with the situation said it hasn’t kept pace with the increase in ca- $2.5 billion and $3 billion, including debt. was a fully subscribed book. But this per- pacity,” said Henry Pringle, a vice presi- A sale need not be imminent, however. son said Poseidon pulled the deal at the dent at AlixPartners. Another source said separately that while 11th hour because it was likely that sec- Rahul Kapoor, director at Drewry Permira had been approached back in the ondary trading wasn’t going to go so well Maritime Equity Research, said the spring, it was “not looking at anything at amid fears of an economic slowdown as container shipping market “has been very the moment.” The feeling was, this person China devalued its currency on the heels poor this year.” Nor does it look like it’s said, that Ancestry.com was a young invest- of the release of disappointing export and going to get better anytime soon, if the ment and there was no hurry for the private producer price data. actions of the largest container shipping equity firm to look for an exit. Poseidon started business operations company in the world is any indication. That is not to say, that if a bidder ap- in December 2010 through its predeces- Maersk Inc. on Nov. 9 reported a 61% proaches, Permira won’t look at the matter sor, Poseidon Containers Group, which decline in third-quarter profit year-over- again. With more than 2 million subscrib- comprised subsidiaries of Poseidon Con- year because of low freight rates. Maersk ers across all its sites, all prepared to pay tainers Holdings LLC. PCH was founded expects the container shipping market to good money to research their roots, find out by Giouroukos, Kelso and Maas Capital remain weak. Maersk, whose land-based where their ancestors hailed from or simply Investments BV. A Maas Capital rep- staff totals 23,000 globally, said it plans to update their family trees, another private resentative declined to comment.. Kelso reduce headcount by 4,000 by 2017. equity firm might consider an offer at any offiicals weren’t available for comment. With such choppy waters ahead, time. Poseidon charters its vessels to A.P. Poseidon may not be able to chart a A human generation is generally mea- Moller-Maersk A/S, CMA CGM SA, course to an IPO as it had hoped. n sured as 30 years. But in private equity, even Cosco Container Lines Co., United — Armie Margaret Lee three years can seem a long time. n

close print back < Index > cover search view 20 thed aily deal Monday November 23 2015 CAPITAL CALLS Behind the resurgence of pulled initial offerings Most PE-backed companies that have postponed or withdrawn offers remain in their parents’ hands

by armie margaret lee

When Parthenon Capital Partners AP Capital Management LP-backed su- LP-backed consumer lender LoanDe- permarket giant Albertsons Cos.; NEP pot Inc. pulled its initial public offer- Group Inc., a mobile teleproduction ing due to market conditions on Nov. services company backed by Crestview 12, it became the latest in a series of PE- Partners LP; Philadelphia Energy So- backed companies to either hit the pause lutions Inc., an oil refining and logistics button or nix plans to go public. company owned by Carlyle Group LP There have been 24 IPO postpone- (CG) and Energy Transfer Partners ments and withdrawals by financial LP (ETP); and Poseidon Containers sponsor-backed companies this year Holdings Corp., a Kelso & Co. LP- through Nov. 17, according to data from backed owner and operator of container Dealogic. That’s the highest total since ships. 2012, when the full-year tally was 34. “If a company has gone so far as to Full-year totals for 2014 and 2013 were start its IPO roadshow, the expectation 20 and 16, respectively. is that it will ultimately go public,” said “There’s a lot of uncertainty in the Patrick Shannon, partner and global co- equity markets right now,” said Jeremy Swan, private equity and chair of Latham & Watkins’ capital markets practice, speaking in venture capital industry practice leader at accounting firm Cohn- general and not about any specific firm. That said, “it’s very easy to Reznick LLP. “A lot of IPOs are getting priced at the low end of the imagine a situation where the IPO continues to be delayed and a range, or in some cases, below. suitor comes along and says ‘Let me buy you.’ ” “The IPO market from my perspective is not as strong as it was A lawyer who works with PE firms and declined to be named last year. Overall, you haven’t had a ton of blockbuster IPOs to re- for this article, said that when IPOs are pulled, what he’s seen ally heat up the market,” Swan added. more than anything else are financial sponsors holding on to their In some cases, companies did not proceed with going public be- portfolio companies. Rather than going out and trying to sell the cause they were sold. In August, for instance, financial software company soon after the IPO withdrawal, it’s more likely that PE maker SunGard, which is owned by a consortium of seven PE firms do a dividend recap, the lawyer said. firms, pulled its IPO days after its $9.1 billion sale to Fidelity Na- CohnReznick’s Swan noted a shift in the way pulled IPOs are tional Information Services Inc. (FIS) was announced. perceived. He said that over the years, there’s less of a stigma asso- Other examples include TPG Capital LP-backed Par Phar- ciated with pulling a deal. “Today, the market is much more vola- maceutical Holdings Inc., a maker and distributor of generic and tile than it has been,” he said, adding that if a company withdraws branded drugs that pulled the plug on its IPO in September due and comes back later, “it’s less of a negative reflection on the busi- to its $8.05 billion sale to Endo International plc (ENDP), and ness.” Blackstone Group LP (BX)-backed nonwoven manufacturer Av- Among the companies that withdrew their IPOs then went on intiv Inc., which withdrew its IPO in October when its $2.45 bil- to take another stab at going public is Dave & Buster’s Entertain- lion sale to Berry Plastics Group Inc. (BERY) was completed. ment Inc. (PLAY). The Oak Hill Capital Management LLC- More recently, Interactive Data Corp., a pricing and data ser- backed dining and arcade chain withdrew its filing in 2012 because vices company owned by Silver Lake Partners and Warburg Pin- of market conditions. Last year, the company returned to the IPO cus LLC, on Nov. 4 withdrew its IPO after its PE backers agreed to path, filing confidentially for an IPO in June 2014 and making its sell the company in October to Intercontinental Exchange Inc. S-1 filing three months later. After a month, Dave & Buster’s went (ICE) in a $5.2 billion cash-and-stock deal. public, raising $94 million. An S-1 filing will sometimes bring potential bidders forward “The IPO window can open very quickly and it can close very even if the company is not pursuing a parallel sale track along- quickly,” said Swan. side the IPO, noted Jennifer Perkins, partner and global chair of As the end of the year approaches, people are thinking more Latham & Watkins LLP’s private equity practice, speaking in about 2016, Shannon said, adding that people are “cautiously opti- general. mistic” when it comes to IPOs. Other companies cited market conditions for postponing or “My sense is there’s still a lot of enthusiasm in the IPO market. withdrawing their IPO. The roster of firms include Cerberus I’ve heard talk of org meetings for March,” Perkins said. n

