12 ms·
Toshiba picks Bain Capital as preferred memory unit buyer
- nerpderp83 9y agoI don't yet understand.
- tryingagainbro 9y agoTheir MO: Buy it with debt. Charge the company for the debt and huge management fees which will be paid with more debt. Take it public after milking it to the max, so you can make even more money in the IPO. Chapter 11 is next http://www.businessinsider.com/brick-and-mortar-retail-private-equity-debt-financing-lbo-2017-8 http://www.businessinsider.com/brick-and-mortar-retail-priva...
- rblatz 9y agoI’ve heard that before,but why would banks/people keep loaning them money? And I’d expect the market to learn to avoid their IPOs and stocks.
- guiriduro 9y agoBecause if they win the debt gets paid, and if the market crashes the taxpayer pays. Win:win.
- sanxiyn 9y agoUnlikely, since consortium includes Hynix. Hynix is #4 flash memory producer, Toshiba is #2. Hynix certainly has interest in actual business.
- baybal2 9y agoThat's the thing. Bain will be in conflict with those two. Bain here is for eighties style LBO game, as if it not went out of style.
- petra 9y agoWhy do public markets invest in such crap ?
- baybal2 9y agoWhy Americans invest in public stock markets full of crap?
- perl4ever 9y agoWhy do you characterize investors in public stock markets as "Americans"? I don't think American capital is the majority of the world any more, if it ever was.
- baybal2 9y agoRegular Americans certainly lead the world for the amount of money of ordinary people poured into the stock market
- cat199 9y agoBut yet, >20% of US stocks are owned by foreigners.. and I would wager these are majority institutional investors.. http://money.cnn.com/2015/10/01/investing/foreign-investors-buy-us-stocks-bonds/index.html http://money.cnn.com/2015/10/01/investing/foreign-investors-... besides, most average people who invest - US and foreign alike - buy mutual funds and have no idea what is in their portfolio.. but go ahead with your logical fallacy self - you are certainly making a stronger case for the americans being the dumb ones..
- baybal2 9y ago>but go ahead with your logical fallacy self - you are certainly making a stronger case for the americans being the dumb ones.. Hmmm >most average people who invest - US and foreign alike - buy mutual funds and have no idea what is in their portfolio.. I put this to doubt. People who invest in US and in the remaining world do come from rather different socioeconomic classes. US is probably one of the few countries where an average Joe ever knows what mutual funds are.
- whatok 9y agoOut of all the businesses Bain Capital's private equity arm has listed in the link below, how many of them follow the template you've described? http://www.baincapitalprivateequity.com/investments http://www.baincapitalprivateequity.com/investments
- chrisgd 9y agoTo be fair, I think there would be some survivor bias. They aren't going to list all their failures
- whatok 9y agoThe original poster seems to be able to forecast how these companies are going to do. It's arguably harder to do that when a deal is just announced so I'd imagine it's easier with this list of businesses that they've already closed on.
- ensignavenger 9y agoArguably, Toy R Us... it looks like Bain and its partners put down about 20% of their own money towards the purchase. However, there has been no IPO since that purchase, and they will likely lose most if not all of that investment, so I don't think even that fits the pattern.
- kolbe 9y agoI don't think so. This seems like one of the very few deals that Bain does that doesn't fit that mold.
- jfoutz 9y agoSounds like hiring a javascript ui developer to write real time embedded assembly. I mean, smart people can accomplish a lot, but why would you do that?
- KGIII 9y agoOne of the reasons I hate being introduced as Dr. KGIII is that I will, almost inevitably in certain groups of people, get asked medical questions. I'm a mathematician, not an MD. When I explain this, I will frequently get responses like, "Well, you're obviously smart. What's your opinion?" Again, with things like medical questions. Why this is, I do not know. But, it happens with great regularity - to the point where I actively tell people that I don't want to be introduced as Dr. KGIII. They seem to think that I have expert knowledge in all things. Trust me, I don't.
- Spooky23 9y agoNo. This lets them extract more dollars from the technology industry, as memory is constrained and getting more costly. They'll constrain product supply more, then spinoff before competitive capacity comes online.
- gourou 9y agoThis seemed in the pocket for Western Digital and Foxconn, I sure didn't expect them to choose Apple and Dell.
- ringaroundthetx 9y ago"Think of it like The Toys-R-Us of DRAM" I would have loved to be in that board meeting
- ehnto 9y agoConsidering Toys-R-Us has gone bankrupt, perhaps not the most prosperous analogy either!
- eli 9y agoPretty sure Bain Capital owns a controlling stake in Toys-R-Us
- justin66 9y agoLoading down one of their companies with debt and then having it file for bankruptcy is a strategy they've used in the past. I wonder if that's what happened here.
- cratermoon 9y agoThat's pretty much Bain's modus operandi for all their holdings.
- JumpCrisscross 9y ago> Loading down one of their companies with debt and then having it file for bankruptcy is a strategy they've used in the past Bain will lose almost all its money in Toys ‘R’ Us. It has written its equity down to zero, didn’t really take any dividends along the way, and itself holds the most junior tranches of debt.
- remline 9y agoThen other holdings of Bain sold "Toys R Us" goods and services and were perhaps sold after a good quarter?
- 9y ago
- crunkykd 9y agoStrip & Flip Bain loads their acquisitions up with debt to pay themselves off, and then runs for the hills. Like with Toys-R-Us now going bankrupt. Recall Mitt Romney was CEO of Bain. This is the GOP business modus operandi.
- gumby 9y agoI don't understand how the LBO companies like Bain still get away with it. I would have thought that the lenders would have gotten wise to it and stopped lending. After all they lose their principal in the almost inevitable bankruptcy.
- xenadu02 9y agoNormally I would agree but in this case Dell and Apple appear to be the ultimate backers. I assume Bain was brought in to lead the financing aspects. (Disclosure: I have zero inside knowledge of this deal)
- wtallis 9y agoBain has been in the bidding process pretty much from the very start, while Apple and Dell only started getting mentioned as part of the consortium recently.
- xadhominemx 9y agoIf something about an large, established industry you don't know all that well seems bizarre and counter intuitive and you think you know better, a good first step is to reexamine your assumptions and seek real data. In this case, you should look into aggregate losses in first and second lien lending to PE-sponsored LBOs over the past couple cycles. It's almost certainly a lot lower than you think.
- downrightmike 9y agoGreat news for all the other chip makers.