Monday, September 12, 2016

What would Tony Stark do?

Random thought that occurred to me today, amid the shareholder grumbling about Oracle's proposed takeover of Netsuite ...

T. Rowe Price, who is the second largest shareholder in Netsuite behind - ahem - Larry Ellison, says it's not so much the fact that Ellison is reaching into one pocket to pay himself in the other... it's just the price that Oracle is offering.  Maybe.

But your humble blogger can't help but think of the similar drama swirling around Elon Musk's proposal to have Tesla (which he controls) merge with Solar City (ditto).

Both Musk and Ellison had cameos in the movie Iron Man 2.  For those sad people who don't follow the Marvel comics universe, Tony Stark is a self-described "genius, billionaire, playboy, philanthropist" who becomes the superhero Iron Man.  Musk and Ellison have both been compared to Stark over the years, and have laid varying claims to those four descriptions in their public and personal lives.

The fictional Tony Stark took over, and grew, the defense contractor started by his father in World War Two - and designed, built and manufactured all kinds of cool stuff, including of course the Iron Man suits.  Now, I've read a lot of comics over the years, but I don't recall ever seeing a story about Stark International using other people's money to fund deals like these two.  So, the question must be asked: What would Tony do?

Thursday, July 28, 2016

Oracle-Netsuite is actually happening

Wow, we didn't really believe it, but the WSJ is reporting this morning that Oracle is actually buying Netsuite for $9.3 billion, which is a premium of 19% over yesterday's closing price.

Business articles in the Journal don't usually get a lot of comments (unlike the political ones!) ... but almost as soon as the story was posted, a commenter wrote:

As a long-time JD Edwards/Oracle customer, I was so happy with our decision to migrate to NetSuite for a couple of reasons, not the least of which was not having to be an Oracle customer anymore. I guess I'll have to get used to being treated like garbage again by my ERP vendor.

Yep.  Or, you could try the leading commercial open source ERP, and never have to worry about that kind of thing again!

Thursday, June 30, 2016

Epicor back on the block, heavily laden

The WSJ is reporting that Apax Partners has come down with a case of the 5-year-itch, and is going to try again to find a buyer for Epicor.  Longtime Graveyard readers may recall their last attempt resulted in a bout of inspired Poetry from your humble blogger.

It focused on the shocking financial shell games going on in the firm, a theme which returned the following year when their borrowing practices raised eyebrows even at the ratings agencies who saw nothing wrong with the credit default swaps that led to the 2008 meltdown.

Interestingly, the WSJ piece says in 2014, they turned down offers "deemed too low from bidders including CVC Capital Partners ... Some bids were around $3 billion including debt."

Those last two words are pretty darn important.  How much debt would a buyer have to assume, to take this thing off of Apax's troubled-assets sheet?  The Bloomberg story a year ago said they were looking to borrow an additional $2 billion.  What's that money going toward, you might ask.  New product development?  Building out support teams and taking care of their customers?  Err... well, we do know they've paid themselves over $1 billion in dividends since 2012.

They were still losing money when they stopped reporting financials in 2014. Who knows what the income statement looks like today?  But I think we can all be forgiven for expecting a pretty lopsided balance sheet.

So, who wants to buy that?

UPDATE:  Turns out the answer is KKR.  See the comments.

Tuesday, December 01, 2015

IFS taken over by Swedish PE firm

Well, a buyout by Microsoft would have been more fun for us here at the Graveyard, but now we'll never know.  Sweden-based IFS has sold a majority stake to Sweden-based private equity firm EQT Partners.  The deal works out to about 2.7 times TTM revenues of US $330M, and nearly 30x EBIT of $35M.

Friday, June 19, 2015


Yowza.  Those who have followed this blog for a while know that I'm constantly aghast at the brazenness of the financial owners of legacy ERP companies - crafting exotic debt instruments, levering up the companies they acquire (and, in a sense, their customers) ... all the while, finding plenty of ways to pay themselves extravagant dividends.

Well, Bloomberg is reporting that Apax Partners, owners of Epicor, had to go hat in hand to Jefferies Group to "arrange" $2 billion in new borrowings - because two big banks "passed on managing the offering because of concerns it would run afoul of regulatory guidelines against excessive leverage":

The debt sale, along with a spinoff the company is doing at the same time, would push Epicor’s debt to 7.5 times a measure of its earnings, Moody’s Investors Service said in a statement on Monday in which it cut the company’s credit ratings. The leverage is beyond the ratio of 6 times earnings that U.S. banking regulators have said raises concern. Jefferies, a New York-based broker-dealer, falls outside the purview of banking regulators.

That's not all:

Moody’s lowered the credit ratings of Epicor to six levels below investment grade to B3 from B2, citing the “material increase” in leverage and the aggressive financial policies.
S&P changed its outlook on the company’s B rated debt to “negative,” according to a report Monday. The $300 million dividend follows the company’s approximately $380 million payment to Apax in June 2013, the report said.

Wow.  For a somewhat more light-hearted take on this topic, see the collection of Epicor-inspired POE-try here.