close print back < Index > cover search view 21 the daily deal Monday November 23 2015 ON THE HUNT WorkWell examines consolidation possibilities

edited by Sarah Pringle

WorkWell Medical Group company. We’re pretty good After landing an undisclosed ...captured at it,” he said, adding that Vi- investment from a California aWest has traditionally looked private equity firm, WorkWell As anticipated by The Deal early this year, FactSet Research at colocation assets and will Medical Group LLC plans to Systems Inc. (FDS) has continued to turn the M&A dial to keep continue to do so opportunis- use the funds to expand or- pace with competitors. The Norwalk, Conn.-based financial tically. Colocation refers to the ganically and inorganically data and analytics provider announced on Sept. 22 a $265 mil- renting of data centers, which through acquisitions. lion deal for Portware LLC. Its purchase of the automated trad- are facilities with equipment The company will grow ing technology provider appears to be a move to gain share from for collecting and processing “through the development of rivals Bloomberg LP and Thomson Reuters Corp. (TRI), data. Meanwhile, ViaWest new clinics (organic growth) sources said at the time. When FactSet snagged Code Red Inc. itself was acquired by Shaw to expand their reach and bet- in February for an undisclosed price, The Deal wrote that the Communications Inc. (SJR) ter serve clients that have op- former had a strong balance sheet and financial capability to for $1.2 billion last year. It was erations throughout the state pursue something larger. n —S.P. formerly backed by Oak Hill ... as well as through the selec- Capital Partners LP. INetU tive acquisition of high-qual- is the company’s second ac- ity clinics that would bring BNC Bancorp ing is part of BNC’s DNA, Fitz- quisition since it joined Shaw. WorkWell in to new geogra- A recent deal by BNC Ban- simmons said, adding that the —Jaewon Kang phies and different employers corp (BNCN), the High Point, bank is likely to continue pur- and industries,” said Luke N.C.-based bank holding com- suing smaller in-market deals Cypress Energy Partners Mitchell, managing partner pany, is a precursor of more after taking a short pause to Despite d isappoi nt i ng qua r ter- of Edgemont Capital Part- M&A coming through the close the two pending deals. ly results, oil services compa- ners LP, which advised Work- vault. The company on Nov. Regulators like the bank and ny Cypress Energy Partners Well on its recent deal with 16 agreed to buy neighboring have given it the green light to LP (CELP) intends to continue Salt Creek Capital. In terms bank High Point Bank Corp. do deals at this pace, he said. its pursuit of M&A. “Our team of acquisitions, Mitchell said in a 30% cash and 70% stock It’s more likely that sellers are continues to focus on acquisi- WorkWell would target acqui- deal valued at $141.3 million. knocking on BNC’s door, rath- tions and organic growth op- sitions in states with favorable In regards to future M&A, er than vice-versa, he added. portunities with our customer reimbursement and other reg- BNC president and CEO Rick —Jennifer Tekneci relationships in the inspection ulatory conditions for occupa- Callicutt said in a phone inter- industry to cross-sell our new tional medicine. view that the bank will take a ViaWest Inc. hydrostatic testing services He said some states, such small break as it still has not IT infrastructure provider from our recent acquisition,” as California and Florida, al- closed its August acquisition of ViaWest Inc. plans to keep CEO Pete Boylan said during a low patients to choose the Southcoast Financial Corp. building its M&A platform recent earnings call. “We also doctors they visit for work- for $95.5 million, but will po- following its latest purchase. continue to see an increase in related medical issues, while tentially look to acquisitions of Denver-based ViaWest an- water and environmental ser- others are more stringent and insurance agencies down the nounced Nov. 16 an agreement vices opportunities.” Boylan put the onus on the employer. road. The bank is not inter- to acquire hosted services went on to say that while the “Florida has become pretty ested in entering new markets company INetU Inc. for $162.5 challenging environment is attractive, as well as the Rust and believes it will be able to million from BV Investment impacting most industry play- Belt and the upper-Midwest,” grow book value in the com- Partners, through which the ers, the company is able to pur- Mitchell said. The presence of pany by 30% over the next two latter earned a greater than 2.5 sue M&A because of its strong the “agriculture, petroleum, years organically, he said. The times return on investment, balance sheet and credit facil- energy and/or manufacturing bank has made 13 acquisitions The Deal has learned. ViaWest ity. The company’s last acqui- industries, as well as govern- since 2010. Hovde Group Inc. chief technology officer Jason sition came on May 6, when it ment and state agencies are analyst Kevin Fitzsimmons Carolan said via phone that paid $11.2 million in cash for also big drivers in finding new said its latest deal is a good one the company will continue to a 51% stake in Brown Integ- markets for expansion.” as it is a low-risk transaction be acquisitive. “We’ve done rity LLC, a hydrostatic testing —Michael D. Brown in their front yard. Dealmak- about 20 acquisitions as a company. —Laura Berman

