| Type | Private |
|---|---|
| Industry | diversified holding |
| Genre | Holding |
| Founded | 1984 |
| Founder(s) | Ronald Perelman |
| Headquarters | New York, New York |
| Key people |
Ronald Perelman, Chair & CEO Paul G. Savas, EVP & CFO |
| Products | Cosmetics, vehicles |
| Services | Banking Services, Security |
| Owner(s) | Ronald Perelman |
| Subsidiaries | MacAndrews & Forbes Group, Inc. Allied Security Holdings LLC AM General Deluxe Entertainment Services Group Inc. M&F Worldwide (MFW) Panavision Revlon Group, Inc. Scientific Games Corporation SIGA Technologies Inc TransTech Pharma |
| Website | MacAndrews & Forbes Holdings, Inc. |
MacAndrews & Forbes Holdings, Inc. is the principal holding company used by and wholly owned by businessman and private equity investor, Ronald Perelman. MacAndrews & Forbes holds interests in a diversified portfolio of public and private companies.
Contents |
Perelman had previously purchased a 40% stake in Cohen-Hatfield Jewelers in 1978,[1] and in 1980 MacAndrews & Forbes & Co., a distributor of licorice extract and chocolate. [2] Perelman had merged Cohen-Hatfield Jewelers and MacAndrews & Forbes & Co. into MacAndrews & Forbes Group Inc.[3]
In 1983, Perelman forms MacAndrews & Forbes Holdings to take MacAndrews & Forbes Group Inc. private. Perelman starts selling bonds to acquire the remaining 66% stake in MacAndrews & Forbes Group Inc.
Also in 1983, Technicolor Inc. was acquired. The divisions are sold off and its core business is sold altogether in 1988 to Carlton Communications for 6.5 times the purchase price. Using the proceeds from the Technicolor division sell off, a 20 percent stake in a similar company was purchased: Compact Video Inc. and increase to 40% in 1987. Despite the bond debt in 1984 saw MacAndrews & Forbes purchasing Consolidated Cigar Holdings Ltd. from Gulf & Western Industries and Video Corporation of America.[3]
Pantry Pride Inc. was purchased next in June 1985 as it had loss that could offset gains of the corporation. Its three retail supermarket chains were sold off with in months and became Revlon Group, Inc. in 1986.[3] In 1985, Perelman took on his biggest deal yet: The Revlon Corporation. Financed with over $700 million in junk bonds from Michael Milken's firm Drexel Burnham Lambert, Pantry Pride Inc. offered to buy any or all of Revlon's 38.2 million outstanding shares for $47.5 a share when its street price stood at $45 a share. Initially rejected, he repeatedly raised his offer until it reached $53 a share while fighting Revlon's management every step of the way. Forstmann Little & Company swooped in at $56 a share, a brief public bidding war ensued, and Perelman triumphed with an offer of $58 a share. Perelman paid $1.8 billion to Revlon's shareholders, but he also paid $900 million of other costs associated with the purchase.[4] Perelman had Revlon sell 4 division: 2 for $1 billion, vision care division for $574 million and National Health Laboratories division became a publicly owned corporation in 1988. Additional makeup lines were purchased for Revlon: Max Factor in 1987 and Betrix in 1989 later selling them to Procter & Gamble in 1991.[3] Unfortunately for Perelman, Revlon has become nothing but trouble. Despite Perelman's regular cleansing of upper management[5] and injecting millions of dollars into the company,[6] Revlon stubbornly resists turning a profit. As of the first quarter of 2007, it has had one profitable quarter in the past 32.[7] Its lack of profitability shows in its stock price which has plummeted to less than $1.20 a share as of 2007.[8] A major cause of Revlon's financial problems is the huge debt load stemming from Perelman's purchase of the company.[9]
MacAndrews made an attempted take over of Gillette Company in 1986, offering $4.12 billion. Perelman sold back Gillette stock acquired back to the Gillette Company. He made additional attempts in 1987. A division in 1986 then the rest of Consolidated Cigar in 1988 were sold. Attempted take overs were targeted at TV Services and CPC International. A refinancing of the Holding companies' junk bond for standard bank loans by the end of 1989. [3]
