Word: buyouts
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...takeover rush also increased the value of stocks in a more fundamental way. To guard against hostile merger bids, many companies bought back a portion of their own shares. In many cases, a management group acquired all the stock through a so-called leveraged buyout and took the company private. In all, at least $100 billion worth of shares, or about 5% of the stock in American companies, was taken off the market by mergers, acquisitions, buyouts and stock-repurchase plans. That made the stock that was still being traded more valuable...
Tracking down leaks and insider trading on the stock market, however, has proved notoriously difficult. RCA stock shot up just prior to an announcement that the company would be merging with General Electric. Macy's shares rose precipitously shortly before plans for a management buyout were disclosed. In neither case has proof emerged of trading by people who were privy to inside information...
...energy giant (1985 sales: $19.2 billion), the threat was only the latest in a series of battles. Amid a lengthy steel strike, its first since 1959, and menaced for weeks by speculative stock buying and takeover rumors, the company headed by Chairman David Roderick, 62, faced an $8 billion buyout offer from Carl Icahn, 50, chairman of Trans World Airlines. At week's end it was unclear whether Icahn sought control of USX or merely wanted to pocket a hefty profit for his efforts...
Attack of the Locusts! Not long ago, going public was the hottest move a company could make. These days, it's going private. Private equity funds are soaring worldwide, particularly in Europe, where the value of buyouts rose by 23% last year to €80 billion, according to the U.K.-based Centre for Management Buy-Out Research, and seems likely to keep rising. Not everyone likes the trend; German officials have likened the firms to "locusts." But U.S. funds alone have trebled their investments in Europe over the past four years. Many of them are currently raising huge war chests...
...farmers who needed tractor parts (hence the catchy name). Over the next four decades, TSC strayed off the farm and started peddling everything from sporting goods to Crock-Pots. In the 1970s, conglomerate Fuqua Industries acquired TSC, further diluting the retailer's focus. Scarlett participated in a leveraged buyout in 1982 and floated TSC as a public company in 1994; he owns 14.5% of the common stock, worth about $233 million today...