Monday, July 09, 2007

Carlyle Pays Through the Nose for Sequa Corp.

With all those overflowing bank vaults of cash, The Carlyle Group decided to put some of it to work. They announced an agreement to purchase Sequa Corp for a 50% premium driving the stock up some $60 a share to $172 per share.

After a quick review of the company's 2006 annual report, it's clear Sequa will pay no taxes in the future should Carlyle use debt to finance even a small part of the $1.99 billion acquisition price. Their relatively small bottom line could disappear quickly under a pile of interest charges.

The diversified company occupies several Carlyle niches, aircraft and automotive parts and technology. One doesn't have to read far to find the U.S. military is a key customer. That should make Chairman Emeritus, ex. Defense Chief Frank Carlucci happy.

However, one division should bring a unique business to the Carlyle fold. Tuxedos! So the next time President Bush invites all his high dollar, big donor friends to dine with the Queen of England, After Six can handle the gentlemen's formal dress.

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