Perelman first entered what became known as the Savings & Loan crisis in 1988 when along with Gerald J. Ford he bought five insolvent thrifts with $12.2 billion in assets and $5.1 billion in federal aid for $315 million.[10] The five banks originally operated as a single entity named First Texas Bank, but the name changed to First Gibraltar after about a week.[11] Perelman's turn-around manifested as trimming the payroll, selling branches, and dumping of $2.5 billion of underperforming assets. In 1990, Perelman added San Antonio Savings Association and Sooner Federal to First Gibraltar for $10.1 million and $5.1 million, respectively. The purchase of San Antonio added $1.1 billion of healthy assets, $1.2 billion unhealthy assets, and a $1.3 billion government cash advance to Perelman's larder while Sooner only provided $1.2 billion in assets along with the typical government guarantees.[12][13] Sooner Federal was not only the last S&L Perelman bought, but the first he sold; In August 1992, he sold the pieces of Sooner to Bank of Oklahoma and Fourth Financial Corporation for $31.4 million.[12] The following month he sold the rest of First Gibraltar to BankAmerica for $110 million, retaining four branches in Plano, Texas and $1.2 billion of assets in the mortgage and property management sectors.[14] He renamed the four branches First Madison.[15] It's unclear how much money Perelman made from his savings & loan deals, but it's estimated that he made anywhere from $600 million to $1.2 billion with most of the profits manifesting as tax breaks elsewhere in his empire.[16] In essence, by owning First Gibraltar he was able to avoid paying hundreds of millions in federal taxes.[17]
Perelman jumped back into the savings & loan game in a big way in 1994 by buying First Nationwide from the Ford Motor Company for $664 million.[18] Ford held onto $1.8 billion of First Nationwide's assets valued at $444 million, two-thirds of which were considered troubled assets,[18] offered to buy back up to $500 million of First Nationwide's other $7.9 billion of assets that went bad in the future, and gave Perelman $50 million to cover potential severance payments.[16] Perelman quickly boosted its portfolio, adding $10 billion worth of mortgages in exchange for a $175 million payment to Resolution Trust Corporation.[19] Before 1995 ended, Perelman added two more thrifts to his collective: SFFed's $4.1 billion of assets for $250 million[20] and Home Federal Financial's $735 million of assets and $662 million of deposits for $70.6 million.[21] Just as quickly as he added assets, branches, and deposits in California, he dumped what he had elsewhere in the country. In 1995 alone he sold off 79 branches with $4.3 billion in deposits spread out across five states.[22] 1996 went a little slower, but not eventfully. He acquired California Federal Bancorp for $1.2 billion, creating the 4th largest thrift in the country with $32.3 billion in assets.[23] In 1997, another $3.3 billion in mortgages were added courtesy of WMC Mortgage but it was an otherwise quiet year for First Nationwide.[24] In 1998, Perelman negotiated a stock swap with Golden State Bancorp to create the third largest thrift in the country with $50 billion of assets. The deal left Golden State's shareholders the majority, but Perelman's camp still controlled the company.[25] Everything remained quiet until May 2002 when Citigroup announced plans to buy Golden State for $5.8 billion, but ultimately reduced the offer to $4.9 billion due to a stock drop.[26] Citigroup's final offer was 0.821 shares of Citigroup common stock and $7.47 cash for every share of Golden State exchanged, which converted Perelman's 43 million shares of Golden State into $321,210,000 in cash plus 36,124,000 shares of Citigroup. All things considered, Perelman expected to make about $2 billion off the deal, but because he had quasi-sold many of his shares in the past, he probably gained substantially less than that.[27]
Andrews Group, Inc. is formed from the corporate shell of the former Compact Video. Andrews Group purchases Marvel Entertainment Group, Inc. in 1989 and later its former parent company New World Entertainment, Inc.
In 1989, Andrews Group lost $14.8 million with a negative net worth of $10 million. At this time, MacAndrews & Forbes owned 57%.
In 1991, Marvel Entertainment Group, Inc. goes public with 30% sold to the public.
