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Each week, we report instances where the money junky hedge funds, private equity groups and the already big companies swallow another piece of the global economy. Here are some more of what the BIGS have been gobbling up and how the Bigs keep getting bigger and the rich keep getting richer…
BLACKSTONE BOOKS €21-BILLION DEAL FOR EUROPEAN WAREHOUSE SPACE
In what the Financial Times calls “one of the biggest-ever private real estate deals,” private equity firm Blackstone Group has announced a €21-billion recapitalization of Mileway, its European warehouse business.
Blackstone offered Mileway’s investors the option of increasing their stakes, standing pat, or cashing out.
Some are exiting, but others—including several Asian national wealth funds and U.S. pension programs—have added at least $500 million to their involvement, the Financial Times reported, and will fund about three-quarters of Mileway’s increased value.
The deal is subject to a 75-day waiting period to see if any other entities might offer even more for Mileway, giving Blackstone and its investors the option of selling out for an even heftier profit.
The dramatic rise of online shopping during the COVID War has pushed up the value of warehouses and last-mile distribution centers by an average of 35 percent, MSCI reported, making the properties a key focus of recent real estate investment.
Mileway, which Blackstone formed in 2019, now owns about 1,700 logistics properties across 10 European countries.
Last year, Blackstone spent $720 million in India to buy 3.5 million square feet of warehouse space and development sites that could sprout another 18 million square feet, as we reported in “Blackstone Gobbling Up India’s Storage Space” (27 Apr 2021).
Vacant buildings among U.S. warehouses fell to 3.9 percent last fall, a record low, according to an October study by logistics firm Prologis.
The shift from “just in time” to “just in case” inventory structures will continue to keep warehouse space in short supply for at least the rest of this year, with rents climbing by double digits.
CELANESE WILL BUY MOST OF DUPONT UNIT FOR $11 BILLION
Chemical company Celanese will buy most of Dupont de Nemours’ mobility and materials unit for $11 billion.
The unit sold about $5 billion last year in polymers, resins, and products for vehicles, The Wall Street Journal reported, and accounted for almost a third of Dupont’s overall sales.
The purchase includes a global production network, 29 locations, intellectual property, and customer contracts, according to the WSJ.
The sale’s value reflects 14 times the unit’s 2021 gross operating earnings, Dupont said.
“We are confident in our ability to capture synergies that will allow us to double Celanese total free cash flow within the next five years,” Celanese CFO Scott Richardson said in a statement.
Dupont’s share price slipped 1 percent on the news; Celanese stock shed about 5 percent.
INTEL TO BUY TOWER SEMICONDUCTOR FOR $6 BILLION
U.S. chip maker Intel is finalizing the purchase of Israel’s Tower Semiconductor for $5.4 billion, people familiar told The Wall Street Journal.
Tower’s market value was estimated at $3.6 billion, indicating that Intel places a hefty premium on Tower’s value to its future.
Tower’s shares soared 49 percent in after-hours trading on 14 February after news of the sale broke.
Tower has manufacturing plants in California, Israel, Japan, and Texas.
Intel’s purchase is part of the company’s expansion plans to meet exploding demand for chips for everything from smart appliances to electric vehicles.
The plan includes investing $20 billion to build two new chip-making plants outside Columbus, Ohio (“Intel Follows One of Our Top Ten Trends: Self-Sufficiency,” 25 Jan 2022) and its attempt last year to buy competitor GlobalFoundries.
Negotiations ultimately failed and GlobalFoundries made a public stock offering instead and is now valued at about $30 billion.