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Blackstone group buys 44% of Leica

Discussion in 'Open Discussion' started by WT21, Oct 20, 2011.

  1. WT21

    WT21 Mu-43 Hall of Famer

    Feb 19, 2010
    Boston
    From the Wall Street Journal
    Blackstone to Buy Minority Stake in Leica - WSJ.com

    Blackstone (Blackstone) took a minority position in Lecia (page B8 from 10/12 edition for you paper readers). It says Leica's revenues were 250 Euro, and the minority stake of 44% cost 130 Euro. That's just a little higher valuation of 1X earnings, which is not a strong statement of worth.

    It also says Leica has turned to profitability, and recently paid a dividend (which means it's making, and not losing, money).

    Blackstone said there are opportunities to move into emerging markets (Asia, Latin America, etc.) that the investment can help with, and the return window is "medium to Long Term."

    I think this is good news. The market needs a healthy Leica, shipping good products.
     
  2. ~tc~

    ~tc~ Mu-43 Hall of Famer

    Oct 22, 2010
    Houston, TX
    Having worked for a company that was owned by Blackstone, I would argue this is the worst possible thing for the camera division of Leica.

    They will not abide by the small volume, inefficient production process model. At best, you will see more Panasonics rebranded as Leica and dilution of the brand. Realistically, they will keep the other parts of the company and spin off the camera division. Worst case, they will say it's just better to close the camera division and sell off its assets - it's worth more split up than whole.
     
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  3. WT21

    WT21 Mu-43 Hall of Famer

    Feb 19, 2010
    Boston
    It's a minority stake

    They don't have control (yet)

    Sent from my iPhone using Mu-43 App
     
  4. krugorg

    krugorg Mu-43 Hall of Famer

    Jul 18, 2011
    Minnesota USA
    I wonder if Blackstone will push them towards m4/3. Leverage the name, but with the potential for much higher volume.
     
  5. Narnian

    Narnian Nobody in particular ...

    Aug 6, 2010
    Midlothian, VA
    Richard Elliott
    They do not need a majority stake to make major changes - if they can get enough other investors to agree.

    I agree with ~TC~. I can see them pushing the brand into a lower cost high volume approach, possibly cheapening the Leica brand. Or even selling the camera line off (maybe to Panasonic). Leica becomes their high end while Lumix the lower end.

    On the other hand, if they could bring Leica technology and designs to lower cost systems that could be a plus. More lenses like the 25/1.4 Summilux could help push the Micro 4/3 system.
     
  6. WT21

    WT21 Mu-43 Hall of Famer

    Feb 19, 2010
    Boston
    Such pessimism!

    Sell off the camera division? What else do they do?

    There are only two share holding groups. Leica is not a public company. Black stone might have rights to buy majority if certain hurdles are not met, etc., but they aren't yet the controlling interest.

    Sent from my iPhone using Mu-43 App
     
  7. ~tc~

    ~tc~ Mu-43 Hall of Famer

    Oct 22, 2010
    Houston, TX
    Measuring devices (Leica Geosystems), other optics like microscopes (Leica microsystems).

    Leica - Three Independent Companies Share the Leica Brand

    At 44%, it doesn't take a whole lot of convincing (probably one vote) to become a majority. Also, these votes are usually more about the $ and leverage than philosophical debates.

    If Blackstone says "do this, and we'll contribute another x million euro", it becomes a pretty simple business decision - you do "this".
     
  8. Yep, Leica is quite big in surveying equipment.
     
  9. WT21

    WT21 Mu-43 Hall of Famer

    Feb 19, 2010
    Boston
    The whole company is lke 250m€ whats to break up? Its not a large conglomerate. There's no massive hidden value to unlock here, by breaking apart such a small company.

    The stated reason for investment is to expand the brand into new geographies and markets. Likely the new investor sees a premium brand that is underutilized. Emerging markets would be a great play for Leica. South America at the moment has some of the world's hottest economies.
     
  10. Hikari

    Hikari Mu-43 All-Pro

    Nov 26, 2010
    What other parts of the company? It is only a camera company. Leica Geosystems and Leica Microsystems are separate companies in their own right. They have nothing to do with the company that makes the M9 or S2,
     
  11. WT21

    WT21 Mu-43 Hall of Famer

    Feb 19, 2010
    Boston
    Doesn't that very link say that they are "independent" companies that "Share the Leica Brand" -- seems they are not related.
     
  12. WT21

    WT21 Mu-43 Hall of Famer

    Feb 19, 2010
    Boston
    According to this post Leica sells 44% to Blackstone | Leica News & Rumors one guy (Dr. Kaufmann) owns 51% of the company. I've no doubt Blackstone has a way to buy the rest of the company in the future. It will be interesting to see how it develops.
     
  13. Biro

    Biro Mu-43 All-Pro

    May 8, 2011
    Jersey Shore
    Steve
    44 percent might not be a majority... but it could very well be a controlling interest if Kaufman sees them as an ally. Ford owned about a third of Mazda, but it was a controlling interest, given the size and structure of the company's board and other shareholders. I'll defer to tc about working for companies owned by Blackstone. But sometimes the right private equity company can be just what the doctor ordered. The fact that they are saying investment return is medium to long-term indicates they may plan to have patience and may understand the unique nature of Leica.