stunsworth Posted October 19, 2011 Share #21 Posted October 19, 2011 Advertisement (gone after registration) http://www.l-camera-forum.com/leica-forum/customer-forum/205686-blackstone.html Perhaps a mod can merge the threads? Link to post Share on other sites More sharing options...
Advertisement Posted October 19, 2011 Posted October 19, 2011 Hi stunsworth, Take a look here Blackstone. I'm sure you'll find what you were looking for!
sandymc Posted October 19, 2011 Share #22 Posted October 19, 2011 I've had dealing with some of the folks at Blackstone as well as some of their competitors. I'd view their involvement as a positive, in the sense that if you want or need a PE company involved, Blackstone have a relatively long time horizon compared to some of their peers. So they're unlikely to demand a way to sell their shares in the very near term. Having said that though, like any other PE firm, they will be wanting a clear route to getting their money back (plus some!) over the medium term. Sandy Link to post Share on other sites More sharing options...
adan Posted October 19, 2011 Share #23 Posted October 19, 2011 Lots of ways to read this: Dr. K simply wants to finally get back some of his investment, now that Leica is profitable. Dr. K wants a strong cash position for the company in the event Leica has to buy Kodak's sensor division - or some other sensor source - without the strict repayment schedule a loan would require. Or alternatively, Dr. K wants to cash out some ownership of Leica in order to acquire a sensor source as a separate holding for ACM (thus avoiding the conflicts and complications of "Leica" themselves providing sensors to other camera makers). (Or as mentioned, cash for expansion of production) Blackstone does many things: they buy companies for themselves, they manage funds that buy things with "other people's money", they advise investors on buying things, and they advise on restructurings. For the moment I take this as mildly positive - someone other than Dr. K thinks Leica is a good investment. Other than that, it is basically a transfer of part-ownership from one investment group to another. Link to post Share on other sites More sharing options...
stunsworth Posted October 19, 2011 Share #24 Posted October 19, 2011 At least he didn't get the money from those reptiles on "Dragons' Den". Link to post Share on other sites More sharing options...
hector_jorge Posted October 19, 2011 Share #25 Posted October 19, 2011 Profits up, quality down. At the end, and if it is the way, Leica down. Link to post Share on other sites More sharing options...
roguewave Posted October 19, 2011 Share #26 Posted October 19, 2011 Simply put, Blackstone is the largest company of it's kind. It manages more assets than anyone else on the planet. Leica made a good business choice. Link to post Share on other sites More sharing options...
Ecaton Posted October 19, 2011 Share #27 Posted October 19, 2011 Advertisement (gone after registration) Lots of ways to read this: Dr. K simply wants to finally get back some of his investment, now that Leica is profitable. Dr. K wants a strong cash position for the company in the event Leica has to buy Kodak's sensor division - or some other sensor source - without the strict repayment schedule a loan would require. Or alternatively, Dr. K wants to cash out some ownership of Leica in order to acquire a sensor source as a separate holding for ACM (thus avoiding the conflicts and complications of "Leica" themselves providing sensors to other camera makers). (Or as mentioned, cash for expansion of production) Blackstone does many things: they buy companies for themselves, they manage funds that buy things with "other people's money", they advise investors on buying things, and they advise on restructurings. For the moment I take this as mildly positive - someone other than Dr. K thinks Leica is a good investment. Other than that, it is basically a transfer of part-ownership from one investment group to another. I agree with your summary, except for the thought of Leica having more funds for expansion at hand. ACM will sell Leica shares for cash to a Blackstone controlled German investment company. Leica itself does not receive any cash as a result of the transaction at shareholder level. Of course, with Blackstone as strategic investor, Leica's possibilities to raise funding for business expansion will vastly improve. Link to post Share on other sites More sharing options...
mmradman Posted October 19, 2011 Share #28 Posted October 19, 2011 As long as Blackstone does not set up management team staffed by KODAK management stars and no diversification into printers etc there is a chance of keeping status quo, otherwise change is always good way to either survive or fail. Link to post Share on other sites More sharing options...
