SodaStream (SODA) Deal Not Impossible, but Difficult, Says Deutsche Bank Jul 25, 2014 09:04AM

Deutsche Bank maintained a Hold rating on SodaStream International (NASDAQ: SODA) with a price target of $32. Comments follow rumors yesterday of private equity interest. In the view of analyst Bill Schmitz Jr, a deal would be difficult.

"With more company takeout chatter hitting the tape around earnings, which should remain lackluster, we believe a private equity deal, while not impossible, should be difficult," said Schmitz.

"The company’s balance sheet could handle a fair bit more debt based on current operating metrics, but with fundamental outlook uncertain and EBITDA to base a leverage ratio on a moving target, we believe financing could be difficult. Moreover, with the bulk of the company’s manufacturing operations in the West Bank, geopolitical risks also need to be considered. From a tactical view, company could dramatically improve its profitability in a private context by gutting advertising spending and G&A costs to boost operating profit, but at some point sales need to stabilize since cost saves cannot accrue in perpetuity and there needs to be some comfort that the core installed base in the US and Europe is sticky and willing to continue to participate in the strongly mix accretive CO2 canister exchange program. Moreover, the company’s head of Corporate Development and Communications recently left the company to pursue another opportunity, which is curious relative to potential transaction because one would think he would want to stick around for the change of control provisions normally associated with a transaction," continued the analyst.

"So, while the shares have clearly pulled in, making a deal a bit more palpable at these levels, fundamental weakness has driven this decline and any buyer – strategic or financial – likely needs comfort that there is sales and profit support in the business," he concluded.

For an analyst ratings summary and ratings history on SodaStream International click here. For more ratings news on SodaStream International click here.

Shares of SodaStream International closed at $31.63 yesterday.

SodaStream (SODA) May be Taken Private - Bloomberg Jul 24, 2014 11:44AM

(Updated - July 24, 2014 11:44 AM EDT)

SodaStream International (NASDAQ: SODA) is in talks with an investment firm about taking the company private, according to Bloomberg, citing sources. The deal would value the company at $40 per share. The report goes on to say several private equity firms have looked at it as a leveraged buyout.

Blackstone (BX) Will Take Majority Stake in Service King Collision Jul 23, 2014 08:17AM

Service King Collision Repair Centers, today announced a partnership with private equity funds controlled by Blackstone (NYSE: BX) to recapitalize one of the largest independent U.S. chains of automobile body repair centers. The Carlyle Group (Nasdaq: CG) together with its co-investors and the management and employees of Service King will retain a significant minority stake in the Company. Terms of the transaction, which is expected to close during the third quarter, were not disclosed.

Established in 1976 and headquartered in Dallas, Texas, Service King now operates 177 locations across 20 states, having grown under Carlyle’s ownership from 47 locations in Texas.

“We are grateful for our partnership with the skilled and knowledgeable teams at the Carlyle U.S. Equity Opportunity Fund and Carlyle Strategic Partners,” said Chris Abraham, Service King’s Chief Executive Officer. “Service King’s recent growth is an example of Carlyle’s long-term approach to value creation and we look forward to working with our new partners at Blackstone to continue executing on our strategy.”

Shary Moalemzadeh, Carlyle Managing Director and Co-Head of Carlyle Strategic Partners, said, “In a fragmented industry, Service King has grown tremendously and Carlyle is proud to have supported their achievements. We will continue to support Service King’s business and growth strategy and we are pleased with the successes we have achieved together thus far during Carlyle’s investment period.”

David Stonehill, Carlyle Managing Director and member of the Carlyle U.S. Equity Opportunity investment team said, “We are delighted to have partnered with management and employee-owners in expanding the business over the past two years and look forward to continuing management’s expansion plans for the business. Service King’s commitment to its customers and focus on high quality service in collision repair initially attracted us to this investment, and we welcome Blackstone’s partnership in further strengthening the brand and business.”

Peter Wallace, Blackstone Senior Managing Director, said, “We are excited to invest in Service King – an industry leader with an unparalleled commitment to its customers and focus on high quality service. We look forward to partnering with management, the Company’s employee-owners, and Carlyle to support Service King’s continued growth and expansion.”

Equity for Carlyle’s August 2012 investment in Service King came from the $1.1 billion Carlyle U.S. Equity Opportunity Fund and the$700 million Carlyle Strategic Partners Fund III L.P.

Carlyle’s U.S. Equity Opportunity Fund builds on the firm’s two decades of investing in the mid-market buyout space. Recent deals include: Galaxy Brands, a consumer brand acquisition and development platform and ECi Software Solutions, a provider of enterprise resource planning and business applications. Carlyle Strategic Partners specializes in investments in companies that are operationally sound yet have near-term financial needs. Recent deals include: Klenk Holz AG, a European company in the wood-product industry, and Waddington North America, a manufacturer of premium plastic foodservice disposables.

UPDATE: Fred's (FRED) Trading Halted; Said in Talks with Sycamore Partners Jul 17, 2014 12:29PM

(Updated - July 17, 2014 12:29 PM EDT)

Fred's (NASDAQ: FRED) trading halted for volatility. Shares are up 10.8 percent.

UPDATE - Bloomberg reports that private equity firms Sycamore Partners is in early talks to buy Fred's.

Deutsche Bank Read-Through on International Game Tech (IGT) (BYI) (SGMS) Jul 16, 2014 11:30AM

GTECH's deal to acquire International Game Tech (NYSE: IGT) is good for the industry, said Deutsche Bank analyst Carlo Santarelli, but it might not a be good sign regarding potential interest from private equity. Bally Technologies (NYSE: BYI) and Scientific Games (NASDAQ: SGMS) were mentioned in the report.

"In general, we see the on the surface multiples, pre synergies, as a positive for the industry given, on a FCF basis, it implies a value for BYI (Hold; $60.18) of $72 and SGMS (Nasdaq: SGMS) (Sell;$9.93) of $12. On an EBITDA basis, the multiple values BYI at ~$83 and SGMS at $24 on our F15e numbers, respectively. That being said, given the strategic nature of the acquisition and the belief that more than $280 mm in EBITDA synergies exist, the buyer purchase multiple is actually closer to 6.5x forward EBITDA and is in line with our SGMS target multiple, which values the equity at $7, and a discount to the current BYI trading multiple. At a similar multiple, the transaction values BYI at ~$50 per share."

"While we expect the perceived industry consolidation story to be well received and shares of BYI and SGMS to respond favorably to this transaction, we believe it is important to remember a few things: 1) the space has rallied since this transaction was announced, 2) we have yet to see an actual shrinkage of the pure slot equipment competitive landscape (BYI/SHFL, SGMS/WMS, and now GTECH/IGT), and 3) we think this transaction shows just how difficult it is for private equity to get involved in this sector. To expand on the last point, we would note that of the equipment suppliers, IGT, in our view, was the most logical PE takeout candidate given its solid balance sheet, which could easily absorb an incremental 1-2 turns of leverage, its strong free cash flow, its industry leading install base, and its overall scope. With PE, at least for now, not willing to eclipse an offer of $18.25, and the multiples it implies, we find it somewhat difficult for investors to continue to view PE as a potential bidder for assets in this sub sector within gaming," he added.

For an analyst ratings summary and ratings history on International Game Tech click here. For more ratings news on International Game Tech click here.

Shares of International Game Tech closed at $15.50 yesterday.

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