The Carlyle Group has been single-handedly fueling the private equity deal market this summer, sealing at least four blockbuster acquisitions with its latest announcement on Thursday that it would purchase E.I. DuPont de Nemours & Co.’s global auto paint business for $4.9 billion in cash.
The DuPont deal has Wall Street buzzing because Carlyle appears to be increasingly active while its major peers are quiet. Blackstone Group, KKR and TPG Group have not been nearly as busy as Washington-based Carlyle.
The flurry also coincides with Carlyle’s much anticipated initial public offering, which occurred four months ago. Since its modest debut in June at an initial price of $22 per share, Carlyle stock has been on a slow and steady march upward, closing Thursday at $25.88.
The Carlyle dealmaker who engineered three of the four acquisitions said that borrowing money to buy companies is cheap, but the timing for the surge is coincidence.
“In three of these deals, we had been talking to these companies forever,” said Gregory S. Ledford, who heads Carlyle’s industrial and transportation team, which is responsible for three big deals in recent months. “It’s not like in April we just woke up and said it’s time to put money to work. These are businesses we’ve liked and had been in contact with for quite some time.”
Carlyle’s thesis has been to unearth non-core assets that parent companies seek to sell so they can concentrate their intellectual and financial firepower elsewhere. At DuPont, the chemical giant is zeroing in on the life sciences as its core business. Carlyle’s acquisition of Hertz and Dunkin’ Donuts, both several years ago, were done under the same approach.
“They are becoming the stealth Berkshire Hathaway,” said Michael Farr of Farr, Miller & Washington, a District-based investment firm. “You look at the last three to four deals that they’ve done, they are the nuts and bolts, and understandable companies.”
Berkshire Hathaway, headed by Warren Buffett, is known for acquiring businesses with clear and simple profit models, many of which are from old-line industries such as railroads, shoes, newspapers and manufacturing.
Carlyle’s recent deals have a similar flavor, with the company buying into industries ranging from pumps to paint to petroleum — even photographs.
Two weeks ago, Carlyle and Getty Images management paid $3.3 billion to buy Getty Images — the massive photo and digital archives library — from the San Francisco-based investment firm Hellman & Friedman.
Earlier this month, Carlyle Group acquired Los Angeles-based TCW Group, a diversified asset management firm, from Societe Generale for $700 million in cash, and some debt.
Last month, the private equity firm bought Hamilton Sundstrand’s industrial pumps business from parent United Technologies for $3.46 billion. Two days before that, Carlyle partnered with Genesee & Wyoming in a $1.4 billion acquisition of RailAmerica.
On July 2, Carlyle bought Sunoco’s more than 100-year-old refinery in Philadelphia, where it plans to build a rail terminal to transfer shale oil shipped from North Dakota to the refinery.
Observers said they aren’t surprised by the deals, especially given the availability of easy capital.
“That’s their business,” said Tim Loughran, a finance professor at the University of Notre Dame’s Mendoza College of Business, referring to the recent spate of acquisitions. “So why would I be surprised?”
Observers questioned whether Carlyle could handle all the businesses at once.
“My group will be digesting a little bit,” said Ledford. “But we have the bandwidth and a bench deep enough to manage all these investments at the same time.”