rosuna Posted October 19, 2011 Share #29 Posted October 19, 2011 Leica does not need to buy the sensor division from Kodak. Leica might build an internal division for sensor technology, and use suppliers for the manufacture, as many other companies do, even Kodak (they signed an agreement with IBM for manufacturing years ago). If Leica needs, say, 100 million euros for diverse investment projects (the new factory, the M10, the new mirrorless, etc.), Kauffmann, as the only owner, would face two alternatives: a loan, or new funds brought by him to the company (increasing the societal capital what only Kauffman owns). Now, the new funds would come from Kauffman (56%) and Blackstone (44%). The banking system in Europe is almost collapsed. Moreover, in selling that 44%, Kauffman would have recovered all the initial investment he did. Even if Leica is very profitable in the future, the short term investments needed may be too much for Kauffman alone. Link to post Share on other sites More sharing options...
adan Posted October 19, 2011 Share #30 Posted October 19, 2011 Of course, with Blackstone as strategic investor, Leica's possibilities to raise funding for business expansion will vastly improve. Thanks for the correction (pre-coffee post ). Yes, of course, Leica per se does not get more money directly from this deal. The money goes to Dr. K and ACM. As you and Ruben say, it does mean that future additional investment, if required (and agreed upon as prudent and useful), will come from both Blackstone and ACM, meaning Dr. K/ACM won't have to shoulder the whole burden. Link to post Share on other sites More sharing options...
andy.we Posted October 19, 2011 Share #31 Posted October 19, 2011 This can not mean anything good for Leica. Very bad news. Link to post Share on other sites More sharing options...
StephenPatterson Posted October 19, 2011 Share #32 Posted October 19, 2011 The press release is interesting, as it states the sale was made to help Leica enter new markets, specifically in Asia, Latin America and the Middle East, as well as "further developing the brand and it's products". Let's examine that for a moment. First, the transaction. Even though no financial details were announced this was not a "fire sale", and the price would be at a premium. Whatever the number it is guaranteed that selling 44% of Leica Camera would bring in hundreds of millions of dollars. Leica already has significant coverage throughout Asia. China, Japan, South Korea and Singapore all have Leica Factory stores (Hong Kong has three!!!), in addition to numerous dealers. Latin America also has a Leica Factory store in Brazil, although dealer coverage could be better. Likewise in the Middle East there are dealers in Israel, UAE, Dubai, Pakistan and I'm sure others I am missing. You don't need that kind of cash to expand the existing brand and sales territory. Yes, some of the money will undoubtedly be used for R&D, but even there Leica already has significant resources. No, that much money is needed for just one thing...acquisition. Leica is going to buy the sensor division from Kodak. Link to post Share on other sites More sharing options...
luigi bertolotti Posted October 19, 2011 Share #33 Posted October 19, 2011 Thanks for the correction (pre-coffee post ). Yes, of course, Leica per se does not get more money directly from this deal. The money goes to Dr. K and ACM. As you and Ruben say, it does mean that future additional investment, if required (and agreed upon as prudent and useful), will come from both Blackstone and ACM, meaning Dr. K/ACM won't have to shoulder the whole burden. Agree me too with this view... adventuring in a difficult business like the acquiring of Kodak sensor would be too risky and probably not consistent with Blackstone's expectations in term of return, providing a financial partnership which doesn't leave ACM "alone" in front of investiments which could anyway involve medium-terms agreements with some big player (I think that on sensors they will have anyway to deal with "someone else") can be a positive combination : without being a prophete () one can also speculate that the timing that Blackstone plots for its return could indeed occur in a time in which stock markets have recovered from this terrible period... Of course, there can be also the NO-NO-BLACK-SHARKLIKE view.... : Dr.Kaufman has recovered his initial investiment, Blackstone milks Leica showing well tuned quarterly results, in due time milks a stock market that is still populated by gray actors... and the Company is left alone in no one's hands... hopingfully, won't be so.. Link to post Share on other sites More sharing options...
