10 of the Most Famous Public Companies That Went Private

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10 of the Most Famous Public Companies That Went Private

A private corporation is one that does not have publicly traded shares. Although private corporations may issue stock to shareholders, such shares are not traded on a stock market. Private enterprises are not subject to the Securities and Exchange Commission’s reporting obligations placed on publicly traded corporations (SEC).

Private corporations are not under continual pressure to provide rapid profits, as many major publicly traded companies are. That implies management may pursue long-term, high-risk, high-reward enterprises without being concerned about quarterly outcomes.

Some private organizations, such as private equity firms, give such benefits to publicly traded companies that they acquire and take private. At the conclusion of the transaction, the publicly traded shares are delisted, and stockholders get the stated price per share in cash.

This article examines ten of the most well-known public corporations that became private.

Key Takeaways

  • Taking public firms private is a common investment strategy and business model in which some of the most well-known consumer brands have participated.
  • Companies that have been taken private are often relisted publicly a few years later when their private owners attempt to cash out.
  • Newly privatized enterprises are no longer subject to shareholder pressure, but they are nevertheless under pressure to give a financial return to their new owners as quickly as feasible.
  • A selling of the firm or a portion of the company to an industry buyer, frequently a rival, is an alternative to a second initial public offering after a going-private transaction.

Twitter, Inc.

In April 2022, the operator of the messaging platform accepted a $44 billion takeover bid from Elon Musk, the world’s wealthiest person at the moment with a net value of $268 billion. Musk’s riches is mostly derived from his share in Tesla, Inc. (TSLA), the electric car manufacturer Musk heads.

Twitter’s (TWTR) share price peaked at more than $77 in February 2021, but had dropped more than 50% by January 2022, when Musk started amassing the 9.2% ownership he reported in March. Musk was offered and accepted a position on Twitter’s board of directors, but he subsequently rejected and instead made an informal offer of $54.20 per share in a public “bear hug” letter to Twitter’s board.

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Twitter implemented a poison pill shareholder rights plan to deter Musk from growing his interest, but discussions resumed once the mogul confirmed committed funds for the purchase. Musk said after the agreement that his objective for Twitter is to protect free expression while increasing the service’s functionality.

H.J. Heinz

In 2013, Heinz, the maker of a renowned ketchup brand going back to 1869 as well as a range of other processed goods, agreed to be purchased by Warren Buffett’s Berkshire Hathaway (BRK-A) and Brazilian investment company 3G Capital in a transaction valued at around $28 billion including assumed debt.

The Kraft Heinz Firm (KHC) was formed in 2015 when the company merged with Kraft Foods Group, with Berkshire Hathaway and 3G Capital investing an extra $10 billion in return for 51% of the combined company.

Burger King

The fast-food restaurant company went public for the first time in 2006, raising $425 million. BKC is the ticker symbol for shares traded on the New York Stock Exchange.

In 2010, 3G Capital bought the firm back for $24 per share, or $4 billion. Burger King relisted as a public company in 2012 via a reverse merger with Justice Holdings, which is listed in London.

Burger King purchased Canadian coffee brand Tim Hortons in a tax inversion transaction valued at $11.5 billion at the time of the announcement in 2014. For tax reasons, the merged business, Restaurant Brands International (QSR), is located in Canada, although it maintains a New York Stock Exchange listing in addition to one on the Toronto Stock Exchange (TSX).

Dell Computer

In October 2013, Michael Dell, the CEO of Dell Computer who famously founded the computer hardware provider in his undergraduate dorm room, joined up with the Silver Lake Partners private equity firm to take the business private for $24.4 billion.

Dell returned to public markets in late 2018 via a contentious exchange of Dell stock for VMWare tracking shares announced as part of the EMC acquisition, after purchasing EMC in 2015 in a $67 billion largely debt-financed purchase. The transaction was estimated to be worth $24 billion. Dell will spin out VMWare Inc. (VMW) into a separate publicly traded business in 2021.

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Alliance Boots PLC

When Kohlberg Kravis Roberts & Co. (KKR) and Italian billionaire Stefano Pessina purchased the European health care and pharmacy company for $22.2 billion in 2007, they broke the record for the largest leveraged buyout in Europe, beating off a competing group of private equity bidders.

Walgreens bought a 45% share in the private firm in 2012 and the rest in 2014 for a total of around $22 billion in cash and stock to establish Walgreens Boots Alliance (WBA).

EQ Office

Equity Office Buildings Trust, created by real estate mogul Sam Zell, was the biggest publicly traded owner of office and commercial properties in the United States until it agreed to be bought for $36 billion in 2006 by an affiliate of the Blackstone Group (BX). The transaction came after many rounds of high-stakes bidding, with Blackstone finally triumphing over Vornado Realty Trust (VNO).In 2018, the company’s name was changed to EQ Office.

Hilton Worldwide Holdings

Hilton is the world’s largest hotel brand, with over 6,800 hotels in 122 countries and territories. Conrad Hilton began the firm in 1919 after purchasing his first hotel in Cisco, Texas. The Hilton name was originally used at a hotel in Dallas.

In October 2007, Blackstone Group paid $26 billion for the firm in a leveraged buyout (LBO). Hilton re-listed on the NYSE under the ticker code HLT in December 2013, with Blackstone holding a stake of more than 45%. The company’s second initial public offering garnered more than $2 billion.

Kinder Morgan

Kinder Morgan was operating one of North America’s major oil pipeline and storage portfolios until it was bought out for around $22 billion in May 2007 by American International Group (AIG), The Carlyle Group (CG), Goldman Sachs Capital Partners, and Riverstone Holdings LLC.

Less than four years later, the corporation went public again, generating almost $3 billion from the offering of a 15.5% interest.

PaneraBread

Panera has over 2,100 outlets nationally and anticipates annual sales of over $5.3 billion in 2020. In April 2017, Panera agreed to be bought for more than $7 billion by the private investment group JAB Holding Company, which also owns brands like as Keurig, KrispyKreme, and PeetsCoffee and Tea. JAB Holding Company united Panera Bread, Caribou Coffee, and Einstein Bagels into Panera Brands in August 2021 in order to prepare for a public offering. Panera Brands stated its intention to submit papers with the SEC to launch an IPO a few months later; paperwork is still pending as of May 2022.

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Reader’s Digest

Reader’s Digest is published in 22 countries and 17 languages and will celebrate its 100th anniversary in 2022.

Ripplewood Holdings LLC paid $2.4 billion for Reader’s Digest in March 2007. The firm had financial issues before to the transaction and declared bankruptcy twice, in 2009 and 2013. Reader’s Digest Association renamed as Trusted Media Brands a few years later, in 2015.

The Bottom Line

The trend is clear: today’s going-private transaction will almost certainly be followed by a fresh initial public offering in some future year, when private owners want to cash out. Private equity companies often have time-limited investment objectives and are not in the business of operating the same company for decades.

As a result, although private enterprises are not subject to public shareholder pressure, they are nonetheless operated in the short-term interests of their new private owners. This might imply laying off staff, selling assets, or incurring additional debt to pay the owners a dividend, and such actions may or may not be in the company’s long-term interests, as opposed to those of its new paymasters.

In any event, private bidders acquiring control of publicly traded firms are among the most sophisticated commercial and financial actors. If they’re paying, it’s probably because they’ve planned numerous possibly profitable departure routes. Listing the firm again in time is usually towards the top of that list.

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