8 ms·

A counterpoint: these companies were recently bought by private equity firm KKR Co, the same company that loaded up Toys 'R Us with debt and then liquidated it.

by sp332 7y ago

A counterpoint: these companies were recently bought by private equity firm KKR Co, the same company that loaded up Toys 'R Us with debt and then liquidated it. https://mobile.twitter.com/rhinosoros/status/1214246027127119872 https://mobile.twitter.com/rhinosoros/status/121424602712711... This bankruptcy filling might just be negotiation in the courts to reduce pension obligations.

RobLach 7y ago
Given that milk consumption has only gone down 1% / year over the last 5 years, which isn't dire, I believe it.
- bluntfang 7y ago
  the direness of a 5% consumption loss over 5 years really depends on margins.
  - RobLach 7y ago
    That's definitely true if you've bet on consumption increases and preempted meeting that demand, but milk prices are pretty volatile, jumping +/- $4/cwt throughout the year, which makes me think that COGs are padded enough to give you plenty of time to react. Gut feelings though. For comparison, red meat consumption in the US has fallen 15% in the last 10 years and Tyson stock$ is near it's 5 year high.
satya71 7y ago
Yep. PE loot on solid business.
turk73 7y ago
Now we get the truth.
_bxg1 7y ago
I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?
- echoesofthepast 7y ago
  Tucker Carlson had a good segment on one example of private equity destroying a small American town by bankrupting a business that was by all measures doing well. I haven't seen it anywhere else in mainstream media. https://www.youtube.com/watch?v=IdwH066g5lQ https://www.youtube.com/watch?v=IdwH066g5lQ
  - gunn 7y ago
    Excellent clip thank you.
  - mcv 7y ago
    Hasn't John Oliver done an item about this a few years ago?
    - ubermonkey 7y ago
      Yes.
      - swarnie_ 7y ago
        Can anyone link? As a limey Brit id rather listen to John Oliver then this Tucker chap. (seriously this passes for news?)
        deleted 7y ago
        [deleted]
        ilikehurdles 7y ago
        No, it's considered entertainment.
        alistairSH 7y ago
        No, Tucker Carlson is not news. He's a pundit/commentator who has a talk show. Neither is John Oliver. I'd almost say they're flip sides of the same coin, except Carlson trends WAY right (often right into conspiracy theory land) and Oliver is more center-left.
deleted 7y ago
[deleted]
achow 7y ago
>..these companies were recently bought by private equity firm KKR Co Not KKR. In 1995, Borden was acquired for $2 billion by Kohlberg Kravis Roberts & Co. (KKR), which proceeded to sell off pieces of the company to various buyers. Washington, D.C.-based ACON Dairy Investors, LLC purchased the company in 2017. https://www.bevnet.com/news/2020/borden-dairy-co-files-for-bankruptcy https://www.bevnet.com/news/2020/borden-dairy-co-files-for-b... [Edit] Not sure whether the twitt narrative is correct. From mundane wiki looks like KKR tried to right the sinking ship.. Borden suffered significant losses for the period 1991-1993...In deep financial difficulty, Borden was bought out by Kohlberg Kravis Roberts (KKR) in 1995. KKR increased the pace of divestiture, but was unable to right the company... In 1997, KKR focused the company solely on its pasta and pasta sauces lines. But the new strategy failed as well.. https://en.wikipedia.org/wiki/Borden_(company) https://en.wikipedia.org/wiki/Borden_(company)
- dmix 7y ago
  There have been studies showing private equity does more good for dying businesses than bad. Congress attacked them heavily during the 2008 crisis and they were the first companies called in to congress to answer "tough questions". But it turns out they didn't cause the crisis and that more companies are better off after PE acquisition (ie, they got turned around for the better and created greater economic production had they not existed). Basically most of those companies would be dead without PE as they are often the only solution left, even if it often seems on harsh terms. Private equity firms aren't all just corporate raiders of the 1980s that certain politicians try to spin them as. That's not to say that small towns selling off public services to them is a good idea. Or any other public/private partnership bullshit that is sold as 'free markets' when its the mostly just politicians and their wealthy connections being complete vultures creating things that are nothing like markets. The book "King of Capital" has a really good overview of the history of private equity: https://www.amazon.com/King-Capital-Remarkable-Schwarzman-Blackstone-ebook/dp/B003E8AJXI https://www.amazon.com/King-Capital-Remarkable-Schwarzman-Bl...
  - throwaway5752 7y ago
    They do really awful things, too, and they are rewarded outrageously for it with very little personal risk. Taking a 10x levered loan to pay for a company, transferring the debt to them, and cutting the company loose after paying yourself a dividend that more that covers your loan principal has nothing noble about it at all. I don't want to be acquired by them, but I have much more respect for shops like Thoma Bravo that act as operators and acquire strategically for portfolio companies that places like Bain, for example.