Andrews Group goes on a buying spree picking up:
In 1994, Perelman bought four more stations from the Great American Communications Company for $360 million and four more from Argyle Television Holdings for $716 million. His purchases set the stage for the Fox affiliate switches of 1994 in which Ronald Perelman rewrote the rules for how television affiliates operated and helped establish Fox as a force to be reckoned with.[28] Naturally, Ronald took home a tidy profit: In two deals in 1994 and 1996, Rupert Murdoch bought complete control of New World Communications for $3 billion.[29][30]
Also in 1989, MacAndrews & Forbes acquired The Coleman Company, Inc., maker of stoves, lanterns, and camping and other recreational equipment, for $545 million. Perelman reduced the debt for this purchase by selling the heating and air-conditioning divisions. By the end of 1990 he had sold everything except Coleman's camping equipment and boat businesses, plus added power tool and recreational vehicle businesses. Between 1993 and late 1995 he bought seven more companies for Coleman. [3] In December 1997, Perelman and Al Dunlap met in order to discuss a possible deal between Coleman and Sunbeam Products. Coleman's famous but narrow brand held less growth potential than originally thought and Ronald Perelman wanted out. Coincidentally, Al Dunlap was sitting on a financially insolvent company he wanted to dump.[31] It took until March 2 for them to finally come to an agreement: With some convincing from his banker Morgan Stanley, Perelman sold his entire stake (82%) in Coleman to Al Dunlap in exchange for $1.5 billion in cash and $680 million of Sunbeam stock.[32] They completed the deal on March 30, despite a sell-off triggering press release from March 19 that said Sunbeam would not meet sales expectations. On April 3, another press release took Sunbeam's stock from bad to worse: It would not only fall short of sales expectations for that quarter, but it would barely meet the sales expectations of two years ago. The stock went into a tail spin, falling from $54 a share to $24 a share in a matter of weeks and continued its downward spiral in the following weeks. Perelman bought control of Sunbeam in an effort to salvage the situation but it was for naught. The company had to file for bankruptcy within three years.[33]
On February 17, 2005, Perelman filed a lawsuit against Morgan Stanley.[34] Two facts were at issue: Did Morgan Stanley know about the problems with Sunbeam and was Ronald Perelman misled? During the discovery phase, the judge became exasperated with what she perceived as deliberate stonewalling on the part of Morgan Stanley and ordered the jury to assume Morgan Stanley deliberately and knowingly defrauded Perelman.[35] Hobbled, Morgan Stanley had no choice but to argue that Perelman was too savvy an investor to have fallen for their transparent tricks.[36] After a five-week trial, the jury deliberated for two days, found in favor of Perelman, and awarded him $1.45 billion.[37] The damages stung particularly because Morgan Stanley passed up Perelman's offer to settle the case for $20 million.[38] Morgan Stanley maintained that the court case was improperly decided, citing the judge's decision to use Florida law over New York law and her decision to order the jury to consider Morgan Stanley guilty before the trial began.[39] In 2007, the courts of appeal reversed the judgement. The judges' declared Perelman hadn't provided any evidence showing he'd suffered any actual damage as a result of Morgan Stanley's actions. Perelman appealed,[40] but found himself shot down by the Florida Supreme Court who dismissed it in a 5–0 decision.[41] Undeterred even after that setback, Perelman went back to the trial court and asked for the case to be reopened because the hiding of email evidence was "a classic example of fraud on the court". The trial court rejected his arguments, but as of January 2009, he is beseeching Florida's 4th Circuit to reopen the case.[42]
In 2007, Perelman filed the paperwork for a SPAC (Special Purpose Acquisition Company) called MAFS Acquisition through his holding company MacAndrews & Forbes Holdings. A SPAC is a company founded solely for the purpose of buying out another company, but without any preselected target company. In Perelman's case, the company was selling 50 million units for $10 each. The IPO was being underwritten by Citigroup,[43] but on December 12, 2008, a year after filing for an IPO, MAFS opted to withdraw their application for the "protection of investors".[44]
As of 2010, MacAndrews & Forbes held interests in the following companies: