Archive for July 18th, 2007

KKR, Goldman Looking at Macy’s

by David Bodamer July 18th, 2007

Previously there had been speculation that Eddie Lampert was looking at Macy’s. Now it seems another potential bidder has emerged–private equity giant KKR is said to be looking to make a $24 billion bid along with Goldman Sachs.

Women’s Wear Daily broke the story.

Sources said KKR partnered with Goldman Sachs on an offer for the $27 billion retailer valued at $52 a share, or about $24 billion, which may or may not exclude Macy’s debt.

Private equity sources said an agreement in principle could be within days of getting completed. The financial sources said principals involved had expected a deal to be signed last weekend, but others indicated there were details that needed to be ironed out. Sources also believe that the parties are trying to get a deal done before Monday, the scheduled date for a series of investor meetings planned by Macy’s management.

A value for the potential deal could not be ascertained due to uncertainty over how much debt Macy’s currently has on its books. According to private equity sources, KKR is keen on inking a deal as a way to help sell shares of its planned IPO later this year. Should a deal come to fruition, it is believed KKR would keep current Macy’s management in place, including chairman and chief executive officer Terry Lundgren, the architect of the current configuration of the department store giant.

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Wal-Mart Testing Bible Action Figures

by David Bodamer July 18th, 2007

Wal-Mart said Tuesday it will test sales in some stores of biblical action figures whose makers say they are aimed at Christian parents who prefer their children play with Samson, David or Noah rather than with a comic book character or Bratz doll.

Wal-Mart Stores Inc. spokeswoman Melissa O’Brien said the toys made by One2believe, a Valencia, Calif., company, will be offered in 425 of Wal-Mart’s 3,376 discount stores and Super centers.

One2believe Chief Executive David Socha said his products were part of a “battle for the toy box” with dolls and figures that he said carry negative messages.

“If you’re very religious, it’s a battle for your children’s minds and what they’re playing with and pretending. There are remakes out there of Satan and evil things,” Socha said.

Link.

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Market Cycles and Income-Producing Real Estate

by David Bodamer July 18th, 2007

A little study from Net Gain Real Estate looks at broader economic cycles as a guide for investors looking at commercial property.

An investor needs three pieces of information for developing a reasonable investment strategy and the chart provides this information: (1) The average length of time from peak-to-peak for the prior twenty-one cycles is 58 months. (2) The current business peak was reached in March 2001. (3) We are presently 68 months into the current cycle. What have we concluded so far?

* Given the country’s current economic model, the economy is cyclical.
* Bull markets don’t last forever.
* Recessions don’t last forever.
* The average cycle for the past 100 years from peak-to-peak is 58 months.
* The peak for the current cycle was March 2001.
* We are 68 months into the current cycle.

This information gives an investor the next possible peak and the length of time needed for the subsequent peak. The average is 58 months. The shortest peak-to-peak business cycle is 17 months and the longest is 128 months. Given those conclusions, the real estate investor has to follow a sound investment strategy which includes techniques that insure staying power.

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