MacAndrews & Forbes Holdings

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MacAndrews & Forbes Holdings, Inc.
Type	Private
Genre	Holding
Founded	1984
Founder	Ronald Perelman
Headquarters	New York, New York
Key people	Ronald Perelman, Chair & CEO Barry F. Schwartz, Executive Vice Chair & CAO Paul G. Savas, EVP & CFO
Industry	diversified holding
Products	Cosmetics, vehicles
Services	Banking Services, Security
Owner	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	website

MacAndrews & Forbes Holdings, Inc. is the principal holding company used by and wholly owned by private equity investor, Ronald Perelman. MacAndrews & Forbes holds interests in a diversified portfolio of public and private companies.

Contents 1 History 1.1 Group 1.2 Holdings 1.3 Revlon Group 1.4 Other Actions 1.5 Savings and loans 1.6 Andrews Group 1.7 Meridian Sports Holdings 2 Subsidaries 2.1 Current 2.2 Former 3 References

[edit] History

[edit] Group

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]

[edit] Holdings

In 1983 to take the MacAndrews & Forbes Group Inc. private, Perelman forms MacAndrews & Forbes Holdings and sells bonds to acquire remaining 66% shares in MacAndrews & Forbes Group Inc. Also in 1983, Technicolor Inc. was acquired, divisions sold off and the core business sold altogeher 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. Dispite the bond debt in 1984 saw MacAndrews & Forbes purchasing Consolidated Cigar Holdings Ltd. from Gulf & Western Industries and Video Corporation of America.^[3]

[edit] Revlon Group

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]

[edit] Other Actions

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]

[edit] Savings and loans

Main article: Savings and Loan crisis

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]

[edit] Andrews Group

The corporate shell of the former Compact Video, Andrews Group, Inc. is formed. Andrews Group is used to purchased Marvel Entertainment Group, Inc. from its then parent New World Entertainment, Inc. Soon, New World was also purchase by Andrews Group. Only 57% owned by MacAndrews and Forbes, Andrews Group had lost $14.8 million in 1989 and had a negative net worth of $10 million. Marvel Entertainment Group goes public in 1991 with 30% sold to the public. Andrews Group goes on a buying spree picking up Fleer (September 1992), 46% of Toy Biz, Inc. (1993), 54% SCI Television (1993) and 50% share of Genesis Entertainment was purchase added to New World. ^[3]

[edit] Meridian Sports Holdings

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]

[edit] Subsidaries

[edit] Current

As of December 31, 2007, MacAndrews & Forbes held interests in the following companies:

• Allied Security Holdings LLC -- alliedbarton.com -- invested in 2003
• MacAndrews AMG Holding, LLC
  • AM General -- amgeneral.com -- 70% share purchased in 2004
• Deluxe Entertainment Services Group Inc.
• M & F Worldwide (MFW)
  • Harland Clarke Holdings Corp.
    • Harland Clarke Corp. -- harlandclarke.com -- formerly Clarke American Corp.
      • Checks in the Mail -- checksinthemail.com
    • Harland Financial Solutions -- harlandfinancialsolutions.com
    • Scantron^[28]
  • Mafco
• Panavision
• Revlon Group, Inc.
  • Revlon, Inc.
• Scientific Games Corporation
• SIGA Technologies Inc
• TransTech Pharma^[29]

[edit] Former

• Andrews Group, Inc. (formerly Compact Video Inc.)
  • Marvel Entertainment Group, Inc.
  • Fleer
  • SkyBox
  • ToyBiz
  • New World Communications Group
    • New World Entertainment
    • SCI Television
    • Genesis Entertainment
    • Guthy-Renker Corporation
• [First Gibraltar Bank]]
• Golden State Bancorp
• Consolidated Cigar Holdings Inc.
• Technicolor, Inc.
• Meridian Sports Holdings
  • Coleman Company, Inc.
  • Boston Whaler Inc.
  • MasterCraft
  • Skeeter
  • O'Brian
• Mafco Holdings, Inc.
  • Consolidated Cigar Holdings Inc. (2nd Time)
• Mafco Consolidated Group
  • Abex

