This is becoming a trend. And it may be a bit of a shell game.
Oil and gas pipeline operator Kinder Morgan Inc. Monday said it had agreed to be bought and taken private for $15 billion in cash by an investor group that includes Chief Executive Richard Kinder.
So who makes out in a deal like this?
Here are some of the details.
The deal values Kinder Morgan at $107.50 per share, a 5.7 percent premium to the company's stock price of $101.70 at Friday's close. The investor group, which will also assume $7 billion of debt, in May had proposed to buy out Kinder Morgan for $100 a share.
The investor group includes Kinder Morgan management, Goldman Sachs Capital Partners, American International Group Inc., Carlyle Group and Riverstone Holdings LLC.
At first glance this looks kind of interesting. But look at the principles. There's something else going on here.
The transaction will be financed through a combination of equity contributed by the investor group and debt financing provided by Goldman Sachs Credit Partners L.P. and affiliates of Citigroup Global Market Inc., Deutsche Bank Securities Inc., Wachovia Securities and Merrill Lynch, Pierce, Fenner & Smith Inc.
The reason I'm a little skeptical is because this type of deal has been done before. Take a public company, take it private, stir it up and shake it around, and then take the new concoction public again.
"We are proud to partner with this prominent group of private equity firms, all of which have proven records of success," said Richard Kinder.
I'm thinking this is much closer to the real estate deal known as "flipping". The goal is to do as little as possible while the 'property' is in your possession, and then put it on the market. A little paint, new drapes, and a couple of new shrubs, and it looks good as new. But where it counts, it's still basically unchanged.
People are free to do what they want to, but I'm still hoping that the long-term survival of the company is somewhere in the mix.
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