ho_co Posted October 19, 2011 Share #34 Posted October 19, 2011 ... China, Japan, South Korea and Singapore all have Leica Factory stores (Hong Kong has three!!!), in addition to numerous dealers. Latin America also has a Leica Factory store in Brazil, although dealer coverage could be better. Likewise in the Middle East there are dealers in Israel, UAE, Dubai, Pakistan and I'm sure others I am missing... In regard to Leica stores, there are 63 currently; that number is to be increased to 200 per Auf zu neuen Ufern: Blackstone steigt bei Leica ein - n-tv.de. That in itself is a sizable investment. Link to post Share on other sites More sharing options...
stevelap Posted October 19, 2011 Share #35 Posted October 19, 2011 Intentionally or otherwise, Blackstone royally screwed Southern Cross here in the UK, when the time came to cash in on their investment. And there's the rub with this sort of thing.........they always need to cash in at some point. ACM/Dr Kaufman might have a soft spot for Leica, its products and its history, but I seriously doubt that private equity investors are going to come over all soft and cuddly and be swayed by sentiment. Fingers crossed....... Link to post Share on other sites More sharing options...
wattsy Posted October 19, 2011 Share #36 Posted October 19, 2011 We are talking about Blackstone, not Blackwater... Cut from the same cloth, Link to post Share on other sites More sharing options...
Guest Holy Moly Posted October 19, 2011 Share #37 Posted October 19, 2011 In regard to Leica stores, there are 63 currently; that number is to be increased to 200 per Auf zu neuen Ufern: Blackstone steigt bei Leica ein - n-tv.de. That in itself is a sizable investment. What should/can they sell? Hot air or 5th hand Leica IIIf/g? There isn't enough merchandise even for the existing shops...... Link to post Share on other sites More sharing options...
johnbuckley Posted October 19, 2011 Share #38 Posted October 19, 2011 I have worked with Blackstone (they own a client of mine), and worked in behalf of companies that are their competitors. They are principally known as private equity investors, and yes, private equity investors are not long term investors (unless they make a mistake, and cannot sell their stake in the companies they acquire.) Dr. K acquired Leica in gulps, until he was able to get almost all of it. (As I recall, there was a very small percentage of shares outstanding he didn't control.) But having acquired it all, and nursed it back to financial health, it makes complete sense he would want to recoup some of his investment now. Under his leadership, Leica has made quite remarkable financial progress. Think of it: a global recession began in 2008. The M9 was released in 2009. Since then, dealers can't keep Leica cameras or lenses on their shelves, there's a 1-year wait for things like the 35mm Summilux (personal experience), and they are making money again. Good for you, Dr. K, and thank you. But as for what this means for Leica, we honestly have to say it has the potential to be destabilizing. Yes, Blackstone has said that this investment will increase Leica's ability to expand in the developing world, which probably means China. They need more capital than Andreas K and his firm can raise on their own. But private equity investors make their profit when they sell their stake. So I'm afraid the conclusion has to be that in two or three years, it won't be Blackstone. It will be someone else. And that is worrying to me. Link to post Share on other sites More sharing options...
giordano Posted October 19, 2011 Share #39 Posted October 19, 2011 Intentionally or otherwise, Blackstone royally screwed Southern Cross here in the UK, when the time came to cash in on their investment. And there's the rub with this sort of thing.........they always need to cash in at some point. Or to look at it another way, Blackstone restructured Southern Cross and its other care home businesses so effectively that other well informedinvestors paid top dollar for them at the flotation in 2006 and when Blackstone sold its last SC shares in 2007. SC didn't hit the buffers until four years after Blackstone "cashed in", during which time the homes' customer profile and operating environment both changed a lot. A very sad story, but not one where Blackstone should carry all or even most of the blame. Link to post Share on other sites More sharing options...
Jim-St Posted October 19, 2011 Share #40 Posted October 19, 2011 Be interesting to know if this buy-in is leveraged - lumbering Leica with Blackstone's acquisition costs as their liability. That's how these outfits usually work, isn't it? Link to post Share on other sites More sharing options...
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