In 2007—the last glory year before so much came crashing down—investors across Europe, the US and Canada completed 174 of these public-to-private transactions, per the PitchBook Platform. A mere 39 companies have transitioned from the public markets into private equity ownership during the first nine-and-a-half months of 2018, on pace for the fewest take-private buyouts in more than 10 years:
This reverses a three-year trend of take-private buyouts growing more common. And while the amount of overall PE dealmaking is also on track to fall this year, it's far outpaced by the rate of decline for public-to-private takeovers.
Of note, though, is that the size of such deals has gone up—from a little bit less than $1 billion per deal in 2017 to about $1.25 billion per deal so far this year. This hints at a pair of possible explanations for the reversal.
On the NYSE and the NASDAQ, the two largest stock exchanges in the world, there are fewer publicly traded companies than at any point in the past four decades. And the market capitalization of those two exchanges keeps going up. This means there are fewer available targets for take-private buyouts, and that the targets that do exist are more expensive, on average. In some ways, this year's slip in take-private dealmaking across the US, Canada and Europe could be a simple story of supply and demand.
Thirteen of the public-to-private purchases completed this year—a third of all such deals—have been worth at least $1 billion, and 11 of those 13 targets were based in the US. Here's a rundown of the priciest:
CalpineOn March 8, a group led by Energy Capital Partners completed its acquisition of US power-generation giant Calpine for $15.25 per share, or $5.6 billion, to mark the largest take-private buyout in the US, Canada or Europe so far in 2018. Access Industries and the Canada Pension Plan Investment Board also participated in the takeover, which had been agreed to in August 2017 and represented a hefty 51% premium to Calpine's share price the day before reports of a possible sale emerged. Calpine had been publicly traded for more than 20 years until the deal.
CotivitiIn an example of private equity firms spending more than ever on take-private add-ons, Veritas Capital and portfolio company Verscend Technologies bought Cotiviti, a provider of payments software for the healthcare industry, for $4.9 billion. The deal was agreed to in June and finalized during the last week of August, marking a 32% premium to the company's stock price at the beginning of June. Veritas bought Verscend (fka Verisk Health) from Verisk Analytics for $820 million in 2016.
Kindred HealthcareThe July acquisition for $4.1 billion of Kindred Healthcare, an operator of hospitals and other care services, was one of two major healthcare deals conducted this year by the consortium of Humana, TPG Capital and Welsh, Carson, Anderson & Stowe. Just nine days later, the same trio bought hospice operator Curo Health Services from Thomas H. Lee Partners for $1.4 billion. Humana now owns 40% of Kindred after taking the company private, while TPG and WCAS control the other 60%.
Blackhawk NetworkSilver Lake and P2 Capital Partners paid $3.5 billion in June to acquire Blackhawk Network, a fintech company that provides pre-paid gift and rewards cards. The deal was finalized five months after it was announced, with the two firms shelling out $45.25 per share, a 29% premium to the company's average closing share price during the 90 days just before the pact was unveiled. Blackhawk is one of four California-based companies to be taken private for at least $1 billion in 2018.
Related read: 2017 is a down year for US take-private buyouts