close print back < Index > cover search view 22 thedaily deal Monday November 23 2015 rules of the road EU’s Vestager takes on corporate tax avoidance Deals with national governments won’t shield companies from paying their ‘fair share,’ she warns

by Renee Cordes in brussels

The tax woman cometh. EU for merging companies. Competition Commissioner Back in Brussels, the EC Margrethe Vestager is go- unveiled a corporate taxation ing after corporate tax dodg- “action plan” wish list of re- ers with a vengeance, start- forms in June, including plans ing with Starbucks Corp. to relaunch a proposed com- (SBUX) and Fiat Finance and mon tax base for the 28-nation Trade LTD SA for sweetheart EU, up for public consulta- arrangements with national tion through early next year. tax authorities deemed to be The EU also supports efforts illegal government subsidies. to tackle tax avoidance on a The decisions, announced Oct. global level, like the OECD’s 21, offer a taste—and it’s not Base Erosion Profit Sharing gingerbread latte—of what’s project, endorsed last month ahead for Apple Inc. (AAPL) by G20 finance chiefs. While and Amazon.com Inc. Frenchman Pierre Moscovici (AMZN), and maybe dozens is in charge of EU taxation more that have worked out tax policy, his Danish colleague, arrangements with national Vestager, is doing the competi- governments. tion grunt work. EU legislators “I hope that, with today’s have also weighed in, through decisions, this message will be a special committee that spent heard by member state govern- five hours Nov. 16 publicly ments and companies alike,” grilling companies, including Vestager said. “All companies, Facebook Inc. (FB), Walt Dis- big or small, multinational or competition commissioner margrethe vestager ney Co. (DIS), HSBC Bank plc not, should pay their fair share and eight others about their tax of tax.” practices in Europe. All denied wrongdoing and said they were for As competition experts wait for the full decisions to be pub- greater transparency. Their testimony and written responses will lished, some question whether the EU’s antitrust chief should be feed into a report that Vestager and her team of case handlers are using her competition enforcement powers to influence national sure to read with interest. tax policy. Fiat declined an invitation to appear, and Starbucks was not on “She’s shown many times that she won’t shy away from going the list. If they don’t get their decisions overturned, each may have after big multinational companies, and that she won’t shy away to pay as much as ¤30 million ($32 million) in back taxes. from using European tools at her disposal to help the internal mar- In the Starbucks case, watchdogs took issue with a high royalty ket,” said Natura Gracia, a London-based partner with Linklaters paid by a Netherlands-based, Starbucks-owned coffee-roasting LLP. “I’m not saying that she’s misusing state aid tools in the taxa- unit to a U.K. subsidiary, as per a 2008 arrangement with Dutch tion rulings cases, only that their use is a bit borderline, and that authorities. They also pointed to an inflated price for “green” cof- she is clearly showing she will take her own views of how to use fee beans paid from one Starbucks unit to another which “unduly them.” reduced” the tax base of the Dutch roasting unit. The facts of the The cases come about a year after the “LuxLeaks” revelations case are still somewhat unclear. about hundreds of tax-shelter deals between Luxembourg and “There might be a very good reason why Starbucks should pay multinational companies during Jean-Claude Juncker’s time as a substantial royalty for coffee roasting to another member of the prime minister. As European Commission president, he’s made Starbucks group and independent roasters do not, and this is what the fight against tax evasion and avoidance a priority. the commission needs to explain in its final decision,” said Sjoerd It also continues to be a sensitive issue in Washington, where the U.S. Treasury is seeking to tighten rules on tax inversion deals CONTINUED >