[edit] References

1. ^ Hack, Richard (1996). When Money Is King. Beverly Hills, CA: Dove Books, 10-12. ISBN 0-7871-1033-7. 
2. ^ Hack, Richard (1996). When Money Is King. Beverly Hills, CA: Dove Books, 13. ISBN 0-7871-1033-7. 
3. ^ ^{a b c d e f g} MacAndrews & Forbes Holdings Inc. (HTML). Funding Universe. Retrieved on 2008-05-16.
4. ^ Stevenson, Richard. "Pantry Pride Control of Revlon Board Seen Near", New York Times, 1985-11-05, p. D5. Retrieved on 2007-04-27. 
5. ^ Hagedom, Ann. "Possible Revlon Buyout May Be Sign Of a Bigger Perelman Move in Works", Wall Street Journal, 1987-03-09, p. 1. Retrieved on 2007-05-16. 
6. ^ Atlas, Riva (2000). "The Perils of Perelman". Institutional Investor 34 (3). 
7. ^ Gale Group (2005). Revlon Reports First Profitable Quarter in Six Years; Fourth Quarter and Full Year 2004 Results in Line with Expectations. Business Wire. Retrieved on 2007-02-07.
8. ^ Google Finance - Revlon, Inc. Google (2007). Retrieved on 2007-02-07.
9. ^ Cotten Timberlake and Shobhana Chandra (2005). Revlon profit first in more than 6 years. Bloomberg Publishing. Retrieved on 2007-03-20.
10. ^ Hayes, Thomas. "Talking Deals; A Veil of Secrecy In Texas Rescues", New York Times, 1988-12-29, p. D2. 
11. ^ Ladendorf, Kirk. "A bank by any other name . . . must be in Austin // Confusion, lawsuits greet the changes made of necessity", Austin American Statesman, 1989-04-03, p. 12. 
12. ^ ^{a b} Lancaster, Hal. "Perelman Sells Oklahoma Unit Of Texas Thrift --- Big S&L Purchased in 1988 Amid Much Controversy May Be Sold Piecemeal", Wall Street Journal, 1992-08-11, p. A4. 
13. ^ Hayes, Thomas. "Perelman Group Wins Bidding for San Antonio Savings", New York Times, 1990-03-10, p. A32. 
14. ^ King, Ralph T. "BankAmerica, in Texas Push, to Buy Branches of Perelman's First Gibraltar", Wall Street Journal, 1992-09-22, p. A3. 
15. ^ Racine, John. "Texas Dealmaker Is Plotting His Next Move", American Banker, 1993-11-08, p. 10. 
16. ^ ^{a b} Steinmetz, Greg. "Perelman Wins Bidding for Ford's Struggling Thrift --- First Nationwide Is Fairly Clean, as Seller Keeps Big Chunk of Bad Loans", Wall Street Journal, 1994-04-15, p. B4. 
17. ^ Sloan, Allan. "Perelman bucketed S&L 'soup'", Denver Post, 1992-09-26, p. C1. 
18. ^ ^{a b} Sloan, Allan. "Perelman replay in S&Ls may not pay off as well", Denver Post, 1994-11-24. 
19. ^ Ketelsen, James. "Mr. Fixit", Forbes, 1995-05-22, p. 66. 
20. ^ "First Nationwide Bank to acquire SFFed in $250 million pact", Wall Street Journal, 1995-08-29, p. C14. 
21. ^ Cahill, Tom. "1st Nationwide will buy Home Federal $70.6 million purchase is part of statewide expansion", San Francisco Examiner, 1995-12-20, p. B3. 
22. ^ Cline, Kenneth. "1st Nationwide Agrees To Buy Calif. Thrift For $70.6M in Cash Series", American Banker, 1995-12-26, p. 6. 
23. ^ Crockett, Barton. "1st Nationwide Buying Cal Fed for $1.2B Cash Deal Second in Week Between West Coast Thrifts", American Banker, 1996-07-30, p. 1. 
24. ^ Lamonica, Paul. "Weyerheuser Unit's Buyer Sells Off Most Servicing To Focus on Subprime", American Banker, 1997-06-27, p. 14. 
25. ^ Prakash, Snigdha. "Despite Deal's Complexities, CalFed Really Is the Buyer", American Banker, 1998-02-12. 
26. ^ Stein, George. "California; Golden State Shareholders OK Takeover; Mergers: Nearly 90% approve the purchase by Citigroup despite a stock drop that cuts the value of the deal to $4.9 billion from $5.8 billion", Los Angeles Times, 2002-08-23, p. C2. 
27. ^ Laing, Jonathan R. "Ron's triumph?", Barron's, 2002-03-27, p. 15. 
28. ^ Harland Clarke | Press Releases
29. ^ MacAndrews & Forbes Holdings Inc