Private Equity

Three days after a private equity firm bought the San Diego Union-Tribune in mid-2009, it did what private equity firms frequently do: It cut a lot of jobs. The cost savings from the 192 layoffs announced that day, and 150 or so others over the next year, helped Beverly Hills-based Platinum Equity more than triple its money when it sold the newspaper in November. It wasn't nearly so rosy for people thrown out of work in a punishing economy. That's life in the private equity world, where layoffs are part of the playbook that elite investment firms use to squeeze cash out of struggling companies.

Twinkies, the cult favorite snack brand orphaned by its liquidating parent company, Hostess Brands Inc., may have a new home. The popular product, along with Hostess brands such as CupCakes, Ho Hos and Ding Dongs, is being sold to private equity firms Apollo Global Management and C. Dean Metropoulos & Co. for $410 million. The companies submitted the only qualified bid by the deadline set by the Bankruptcy Court overseeing Hostess' case. The purchase, which includes five bakeries and certain equipment, is headed to court March 19 for final approval.

Pension funds and other big investors have been warned to scale back their return expectations in the private-equity buyout business. But they still committed $2.75 billion to a new leveraged buyout fund launched by Beverly Hills-based Platinum Equity. That was $1.25 billion more than Platinum CEO Tom Gores' target, he said -- and $2.05 billion more than went into his first such fund, in 2004. The private-equity business isn't what it used to be, but a lot of institutional investors may figure they won't do better elsewhere, given the sorry state of financial markets.

Brooding-teen retailer Hot Topic Inc. is about to become family with Talbots Inc., an apparel chain beloved by moms. Hot Topic, a mall staple based in City of Industry, is being sold for $600 million to Sycamore Partners, the private equity firm that this summer bought Talbots for $391 million. The $14-per-share cash price represents a 30% premium over Hot Topic's closing stock price Wednesday and was unanimously approved by the retailer's board, the company said Thursday. But the deal still requires shareholder and regulatory approval.

Two months after former Best Buy Co. Chairman Richard Schulze exited the board amid scandal, he offered to buy the struggling electronics giant for as much as $8.84 billion, a deal that would make it the largest buyout ever of a U.S. retailer. But the offer of $24 to $26 a share was met with considerable skepticism Monday among analysts and investors, who nudged the stock price up $2.35, or 13.3%, to $19.99 but nowhere close to the proposed takeover offer price. Standard & Poor's cut Best Buy's credit rating to junk since such a buyout would add debt to its books.

Re "Carl's Jr. owner CKE delays IPO," Business, Aug. 11 The private equity firm Apollo Management, which bought Carl's Jr. operator CKE Inc. two years ago, did what many such firms do: use these companies as credit cards and load them with debt. According to your article, Apollo paid itself $190 million in dividends from CKE last year while cutting costs in part by stopping matching contributions to employees' 401(k) retirement accounts. Do you think the $190 million would have helped the CKE employees more than the executives at Apollo?

WASHINGTON — Carlyle Group is planning to raise $100 million through an initial public offering. The private equity firm is going public even as fears about the global economy have punished stock markets. Many companies canceled their IPOs in August. Private equity firms buy companies and later try to sell them for more money. They often borrow money to fund their purchases. The business slumped during the recession. Other large private equity companies have gone public recently.

Twinkies, the cult favorite snack brand orphaned by its liquidating parent company, Hostess Brands Inc., may have a new home. The popular product, along with Hostess brands such as CupCakes, Ho Hos and Ding Dongs, is being sold to private equity firms Apollo Global Management and C. Dean Metropoulos & Co. for $410 million. The companies submitted the only qualified bid by the deadline set by the Bankruptcy Court overseeing Hostess' case. The purchase, which includes five bakeries and certain equipment, is headed to court March 19 for final approval.

Brooding-teen retailer Hot Topic Inc. is about to become family with Talbots Inc., an apparel chain beloved by moms. Hot Topic, a mall staple based in City of Industry, is being sold for $600 million to Sycamore Partners, the private equity firm that this summer bought Talbots for $391 million. The $14-per-share cash price represents a 30% premium over Hot Topic's closing stock price Wednesday and was unanimously approved by the retailer's board, the company said Thursday. But the deal still requires shareholder and regulatory approval.

Escalating criticism by political foes of Republican presidential candidate Mitt Romney for his work at Bain Capital is unfairly giving private equity a bad name, an industry trade association said Monday. "There is a lot of misinformation being spread, purely for political purposes and on both sides of the aisle, as it pertains to private equity, said Steve Judge, interim head of the Private Equity Growth Capital Council. "While the business model has evolved over time, the fact of the matter is private equity provides capital and operational expertise to companies that are often underperforming or on the brink of failure.