by sp332 7y ago

RobLach 7y ago

Given that milk consumption has only gone down 1% / year over the last 5 years, which isn't dire, I believe it.

bluntfang 7y ago
the direness of a 5% consumption loss over 5 years really depends on margins.
- RobLach 7y ago
  That's definitely true if you've bet on consumption increases and preempted meeting that demand, but milk prices are pretty volatile, jumping +/- $4/cwt throughout the year, which makes me think that COGs are padded enough to give you plenty of time to react. Gut feelings though. For comparison, red meat consumption in the US has fallen 15% in the last 10 years and Tyson stock$ is near it's 5 year high.

satya71 7y ago

Yep. PE loot on solid business.

turk73 7y ago

Now we get the truth.

_bxg1 7y ago

I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?

echoesofthepast 7y ago
Tucker Carlson had a good segment on one example of private equity destroying a small American town by bankrupting a business that was by all measures doing well. I haven't seen it anywhere else in mainstream media. https://www.youtube.com/watch?v=IdwH066g5lQ https://www.youtube.com/watch?v=IdwH066g5lQ
- gunn 7y ago
  Excellent clip thank you.
- mcv 7y ago
  Hasn't John Oliver done an item about this a few years ago?
  - ubermonkey 7y ago
    Yes.
    - swarnie_ 7y ago
      Can anyone link? As a limey Brit id rather listen to John Oliver then this Tucker chap. (seriously this passes for news?)
      - deleted 7y ago
        [deleted]
      - ilikehurdles 7y ago
        No, it's considered entertainment.
      - alistairSH 7y ago
        No, Tucker Carlson is not news. He's a pundit/commentator who has a talk show. Neither is John Oliver. I'd almost say they're flip sides of the same coin, except Carlson trends WAY right (often right into conspiracy theory land) and Oliver is more center-left.

deleted 7y ago

[deleted]

achow 7y ago

>..these companies were recently bought by private equity firm KKR Co Not KKR. In 1995, Borden was acquired for $2 billion by Kohlberg Kravis Roberts & Co. (KKR), which proceeded to sell off pieces of the company to various buyers. Washington, D.C.-based ACON Dairy Investors, LLC purchased the company in 2017. https://www.bevnet.com/news/2020/borden-dairy-co-files-for-bankruptcy https://www.bevnet.com/news/2020/borden-dairy-co-files-for-b... [Edit] Not sure whether the twitt narrative is correct. From mundane wiki looks like KKR tried to right the sinking ship.. Borden suffered significant losses for the period 1991-1993...In deep financial difficulty, Borden was bought out by Kohlberg Kravis Roberts (KKR) in 1995. KKR increased the pace of divestiture, but was unable to right the company... In 1997, KKR focused the company solely on its pasta and pasta sauces lines. But the new strategy failed as well.. https://en.wikipedia.org/wiki/Borden_(company) https://en.wikipedia.org/wiki/Borden_(company)

dmix 7y ago
There have been studies showing private equity does more good for dying businesses than bad. Congress attacked them heavily during the 2008 crisis and they were the first companies called in to congress to answer "tough questions". But it turns out they didn't cause the crisis and that more companies are better off after PE acquisition (ie, they got turned around for the better and created greater economic production had they not existed). Basically most of those companies would be dead without PE as they are often the only solution left, even if it often seems on harsh terms. Private equity firms aren't all just corporate raiders of the 1980s that certain politicians try to spin them as. That's not to say that small towns selling off public services to them is a good idea. Or any other public/private partnership bullshit that is sold as 'free markets' when its the mostly just politicians and their wealthy connections being complete vultures creating things that are nothing like markets. The book "King of Capital" has a really good overview of the history of private equity: https://www.amazon.com/King-Capital-Remarkable-Schwarzman-Blackstone-ebook/dp/B003E8AJXI https://www.amazon.com/King-Capital-Remarkable-Schwarzman-Bl...
- throwaway5752 7y ago
  They do really awful things, too, and they are rewarded outrageously for it with very little personal risk. Taking a 10x levered loan to pay for a company, transferring the debt to them, and cutting the company loose after paying yourself a dividend that more that covers your loan principal has nothing noble about it at all. I don't want to be acquired by them, but I have much more respect for shops like Thoma Bravo that act as operators and acquire strategically for portfolio companies that places like Bain, for example.