A private company is any corporation that is held under private ownership. While they may issue stock and have shareholders, they aren't listed on and don't trade shares on stock exchanges. This means that, unlike public companies, they aren't required to file paperwork or meet the guidelines of the Securities and Exchange Commission (SEC).
Remaining private allows companies a larger degree of freedom. For instance, management can embark on long-term, innovative, and high-risk, high-return ventures and they aren't bound by the pressures of quarterly results. Some public companies, on the other hand, may choose to go private for a number of reasons. In most cases, they may be bought out by a private company or a venture capitalist firm that sees them as a great investment opportunity. This means being delisted from a stock exchange, with shareholders often getting cash or stocks in a defined proportion.
This article looks at 10 of the most popular public companies that went private, There is no particular order in which they're listed.
- Remaining private allows companies a larger degree of freedom, while some public companies may choose to go private for a number of reasons.
- Alliance Boots had the biggest buyout in Europe of its time and was worth $22.2 billion.
- Burger King began as a private company and went public twice before merging with Tim Hortons.
- H.J. Heinz was taken private by Berkshire Hathaway and 3G Capital in June 2013.
- Reader's Digest was acquired by Ripplewood Holdings in March 2007 for $2.62 billion, filed for Chapter 11 bankruptcy in 2009 and 2013, and was sold for £1 to a venture capitalist.
Alliance Boots PLC
The company, listed on the London Stock Exchange (LSE), holds the record of the biggest buyout in Europe of its time. The overall price was worth $22.2 billion. Alliance Boots—commonly known as Boots in the United Kingdom—was bought by Kohlberg Kravis Roberts & Co. (KKR), along with Italian billionaire Stefano Pessina in 2007 for roughly £12.4 billion.
The health care and pharmacy chain was established in 2006 following the merger of two European companies—wholesale and retail pharmacy group Alliance UniChem and the Boots Group, a U.K.-based pharmacy. The deal was announced in 2005 and was estimated to be worth £7 billion. Boots was originally founded in Nottingham, U.K., in 1849 by John Boot.
American pharmacy chain Walgreens purchased a 45% stake in the private company in 2012, paying $6.7 billion for the deal that would take three years to fully implement. Both companies became subsidiaries of the newly-formed Walgreens Boots Alliance.
Few companies experience more than one initial public offering (IPO). Burger King, on the other hand, had two. Originally a private company, the restaurant chain went public in 2006. Shares traded on the NYSE under the ticker symbol BKC. The company raised $425 million when shares first began trading.
The company was then taken private in 2010 by 3G Capital. The company purchased the restaurant chain for roughly $3.26 billion. Burger King was relisted as a public company in 2012. 3G Capital constructed this second IPO along with Pershing Square Capital lead by Bill Ackman and was also involved with the H.J Heinz acquisition.
In 2014, Burger King merged with Canadian coffee chain Tim Hortons. The merger was estimated to be worth roughly $18 billion. This led to the formation of a new company—Restaurant Brands International. Both Burger King and Tim Hortons, which traded on the Toronto Stock Exchange (TSX) were delisted and began trading on the TSX under the newly-formed company's ticker symbol QSR.
The Burger King-Tim Hortons merger resulted in a new entity called Restaurant Brands International.
Dell is among the world leaders for manufacturing PC, mobile, tablets, and other hardware accessories. The company, headquartered in Round Rock, Texas, has about 160,000 employees around the world.
The buyout of Dell Computers was completed in October 2013. Michael Dell—the company’s founder and chief executive officer (CEO)—and Silver Lake Partners took the company private for $24.4 billion. The company's shares were delisted from both the Nasdaq and the Hong Kong Stock Exchange before going private.
After spending more than five years as a private company, Dell went public again in 2018. The company did so by repurchasing tracking shares in software company VMWare. The deal was worth roughly $24 billion. Michael Dell said he was able to transform the company while it was private. Dell shares began trading on the New York Stock Exchange (NYSE) at $46. As of March 25, 2020, the company's market capitalization was estimated at $28.3 billion.