Retailers are pulling back on sales of assault weapons and investors are abandoning gun makers' stocks as the nation's grief focuses on the funerals of the 20 children and six adults killed in the Sandy Hook Elementary School rampage in Newtown, Conn. Calling the deadly assault "tragic and devastating," private equity firm Cerberus Capital Management said Tuesday that it will sell its 95% stake in Freedom Group Inc., which makes the Bushmaster AR-15 rifle that police said was used in the attack.

Struggling Best Buy Co., hoping that the Christmas season will boost its fortunes, agreed Friday to give founder and former chairman Richard Schulze more time to make a takeover bid for the electronics chain. The announcement came amid a two-day burst of trading that ended about where it started. The stock went up nearly 16% to $14.12 on Thursday with word of an imminent bid from Schulze, only to be followed Friday with a drop of $2.07, or 14.7%, to $12.05 with news of the delay.

In a swift overhaul, top officials of troubled teen clothier Wet Seal Inc. - including the chairman - were ousted and replaced by board members handpicked by an activist shareholder that directed the coup. The Foothill Ranch retailer, which operates about 550 mall-based stores under the Wet Seal and Arden B. brands, has been under attack for months by its third largest shareholder, New York City private equity firm Clinton Group. "The company now has a newly formed board where the majority have specialty retail experience," Greg Taxin, managing director of Clinton Group, said in an interview.

The surprise announcement that billionaire Philip Anschutz is putting his sports and entertainment empire up for sale sent potential buyers scrambling to launch bids that insiders say could reach $7 billion or more. The big question on everyone's mind: Who can pony up enough cash to buy such marquee properties as Staples Center, L.A. Live and the Los Angeles Kings? A likely scenario is a group of investors similar to the consortium that bought the Dodgers - deep-pocketed private equity firms combined with sports and entertainment experts and a celebrity frontman.

For all but a few years since 1922, Congress has taxed capital gains at a lower rate than wages in the hope of encouraging people to invest more of their income. The preferential rate has also encouraged some Wall Street executives to structure their pay so that the Internal Revenue Service treats it like capital gains, not salary. Now New York Atty. Gen. Eric Schneiderman is exploring whether one of those maneuvers - used typically by private-equity firms - amounts to tax fraud.

After the coffee. Before figuring out whether if I act like Charlie Sheen I can get his job security. The Skinny: FX gave an order for 90 more episodes of Charlie Sheen's new sitcom "Anger Management. " That's not a typo. Thursday's headlines include some big executive changes at Nickelodeon and Fox, and Dick Clark Productions may have a buyer. Otherwise, it is pretty slow as most of Hollywood is on vacation this week. Daily Dose: Over the last few months, ABC, NBCand Fox have all gotten new program planning chiefs.

Every day, it seems, private equity investment firms are announcing new and larger funds. Blackstone Group said last week it would raise $11 billion from pension funds and other investors to put capital to work in a variety of industrial companies. If it gets the money, the 20-year-old firm founded by onetime Commerce Secretary Peter G. Peterson would top Goldman, Sachs & Co., which raised $8.

It had to be done Re "How far is too far on Iran?," Editorial, Jan. 12 The editorial regarding the car-bomb killing of an Iranian nuclear scientist comes across as rather sanctimonious. All but assuming that Israel's hand was at play, the editorial condemns the action as somehow unfitting. The Iranian regime has said Israel should be destroyed. Such a move by Iran could only be accomplished through a nuclear attack on Israel, which probably motivates Iran's unrelenting effort to develop such weapons.

Fresh from spending over $2 billion to become majority owner of the Los Angeles Dodgers, Guggenheim Partners now appears to be the leading candidate to land Dick Clark Productions -- for a price tag of close to $400 million, people close to the situation said. The $385 million Guggenheim would shell out for DCP is more than double what current owner Red Zone Capital Management, the private equity firm controlled by Washington Redskins owner Dan Snyder, paid for the TV production company five years ago. A formal agreement could be announced as early as next week.

Private equity firm Clayton, Dubilier & Rice is buying David's Bridal Inc. in a deal that values the private company at about $1.05 billion. Los Angeles private equity firm Leonard Green & Partners, which bought the retailer in 2006, will remain a minority partner in the company. David's Bridal produces and sells bridal and special-occasion apparel and accessories through a network of more than 300 stores in North America. Paul Pressler, a Clayton, Dubilier & Rice operating partner and a former Gap Inc. chief executive, will become the company's chairman.