Breaking Even at Cerberus
Has Cerberus Capital Management finally escaped the dark cloud of GMAC LLC and Chrysler LLC?
An assessment by Reuters BreakingViews yesterday suggested that Cerberus, which acquired GMAC (aka Ally Financial Inc.) and Chrysler at the height of the credit boom, has negated its losses on those investments with the pending sale of another investment, Talecris Biotherapeutics, for $3.4 billion to Grifols.
BreakingViews writes of the Talecris deal:
This single investment [in Talecris] more than compensates for Cerberus’s losses on GMAC and Chrysler. The firm’s funds invested roughly $1 billion in those two losing deals combined, according to a person familiar with the situation. … [O]ver all, the private equity firm suddenly has a better story to tell investors.
But Cerberus is still carrying some baggage from the GMAC and Chrysler deals:
The effect may not be even; all three investments were parceled out among Cerberus funds, perhaps not equally. … Unfortunately, Cerberus brought along “friends and family” as co-investors in GMAC and Chrysler. The amount put in by the co-investors is unknown, but the total equity injected in both was an order of magnitude greater than what Cerberus’s own funds contributed. While the Talecris sale gives Cerberus a much-needed lift, these burned co-investors get nothing of the sort. They may not soon forget.
Forget? Investors are blessed with excellent memories.
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