close print back < Index > cover search view 23 the d aily deal Monday November 23 2015 CAPITAL CALLS

< PREVIOUS Fiat has said that it “fundamentally disagrees” with the deci- sion and “that we did not receive any state aid from Luxembourg Douma, a professor of international and EU tax law at Leiden Uni- and we are confident that the matter will be resolved in our favor versity in the Netherlands who also heads the Dutch branch of in due course.” PwC’s EU Direct Tax Group. Experts predict the EC will take a similar line in future deci- The Fiat case centers on a tax-break ruling issued by Luxem- sions. Next up are Amazon’s taxes in Luxembourg and Apple’s bourg in 2012, which the regulator said was based on an “extreme- tax-break arrangement in Ireland (now phasing out its controver- ly complex and artificial methodology” to calculate taxable profits sial “Double Irish” perk over a four-year period). There’s also an that allowed the company to pay tax only on its underestimated in-depth probe into a Belgian tax scheme opened in February. profits. “The first two cases will set a precedent going forward,” said The EC’s analysis showed that taxable profits in Luxembourg Fiona Beattie of King & Wood Mallesons in London. “You can see would have been 20 times higher had the amounts been calculated some of the wider rhetoric about the single market and the desire using market conditions. to ensure, particularly in a recession, that larger companies aren’t Vestager, who inherited both probes from her predecessor exploiting their rights of freedom of establishment in an in appro- Joaquín Almunia, has said while comfort letters issued by tax au- priate manner. The political debate is very important.” thorities are legal as such, that does not hold true when they give On a wider scale, the EC has been looking at tax-ruling prac- companies unfair advantages and have no economic justification. tices of various EU governments since June 2013, extended to all In both probes, the EC used new information request powers member states in December 2014. This past October, EU finance granted by EU governments in July 2013. chiefs gave their unanimous backing to the automatic exchange of Both companies dispute the findings and are planning appeals, information on cross-border tax rulings, welcomed by the EC as a which are also expected from the Dutch and Luxembourg govern- “major step forward” in its fight against aggressive tax planning. ments. With more EC tax-ruling decisions expected soon, experts ad- Starbucks said in a statement that it “shares the concerns ex- vise multinationals to make sure all their arrangements are above pressed by the Netherlands government that there are significant board, even ones already in place. Don’t just assume that because errors in the decision, and we plan to appeal since we followed you get a ruling from [national] tax authorities that you are safe,” the Dutch and OECD rules available to everyone.” It also said it cautioned Linklaters’ Gracia. “All companies should be extra care- has paid an average global effective tax rate of roughly 33%, “well ful when thinking about complex tax structures involving EU above the 18.5% average rate paid by other large U.S. firms.” member states.” n CHRISKWIERAGA

close print back < Index > cover search view 24 the d aily deal Monday November 23 2015 SAFE HARBOR

Wine and the Bordelais experience in China Crash of the Bordeaux craze taught France a harsh lesson in selling to the Chinese market by David Marcus

