CERBERUS CAPITAL MANAGEMENT

'Cerberus Capital Management LP' is one of the largest private equity investment firms in USA. The firm is based in New York, N.Y., and run by -year-old financier Steve Feinberg. Former Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.

Contents

History

Notable acquisitions

References

External links

History

Founded in 1992, Cerberus (named for the legendary three-headed dog in Greek mythology that guarded the gates of Hades) invests primarily in companies which are near bankruptcy and hopes to make the businesses it acquires profitable. Feinberg has stated to his employees that while the Cerberus name seemed like a good idea at the time, he later regretted naming the company after the mythological dog. ^[1]
The company has been a voracious acquirer of businesses over the past several years and now includes sizable investments in sportswear, paper products, military services, real estate, energy, retail, glassmaking, transportation, and building products. Its holdings amounted to $24 billion in 2006.
On October 19, 2006, John W. Snow, President George W. Bush's second United States Secretary of the Treasury, was named chairman of Cerberus.
Cerberus was recently involved in controversy surrounding its contributions to Republican Congressman Jerry Lewis. MCI, a company owned by Cerberus, had a $1 billion contract to create the Navy/Marine computer network. However, the Defense Appropriations subcommittee released a report critical of MCI after receiving complaints about cost overruns and bad management. In response to this report, the committee had proposed to cut the MCI contract by 10%. In June 2003, Lewis, the head of the Defense Appropriations subcommittee, received over $110,000 in contribution from Cerberus. Shortly thereafter, Lewis decided to preserve full funding for the $1 billion contract. In 2005, Lewis was elected as Chairman of the House Appropriations Committee. He acknowledged that the fundraising efforts of Cerberus "played a very significant role" in winning the post. Before her dismissal, US Attorney Carol Lam began an investigation of Lewis's contributors in 2006.
[1]

Notable acquisitions

★ Pharmaceuticals - In December 2004, the company announced the acquisition of Bayer's plasma products business and renamed it Talecris Biotherapeutics.

★ Paper products - The company acquired MeadWestvaco's paper business for $2.3B in 2005 and renamed it NewPage Corporation. Cerberus also purchased, from Georgia Pacific Corporation, its Distribution Division/Building Products and all of its associated real estate. It renamed this new company BlueLinx, based in Atlanta, Ga.

★ Government Services (Military, Energy, and Food & Drug) - owns IAP Worldwide Services, which bought Johnson Controls' World Services division in February 2005, and Netco Government Services.

★ Real Estate - Through investment affiliate Blackacre Capital, the company has been making direct equity, mezzanine, first mortgage, distressed and special situation investments in all asset types. It also controls Miami Beach, Fla.-based LNR Property, a large real estate development and investment firm through subsidiary Riley Property. Cerberus also controls Kyo-ya, a Japan based group of entities that owns several Starwood managed assets in California, Hawaii and Florida.

★ Retail - Cerberus purchased 655 of the 2,500 Albertson's, Inc., grocery stores, forming Albertsons LLC of Boise, Idaho, in June of 2006. They also own Mervyn's department stores, which was acquired from Target Corp. In June 2007, Cerberus acquired Torex Retail Plc., a retail solutions provider in troubled waters, for approximately 400 million US dollars.^[2]

★ Transportation - Acquired bankrupt ANC Rental, owner of the National and Alamo car rental chains, for $230 million in October 2003 and purchased DaimlerChrysler's 45% share of debis AerFinance, an aircraft leasing business, in May 2005. Complete acquisition of debis AirFinance (later renamed AerCap) was concluded in July 2005. Also acquired North American Bus Industries, Optima Bus Corporation, and Blue Bird Corp. in the bus manufacturing sector. Also owns ACE Aviation Holdings, parent of Air Canada.

★ Construction - Announced on July 23, 2007, Cerberus agreed to acquire United Rentals, Inc., North America's largest equipment rental service. The transaction was valued at $6.6 billion, including the assumption of approximately $2.6 billion in debt obligations.

★ Automotive - Peguform, GDX, and Chrysler.

★ Financial Services - General Motors sold a 51% stake in its GMAC finance unit to an investor group led by Cerberus Capital Management. GM expects to receive $14 billion over the next three years from the sale of General Motors Acceptance Corp. In December 2006, Cerberus acquired the Austrian bank BAWAG P.S.K. for a reported EUR3.2 billion. In April 2007, Cerberus announced it intention to acquire Option One Mortgage Corp from H&R Block for about $1 billion. That acquisition is still pending. In August of 2007, Cerberus announced that it was closing one of their mortgage companies, Aegis Mortgage.

★ Firearms - Acquired Bushmaster Firearms, Inc., from Windham, Maine native Dick Dyke for an undisclosed sum in April 2006. Also purchased Remington Arms in April of 2007.

★ Entertainment - To acquire 6 television stations owned and operated by CBS Corporation, pending FCC approval. As of September 1, 2007, the 6 stations are no longer listed on the CBS Television Station website. ^[3]
Those stations are as follows:
:

'DMA Rank'	'Market'	'Station ... Channel (DT)'	'Network'
35.	Salt Lake City - St. George - Provo - Ogden - Orem	'KUTV 2 (34)' / 'KUSG 12 (9)'	CBS
38.	West Palm Beach - Fort Pierce	'WTVX 34 (50)'	The CW
		'WTCN-CA 43'	MyNetworkTV
		'WWHB-CA 48'	Azteca América
51.	Austin	'KEYE-TV 42 (43)'	CBS
52.	Providence - New Bedford	'WLWC 28 (22)'	The CW

★ Other holdings of the investment group include Formica, Inc., and the Aozora Bank in Japan; U.S. tech firm SSA Global Technologies, and cable operator Galaxy Cable. In July 2007, the company announced that in had reached an agreement to acquire United Rentals.

References

1. http://freep.com/apps/pbcs.dll/article?AID=/20070517/BUSINESS01/705170364
2. Jonathan Cable and Marc Jones. Reuters. "Cerberus buys troubled Torex for 204 mln stg". 20 June 2007
3. http://cbslocal.com/


★ Kelley, Matt. "The Congressman and the hedge fund." ''USA Today''. 19 January 2006.

★ Thornton, Emily. "What's Bigger Than Cisco, Coke, Or McDonald's?" ''Business Week'' October 2005.

★ Stringer, Kortney. "Car Rental Companies are sold." Wall Street Journal. 16 October 2003.

★ "Acquisition of LNR Property Corporation Completed" Business Wire. 3 February 2005.

★ "Hirsch, Jerry. "Albertsons To Be Sold, Divided Into 3." Los Angeles Times. 24 January 2006.

★ Bushmaster Continues to Grow with New Owner

★ "Acquisition of debis AirFinance Completed," press release from AerCap, 4 July 2005.

★ "Cerberus Takes Over Majority Interest in Chrysler Group for $7.4B," press release from DaimlerChrysler AG.

External links

★ Cerberus Capital Management home page