Equity Office Properties Trust was the largest owner of office and commercial properties across the U.S. until it was bought out. The buyout for Equity Office Properties saw multiple rounds of high-stake bidding with fierce competition from top-notch bidders. It was finally acquired by the Blackstone Group (BX) for $39 billion in February 2007. The company has roughly 80 offices across the country and changed its name to EQ Office in 2018.
You'll probably recognize the Heinz name from its famous ketchup. The company began as the Heinz & Noble Company and was founded in 1869 by Henry John Heinz. The company manufactures and markets food products in more than 200 countries.
In 2015, the company merged with Kraft Foods Group. The new entity would become the fifth-largest food and drink company in the world. Kraft retained its headquarters in Chicago while Heinz kept its Pittsburgh base.
Prior to the merger, Heinz stock originally traded on the NYSE but was delisted after being acquired by Berkshire Hathaway (BRK-A) and 3G Capital in June 2013. Along with assumed debt, the deal was worth about $28 billion.
Panera has more than 2,000 locations nationwide and boasts annual sales of about $5 billion. The company traded on the Nasdaq under the ticker symbol PNRA. On the last day of trading, the stock closed at $314.93 per share.
In April 2017, Panera was acquired by the private investment firm JAB Holding Company—which also owns brands like Keurig, Krispy Kreme, and Peets Coffee and Tea—in a deal worth over $7 billion.
Hilton Worldwide Holdings
Hilton is a leading global hospitality and hotel chain with more than 3,000 properties in more than 76 countries. The company was founded by Conrad Hilton in 1919 after he purchased his first hotel in Cisco, Texas. The company's first hotel to use the Hilton name was in Dallas.
In October 2007, Blackstone Group bought the company in a leveraged buyout (LBO) fund for $26 billion and subsequently delisted from the NYSE. Hilton went public again, assuming trading on the NYSE under the ticker symbol HLT in December 2013, with Blackstone keeping more than 45% ownership in the company. The company raised more than $2 billion in its second IPO.
Jo-Ann is one of the largest specialty fabric and craft retailers, with more than 850 stores across 49 U.S. states. Founded in Cleveland in 1943, Jo-Ann is now headquartered in Hudson, Ohio.
The company first traded on the American Stock Exchange (AMEX) under the name Fabri-Centers of America. The company changed the name of all its stores to Jo-Ann Fabrics in 1998. It was delisted in March 2011, following a buyout by Leonard Green, a private equity firm, valued at $1.6 billion.
Kinder Morgan is the second-largest oil-producer of Texas and is one of North America's largest energy infrastructure company. The company also operates in the distribution, transportation, and storage of energy.
The company went private in May 2007, following a buyout from American International Group (AIG), The Carlyle Group, Goldman Sachs Capital Partners, and Riverstone Holdings LLC for $21.6 billion.
The company went public again about four years later, trading on the NYSE under the symbol KMI. This second IPO was reportedly the largest of its kind backed by private equity.
Apart from the Reader’s Digest magazine, which has 50 editions and translations in 20 languages, the group also operates 60 different websites.
The publisher of the world-renowned general-interest magazine, the Reader’s Digest, was acquired by Ripplewood Holdings LLC in March 2007 for $2.62 billion. It was subsequently delisted from NYSE as a result of this private acquisition. The company was plagued with financial problems even before it became private and filed for Chapter 11 bankruptcy twice—the first time in 2009 and again in 2013. In February 2014, venture capitalist Mike Luckwell purchased the company for £1.
The Bottom Line
Although privatization brings its benefits, it can also lead to increased pressure from the new private owners. Most deals to take public companies private are through investment conglomerates, which may set strict business objectives with tight timelines for company management. It may also be a red flag for employees in cases of mergers or takeovers. Shareholders of such targeted companies usually benefit, as they typically get a premium on the share price at the time of delisting.