China is both irresistible and mad- French consciousness only slowly. dening to Western businesses. As The early 2000s were a time of pop- massive as the market is and as much ularity throughout the developed as it’s grown in the last generation, world, and wealthy consumers from its culture and government remain the U.S. and Russia helped drive up opaque to even the most sophisticat- prices for high-end wine. That end- ed companies. Suzanne Mustacich ed abruptly with the financial crisis offers a fascinating case study of the of 2008, and wealthy Chinese were challenges of doing business in China poised to fill the void. in her new book, “Thirsty Dragon: They did so aggressively. Prices of China’s Lust for Bordeaux and the the first growths continued to soar, Threat to the World’s Best Wines.” driven by Chinese demand. Chinese Mustacich, an American who lives in individuals of unimaginable wealth Bordeaux and reports on its wine trade for Wine Spectator, depicts and unclear background started buying up estates in Bordeaux, both the frenetic unpredictability of life in China and the befud- many of whose 8,000 or so producers struggled to make wine dlement of the Bordelais as their clubby world is overrun by people without losing money. Chinese companies entered the wine trade whose language they do not speak and whose motivations the do aggressively and tried to eliminate the byzantine system of mer- not understand. chants who since the 1600s have helped move wine from producer Bordeaux, a city of 240,000 in southern France, is the center to ultimate consumers. of one of Europe’s most commercially sophisticated wine regions. In China, aspiring merchants faked French labels with abandon, Since the 17th century, the city has attracted wave after wave of a practice the French were far too slow to recognize and attempt immigrants who have established themselves as merchants ex- to stop. Mustacich details those half-hearted efforts in one of the porting wine all over Europe and to the U.K. and the U.S. book’s best chapters, where she follows investigator Nick Bartman By European standards, there’s an immense amount of wine as he explores the illegal underbelly of the Chinese economy. for them to sell, and at the high end it’s ranked by a classification The bubble ended as abruptly as it began. In March 2012, Chi- system established in 1855 that helps wealthy customers navigate nese Premier Wen Jiabao promised to clamp down on foreign the often-confusing world of high-end wine. As Mustacich writes, travel, cars and banquets. Within weeks, Chinese started walking “The classification had history, allure and a precise ranking of sta- away from their orders for first growths and other high-end Bor- tus. It was a gift-giver’s dream.” deaux, behavior that angered and confused the Bordelais. For most of the 20th century, China was not an important mar- Jiabao’s anti-corruption campaign has yet to abate, and the ket for Bordeaux. Very few Chinese could afford even cheap wine, Chinese frenzy for Bordeaux has yet to resume. The region’s wine for which even fewer of them had any affinity. But in 1996, Li Peng, exports to China fell by 26% last year to $300 million. then the Communist Premier, criticized the effects of baijiu on But rich Chinese continue to buy property in Bordeaux just as Chinese culture and extolled the health benefits of red wine. The they purchase real estate in the U.S. and Canada, and the Chinese unspoken motivation for his comments may have been to reduce government still wants to become a major wine producer, in part the distillation of rice into baijiu, a high-alcohol spirit, so that more to stabilize the soil in the large desert regions where it plans on of the grain could be used to feed China’s massive population, but planting vineyards. it also had the effect of increasing demand for foreign wine, since The scale of Chinese ambition is staggering; the government Chinese wine was all but impotable. wants to build 1,000 massive estates that will attract tourists, not to Foreign wine meant French wine, and French wine meant Bor- mention allow the politically connected to add to their fortunes by deaux. China’s growing upper class came to see wine as one more contracting to build and manage the properties. The government Western luxury good, like Hermes handbags or Gucci shoes. Wine wants foreign money and expertise to aid in this development, and became part of China’s gift-giving business culture. Chateau Lafite large French producers have warily heeded the call, unable to pass Rothschild, one of the five first-growth wines at the top of the 1855 up the chance to enter a market with 1.3 billion people. Bordeaux classification, became particularly popular in China, But Mustacich’s excellent narrative shows how little the French perhaps because the name is easy to pronounce in Mandarin. have understood that market, recent history that clouds their fu- Bordeaux’s increasing popularity in China impinged on the ture prospects in China. n

close print back < Index > cover search view 25 the d aily deal Monday November 23 2015 MOVERS & SHAKERS

