Private Equity

Calvert School, the private, pre-kindergarten through eighth grade day school in North Baltimore, announced Wednesday that it has sold its more than 100-year-old distance learning business to a private equity firm. The terms of the sale of Calvert Education Services to an investment group led by the Baltimore-based Camden Partners Holdings LLC were not disclosed. "It has a wonderful reputation as a real leader in both home schooling and online education," said David Warnock, Camden Partners' chairman.

Legg Mason Inc.'s stock retreated Friday, a day after shares shot up on a report that the company's board rejected — at least for now — a proposal by senior managers at its affiliates and private equity investors to take the company private. The Baltimore-based money manager's stock rose by more than 3 percent Thursday, but Friday the stock dropped 32 cents to close at $26.52 per share. The decline was driven largely by newly released figures Friday showing that money continued to flow out of Legg funds in the last quarter, said Jeffrey Hopson, a senior analyst with Stifel, Nicolaus & Co. in St. Louis.

Private equity operates with cool detachment, with highly visible results. The global value of private-equity buyouts larger than $1 billion totaled $502 billion last year, according to Dealogic LLC. In the September issue of Harvard Business Review, Felix Barber and Michael Goold contend that U.S. public companies have ceded this financial "sweet spot" to private equity and should join in the buying and selling of firms. Although private equity enjoys tax advantages that permit it to make deals more easily than a public company, the authors see opportunities for those public companies with the proper skills to turn around businesses that appear to have value.

Calvert School, the private, pre-kindergarten through eighth grade day school in North Baltimore, announced Wednesday that it has sold its more than 100-year-old distance learning business to a private equity firm. The terms of the sale of Calvert Education Services to an investment group led by the Baltimore-based Camden Partners Holdings LLC were not disclosed. "It has a wonderful reputation as a real leader in both home schooling and online education," said David Warnock, Camden Partners' chairman.

NEW YORK -- Shares of Blackstone Group rose 13 percent on their first day of trading yesterday, as investors rushed to latch onto the private equity boom that has swept corporate and financial America. Given the fanfare surrounding the company, the event seemed more like the coronation of a new Wall Street monarch than the public debut of an up-and-coming company. And the stock's "pop" - on a day when the broader market fell sharply - was another sign of how buyout shops such as Blackstone are challenging old-school investment banks and brokerages for dominance.

The investment bankers were busy yesterday. Companies announced a flurry of proposed mergers and acquisitions, unrelated save for the fact that they come at a time when there's tons of money in search of firms to buy. At least five deals or offers, valued at $1 billion or more each, were unveiled yesterday. OSI Restaurant Partners Inc., parent of Outback Steakhouse and other brands, said it agreed to be acquired by a private investor group for about $3 billion. Health care products maker Abbott Laboratories said it will buy drugmaker Kos Pharmaceuticals Inc. for about $3.7 billion.

FRANKFURT, Germany -- Not since Juergen E. Schrempp announced that he was stepping down 18 months ago has there been this much interest in the stock of DaimlerChrysler AG. Whether there might be as much interest in a Chrysler spinoff remains to be seen. U.S. and foreign auto companies, private equity groups and investment banks are eager to take a look at the struggling company's financial data. Shares of DaimlerChrysler rose in European trading yesterday for a fifth straight session and have gained 5.5 percent since the company said Wednesday that it was keeping "all options open" in considering the future of Chrysler.

DETROIT -- DaimlerChrysler appears ready to sell a controlling interest in the struggling Chrysler Group to Cerberus Capital Management, a private equity firm, people with direct knowledge of the discussions said yesterday. The deal, which would unwind the 1998 trans-Atlantic merger between Daimler-Benz and Chrysler, could be announced as soon as today, these people said. They insisted on confidentiality because of the sensitive nature of the talks. It would conclude three months of discussions that have taken place since DaimlerChrysler announced in February that it was keeping all its options open for Chrysler, including a sale or finding a partner to run the company.

SafeNet Inc., the Harford County technology company under federal investigation for its stock option grants, said yesterday that it has agreed to be acquired by a San Francisco private equity firm for about $634 million. Vector Capital will acquire all of SafeNet's outstanding shares for $28.75 per share - a 12 percent premium over the company's average closing share price for the 30 trading days that ended Friday. Shares of SafeNet closed up 5 cents yesterday at $28.35. A sale would end the Belcamp company's tenure in the public arena, where its shares have been subject to the ups and downs of the volatile technology sector.

Educate Inc. said yesterday that its top management and others proposed to take the company private by paying $8 a share, or about $344 million, in a move that could mark the latest reincarnation for the Baltimore-based operator of Sylvan tutoring centers. The buyout offer comes just two years after Educate became a public company by selling shares on the Nasdaq. Several analysts said yesterday that they expect the deal to go through as the company tries to turn around its struggling tutoring business.

