Word: buyouts
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Dates: during 1980-1989
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...debacle. A series of downbeat realizations converged on Friday, ranging from signs of a new burst of inflation to sagging corporate profits to troubles in the junk- bond market that has fueled major takeovers. The singular event that shook investors was the faltering of a $6.75 billion labor-management buyout of UAL, the parent company of United Airlines, the second largest U.S. carrier. "That's when all hell broke loose," said Robert Newman, a floor trader for Equitrade Partners. "It was very reminiscent of something I do not care to think about...
...apparently balked at the deal, which was to be partly financed through junk bonds. The takeover group said it would submit a revised bid "in the near term," but the announcement stunned investors who had come to view the United deal as the latest sure thing in the 1980s buyout binge. Said John Downey, a trader at the Chicago Board Options Exchange: "The airline stocks have looked like attractive takeover targets. But with the United deal in trouble, everyone started to wonder what other deals might not go through...
...higher price when the deals go through. The high anxiety about the junk-bond market sent the stocks of takeover targets plunging across the board. "The arbs got their heads handed to them," said Anson Beard, the chief trader for Morgan Stanley. "Very few anticipated that the UAL buyout could fail." Small investors suffered less because they have been less active in the market since the 1987 crash...
...Kevin Phillips described the problem two weeks ago in the Washington Post as "a frightening inability to define and debate America's emerging problems." Last week's 190-point stock market tumble was the immediate result of economic developments, namely UAL's failure to obtain financing for its leveraged buyout. But Washington's glaring inability to control spending hardly inspires the confidence that markets need...
...faltering buyout of UAL, the parent of United Airlines, combines with signs of a new burst of inflation to put stock prices into a spin. The drop rekindles concerns that a debt-laden era might be coming to grief and provokes fears of a bearish season ahead...