Private Equity firms still have the appetite for taking over public companies

This week has seen the announcement that ADT Corporation, the security systems firm, will be acquired by Apollo Global Management for a reported USD 11.9bn, including the assumption of USD 5bn in debt. This will see ADT delist from the New York Stock Exchange, which it listed on in September 2012 as a result of it being spun off from its then parent company, Tyco International. The deal is the largest buy out announced so far in 2016 by some way, and is also the first “mega deal” (i.e. greater than USD 10bn) involving a PE firm taking a listed company private. As has been well reported, private equity “Dry Powder” is at record levels and PE firms globally are looking for ways to put their substantial reserves of committed funds to good use. 2015 saw four “mega deals” in which the target company was a listed entity, subsequently taken private by its PE acquiror. This was the highest number recorded since 2007, when there were nine of these deals totalling over USD 232bn. High profile public companies taken private by PE in 2015 included EMC Corporation, Kraft Foods, Cablevision Systems (awaiting completion) and Keurig Green Mountain.

Given that “Dry powder” levels are calculated to be at over USD 110 trillion, I am sure we can expect to see more of these types of deals being announced, despite the ongoing jitters around the global economy.