compiled by Baz Hiralal

Sierra Ventures named Jim Doehrman as its first partners: Ari B. Blaut, leveraged finance and acquisi- operating partner. Most recently chief financial offi- tion finance; Heather L. Coleman, executive compen- cer of Xtime, he helped prepare the vehicle service and sation, corporate governance and securities; Scott B. repair software company for an initial public offering Crofton, mergers and acquisitions; Joseph A. Hearn, and led its sale a year ago to Cox Automotive for $325 transactional, regulatory and compensation-related million. matters for financial institutions; Kathleen S. McAr- Before that, as CFO, he led Gracenote through a thur, complex commercial litigation, regulatory en- growth phase leading to the $265 million sale to Sony forcement proceedings and internal investigations; Corp. and Matthew J. Porpora, securities, antitrust, banking, com- Doehrman was also CFO of Octane Software Inc. to Epipha- modities and other complex commercial litigation, as well as in ny Inc., which was sold for $3.2 billion; and led the IPO of IDG regulatory and criminal investigations. Books, the publisher of the iconic “For Dummies” books. Latham & Watkins LLP named a dozen partners: Shagufa Advent International added Andrew Cosslett as an operating R. Hossain and Leakhena Mom, representing private equity partner, focusing on the leisure sector. firms, investment banks and public and private companies in fi- Cosslett is chairman of Fitness First Group, and was CEO nancing and other transactions; Robbie McLaren, mergers and from 2012 until July. acquisitions and PE deals, as well as reorganizations and general He is also chairman of England Rugby 2015, the organizing corporate matters; Farah O’Brien and Giovanni B. Sandicchi, committee for Rugby World Cup 2015 and is an independent di- M&A, joint ventures and other corporate transactions; Chad G. rector of the Rugby Football Union. Rolston, M&A; Adrian Chiodo, cross-border leveraged finance Cosslett began his career at Unilever plc before holding and public-to-private transactions; Douglas H. Burnaford, management positions at Cadbury Schweppes plc, including investment management, structured finance and leveraged fi- as regional president for Europe, the Middle East & Africa and nancings; Jesse K. Sheff, counseling arrangers and traditional CEO of Asia Pacific. and non-traditional financing sources with acquisition and oth- Between 2005 and 2011, Cosslett was CEO of InterConti- er leveraged financings; Helena Potts, complex international nental Hotels Group plc. cross-border restructurings; Adam J. Goldberg, corporate and During that time he was also chairman of Duchy Originals cross-border restructurings and chapter 11 reorganizations; and Ltd. between 2005 and 2008. Rachel K. Bates, complex real estate transactions, with focus on hospitality and private equity matters. Simpson Thacher & Bartlett LLP elected nine partners, effec- tive Jan. 1. King & Spalding LLP named 24 partners: Sajid Ahmed, Amy In New York: David Azarkh, capital markets, securities and Frey and Elizabeth Silbert, international arbitration; Brian corporate governance; litigator Susannah Geltman; Brian Bohnenkamp, FDA and life sciences; Susan Clare, Meredith Gluck, banking, credit and acquisition finance; Jonathan Lind- Redwine and Elizabeth Taber, tort and environmental litiga- abury, derivatives; Sebastian Tiller, mergers and acquisitions tion; Kevin Clark, Shelby Guilbert, Kristen Lynn, Emmett and corporate governance; and Jessica Tuchinsky, banking Murphy and Benjamin Pollock, business litigation; Archie and credit. Fallon, global transactions; Justin King, Robert Leclerc and The London partners will be Carol Daniel, U.S. capital mar- Carrie Ratliff, corporate; Antonio Lewis, intellectual property; kets transactions; Wheatly MacNamara, real estate; Seema Christopher McCoy, Dave Powell and Sven Wortberg, capi- Shah, private funds. tal transactions and real estate; Simon Rahimzada, Moustafa Said and James Stull, Middle East and Islamic finance; and Mi- Gibson, Dunn & Crutcher LLP is naming eight partners for chael Urschel, finance. New Year: Daniel Angel, intellectual property transactions and strategic sourcing; Douglas M. Champion, real estate/land use; Proskauer Rose LLP announced nine new partners: Scott Daniel P. Chung, litigation/white collar; Gabrielle Levin, se- Bowman, tax and estate planning; Guy Brenner, complex liti- curities and labor and employment litigation; John D. W. Par- gation matters; Michael Ellis, public and private mergers and tridge, litigation, FDA and healthcare and white collar matters; acquisitions and securities; Ali Fawaz, executive compensation Heather L. Richardson, healthcare litigation; Benyamin S. and employee benefits; Robin Feiner, initial public offerings, Ross, mergers and acquisitions; and Robert Vincent, intellec- follow-ons and block trades; Stephen Gruberg, debt capital tual property. markets; Russell Hirschhorn, complex ERISA litigation; Vin- cenzo Lucibello, financing transactions; and Catherine Sear, On Jan. 1, six Sullivan & Cromwell LLP attorneys will become tax aspects of private investment fund structuring. n

close print back < Index > cover search view 26 the daily deal monDAY november 23 2015 FEEDBACK

CONTACT THE DAILY DEAL

Let us know what you think of our coverage or just share your views founding Chairman: Bruce Wasserstein on the news of the day. Tell us about problems with links or take issue with something you read here. Just type your comments in the box below and send them directly to The Daily Deal editors. The Daily Deal (ISSN 1545-830X) is published Monday through Friday by The Deal © 2015. COMMENT The Copyright Act of 1976 prohibits the reproduction by photocopy machine or any other means of any portion of this publication except with the permission of the publisher. The Daily Deal is a trademark of The Deal.

