Hicks Muse to invest in Europe with $1.5 bil fund
Buyout firm to open London digs, new currency attractive
Citing attractive acquisition opportunities as Europe moves toward a single currency, the Dallas-based company plans to open a London office in January and plans to raise a $1.5 billion fund to invest in Europe.
"We believe there is going to be a huge increase in merger and acquisition activity in Europe. It's already begun, and once the monetary union is actually here, it will accelerate," chief operating officer John Muse said in a telephone interview from London to New York. Eleven European countries are slated to swap their currencies for the new euro in January.
Founded in 1989, Hicks Muse in the past few years has assembled radio and television assets into a media powerhouse. It recently announced plans to combine its Chancellor Media Corp. and Capstar Broadcasting Corp. to create the largest U.S. radio company. In addition, the company is partners with Kohlberg Kravis Roberts in Regal Cinemas, the largest U.S. movie theater chain in terms of screens.
Other holdings include a 62% stake in Texas oil producer Coho Energy Inc., television company Lin Holdings Corp., circuit board manufacturer Viasystems Group Inc. and Mexican insurance company Seguros Commercial America.
Hicks Muse last week walked away from a deal to buy two units of U.S. publisher Simon & Schuster from British media group Pearson Plc for $860 million. Hicks Muse had sought to cut the price because it believed the businesses were not meeting financial projections. It denied rumors that financing problems caused the deal's collapse.
And on Tuesday, Hicks Muse announced a $100 million investment in Brazilian pay television station TV Cidade. It already has pay television investments in Argentina, Venezuela and Mexico.
Hicks Muse is not a complete stranger to Europe. The company recently announced a $206 million acquisition of Glass's Group, a British-based provider of automotive information services and a well-known car pricing guide.
Hicks Muse sees a wealth of buying opportunities as European conglomerates continue to slim down and unload noncore assets.
"For firms like us, there will be a lot of things to look at, and out of all these divestitures we're hopeful there will be a lot of diamonds in the rough," Muse said.
"We're going to be looking for add-ons for our U.S. companies. We're going to be looking for companies like Glass's where we can execute a pan-European strategy," he said.
Hicks Muse currently faces restrictions on European spending because its active $4 billion fund is limited to a 30% investment outside the United States.
"The more we looked at (European opportunities), it became clear to us that this could be quite large. We don't think the 30% will be enough to take full advantage of the opportunities that are here," Muse said. That's why the company will set up a separate fund for European investments.
Although the new fund will target Europe, most of the money is expected to come from American investors, who now represent about 80% of the group's investment base.