CUSTOMER SERVICE INFORMATION Subscriptions: 1-888-257-6082 Advertising & Reprints: 1-212-321-5565 Customer service: 1-888-667-3325, 1-212-313-9200 or [email protected]

ABOUT THE DEAL For more information about The Deal’s products and services, please visit us online at www.thedeal.com and click “About Us”.

NAME (optional) IMPORTANT NOTICE ABOUT YOUR SUBSCRIPTION As stated in our terms and conditions policy, you are granted a nonexclusive, nontransferable, limited license to access and use The Daily Deal. COMPANY/FIRM (optional) Each license ordered includes: (a) the right to electronically display materials to no more than one person at a time; (b) the right to obtain a single printout of materials downloaded. SUBMIT CLEAR

Visit http://www.thedeal.com/terms.html for more information. Your comments will be sent via your e-mail program to The Daily Deal. If you click “submit” while you are offline, the text will be stored in your own outbox until you reconnect to the Internet and activate your e-mail application. Thank you for your interest.

To submit items for Movers & shakers, contact Baz Hiralal: [email protected]

close print back < Index > cover search view 27 the dai ly deal Monday November 23 2015 COMPANY INDEX

Advent International ...... 25 Edgemont Capital Partners LP ...... 21 Olshan Frome Wolosky LLP ...... 10 Aeropostale Inc ...... 4 Endo International plc ...... 20. Omniforce LLC ...... 17 Aker ASA ...... 17 Energy Transfer Partners LP ...... 20. Owens & Minor Inc ...... 13 Albertsons Cos ...... 20. Epiphany Inc ...... 25 Pacific Seafood Group ...... 17 Aldo Group Inc ...... 12 Facebook Inc ...... 22 . Pacific Sunwear of California Inc ...... 4 AlixPartners LLP ...... 6, 19 FactSet Research Systems Inc ...... 21 Parthenon Capital Partners LP ...... 20. Amazon .com Inc ...... 6,. 22 Fiat Finance and Trade LTD SA . . . . .22 . Permira ...... 18 American Apparel Inc ...... 7 Fidelity National Information Pershing Square Capital Management . . . 10 American Eagle Outfitters Inc ...... 6 Services Inc ...... 20. Philadelphia Energy Solutions Inc . . . . . 20. American Seafoods Group LLC ...... 17 Fitness First Group ...... 25 Poseidon Containers Holdings . . . . . 19,. 20 Ancestry .com LLC ...... 19 Five Star Quality Care Inc ...... 12 Proskauer Rose LLP ...... 25 Ancora Merger Arbitrage Fund LP . . . . 18 Fossil Group Inc ...... 11. Quiksilver Inc ...... 7 Apollo Global Management LLC ...... 5 Frederick’s of Hollywood Inc ...... 7 RadioShack Corp ...... 7 Apple Inc ...... 4,. 22 Fresh & Easy LLC ...... 7 Rapid Ratings International ...... 5 A .P . Moller-Maersk A/S ...... 19 Genesco Inc ...... 12 Sagent Pharmaceuticals Inc ...... 13 Approach Resources Inc ...... 12 Gibson, Dunn & Crutcher LLP . . . . . 10,. 25 Salt Creek Capital ...... 21 Aqua Terra Water Management LP . . . . 17 GlassRatner Advisory ScanSource Inc ...... 13 Arcus Hunting ...... 17 & Capital Group LLC ...... 4 Sears Holdings Corp ...... 4 Astec Industries Inc ...... 12 Great Atlantic & Pacific Tea Co ...... 7 Seritage Growth Properties ...... 5 Atwood Oceanics Inc ...... 12 Gulf Island Fabrication Inc ...... 12 Shake Shack Inc ...... 4 LLC ...... 5 Gymboree Corp ...... 4 Shaw Communications Inc ...... 21 Bebe Stores Inc ...... 5 HHgregg Inc ...... 5 Sierra Ventures ...... 25 Berry Plastics Group Inc ...... 20. H Partners Management LLC ...... 9 Silver Lake Partners ...... 20. Blackstone Group LP ...... 20. Haggen Holdings LLC ...... 7 Simpson Thacher & Bartlett LLP . . . . . 25 Bloomberg LP ...... 21 Harris Williams & Co ...... 16 Solic Capital Advisors LLC ...... 4 Blue Harvest LLC ...... 17 High Point Bank Corp ...... 21 Sony Corp ...... 25 BNC Bancorp ...... 21 Home Depot Inc ...... 4 Southcoast Financial Corp ...... 21 Bravo Brio Restaurant Group Inc ...... 12 Hovde Group Inc ...... 21 Spectrum Equity Investors LP ...... 18 Bregal Partners LP ...... 16 HSBC Bank plc ...... 22. Standard General LP ...... 7 BV Investment Partners ...... 21 IDG Books ...... 25 Staples Inc ...... 11. C . Wonder LLC ...... 7 INetU Inc ...... 21 Starboard Value LP ...... 10 Cache Inc ...... 7 Interactive Data Corp ...... 20. Starbucks Corp ...... 22 . Cadbury Schweppes plc ...... 25 Intercontinental Exchange Inc ...... 20. Sullivan & Cromwell LLP ...... 25 Caleres Inc ...... 12 InterContinental Hotels Group plc . . . . .25 SunGard ...... 20. Campbell Soup Co ...... 12 ITT Corp ...... 13 Carlyle Group LP ...... 20. J . Crew Group Inc ...... 4 Swell .com ...... 6 Centre Partners Management LLC . . . . 16 J C. . Penney Co ...... 4 Target Corp ...... 5 Cerberus Capital Management LP . . . . 20. Jacobs Engineering Group Inc ...... 13 Tempur Sealy International Inc ...... 9 Children’s Place Inc ...... 5 Jive Software Inc ...... 13 Third Point LLC ...... 10 City Sports Inc ...... 7 Kelso & Co . LP ...... 19,. 20 Thomson Reuters Corp ...... 21 Claire’s Stores Inc ...... 4 King & Spalding LLP ...... 25 Titan International Inc ...... 13 Cleary Gottleib Steen & Hamilton . . . . . 10 King & Wood Mallesons ...... 23 TJX Cos ...... 4 CMA CGM SA ...... 19 Kirkland’s Inc ...... 13 Toys “R” Us Inc ...... 4 Cofra Holding AG ...... 16 KKR & Co . LP ...... 6 TPG Capital LP ...... 5,. 20 CohnReznick LLP ...... 20. Latham & Watkins LLP ...... 20,. 25 U .S . Community Behavioral ...... 17 Comerica Inc ...... 12 Leonard Green & Partners LP ...... 5 Under Armour Inc ...... 6 Contango Oil & Gas Co ...... 12 Linklaters LLP ...... 22. Unilever plc ...... 25 Cooley LLP ...... 7 LoanDepot Inc ...... 20. United Arab Shipping Co ...... 19 Cornerstone OnDemand Inc ...... 12 Maas Capital Investments BV ...... 19 Urban Outfitters Inc ...... 11, 13 Cosco Container Lines Co ...... 19 Macy’s Inc ...... 4 USA Discounters Ltd ...... 7 Cox Automotive ...... 25 Maersk Inc ...... 19 Versa Capital Management LLC ...... 4 Crestview Partners LP ...... 20. Merion Capital LP ...... 18 Viavi Solutions Inc ...... 10 CSX Corp ...... 12 Micron Technology Inc ...... 13 ViaWest Inc ...... 21 Cubic Corp ...... 12 Misfit Inc ...... 11. Vornado Realty Trust ...... 6 Cypress Energy Partners LP ...... 21 Modine Manufacturing Co ...... 13 Wal-Mart Stores Inc ...... 4 Danaher Corp ...... 10 Monitor Clipper Partners LLC ...... 16 Walt Disney Co ...... 22 . Dave & Buster’s Entertainment Inc . . . . . 20. Moody’s Investors Service Inc ...... 6, 13 Weatherford International plc ...... 13 Dawson Geophysical Co ...... 12 National Oilwell Varco Inc ...... 13 Whole Foods Market Inc ...... 13 Demand Media Inc ...... 12 NEP Group Inc ...... 20. William Blair & Co ...... 10 Denbury Resources Inc ...... 12 Nike Inc ...... 6 WorkWell Medical Group LLC ...... 21 DLA Piper ...... 9 Nordstrom Inc ...... 4 Zim Integrated Shipping Services Ltd . . . .19 Dollar Tree Inc ...... 10 Oak Hill Capital Partners LP . . . . . 20,. 21 Zions Bancorp ...... 13 Drewry Maritime Equity Research . . . . 19 Office Depot Inc ...... 11. Zulily ...... 5

close print back < Index > cover search view