Paging Mr. Fezziwig. One might get the notion that Charles Dickens' good-hearted fictional employer was back in business after the announcement this week by a private equity firm, Cerberus Capital Management, that it intends to sell Freedom Group Inc., the company that manufactured the Bushmaster rifle used in the Sandy Hook Elementary School massacre. Was this a sudden case of moral conviction? Meanwhile, Dick's Sporting Goods has suspended sales of semiautomatic rifles at its stores.

There are serious clouds over the Maryland State Retirement and Pension System and the way the O'Malley administration has managed it. Consider the following: 1. The rate of return in the year ending March 31 was 3.18 percent, and the rate of return over the previous 10-year period was 5.40 percent, nowhere near the 7.75 percent projected by fund managers. 2. The fund's asset allocation targets are 36 percent public equity, 10 percent fixed income, 2 percent cash, and 52 percent "alternative investments" (10 percent private equity, 10 percent "credit/debt strategies," 10 percent real estate, 15 percent "real return" and 7 percent "absolute return")

Recent headlines of interest from the campaign trail, class warfare division: •The Washington Post: "President Obama Wants It Both Ways on Private Equity" •The Hill: "Democrats Balk at Obama Campaign's Sustained Attack on Bain Capital" •Buzzfeed: "Obama Bundler Decries Vilification of Private Equity" •Politico: "More Dems Struggle on Bain" •Boston Herald: "Deval Patrick Says Bain 'Not A Bad Company'" The foregoing...

The founder of a payment processing firm in Rockville has filed a $300 million lawsuit against Baltimore-based private equity firm Sterling Partners, alleging that he was fraudulently induced into selling SecureNet Payment Systems. The lawsuit, filed last week in Baltimore City Circuit Court, alleges that SecureNet's founder and chief executive, Marc Potash, was duped into selling a 52 percent interest of his company to Sterling Partners for $56 million in September 2010. The lawsuit says the deal stipulated that Potash was to remain CEO and have day-to-day control but was wrongly fired a year later and was unable to collect millions in installment payments.

Columbia-based Ann's House of Nuts has been acquired by Gryphon Investors, the San Francisco private equity firm announced Monday. Terms of the deal were not disclosed. Ann's House of Nuts is the largest manufacturer and marketer of trail mixes in North America. The company's snacks are sold under the Ann's House, Ann's House of Nuts and Nature's Harvest brands in supermarkets, wholesale clubs and mass retailers, among others. Hanah.cho@baltsun.com Text BUSINESS to 70701 to get Baltimore Sun Business text alerts

When Bay Bank took over the failed Bay National Bank last month, little was known about the newly created thrift other than it has a name similar to its predecessor. Some things haven't changed. Bay Bank retained all of Bay National's 22 rank-and-file employees. And like Bay National Bank in its early years, the new Bay Bank plans to focus on providing a "very high level" of customer service and loan products tailored for small- and medium-size businesses, according to Kevin Cashen, who took over as chief executive.

Dutch food conglomerate Royal Ahold NV said yesterday that it has signed a $7.2 billion deal with two private equity firms that would end its seven-year stewardship of U.S. Foodservice, the Columbia food distributor that nearly bankrupted Ahold with a nearly $1 billion accounting scandal. Analysts said the sale could open the way for Ahold to sell its U.S. supermarket chains, including Giant Food of Landover.

Paging Mr. Fezziwig. One might get the notion that Charles Dickens' good-hearted fictional employer was back in business after the announcement this week by a private equity firm, Cerberus Capital Management, that it intends to sell Freedom Group Inc., the company that manufactured the Bushmaster rifle used in the Sandy Hook Elementary School massacre. Was this a sudden case of moral conviction? Meanwhile, Dick's Sporting Goods has suspended sales of semiautomatic rifles at its stores.

Alarmed that the purchase of nursing homes by larger companies could cause a decline in care, Maryland is studying whether restrictions should be placed on ownership as regulators face criticism that private equity groups make it more difficult for the public to hold nursing homes accountable for poor care. The goal of the two bills that Gov. Martin O'Malley recently signed into law is to determine if the type of ownership - ranging from small nonprofits to corporations with worldwide holdings - has a connection with violations of state and federal regulations at nursing homes, said Wendy Kronmiller, director of the state Office of Health Care Quality.

It's easy to understand why Alltel Wireless' private equity owners want to flip the company to Verizon Wireless for no profit less than a year after they bought it. Thanks to the credit boom's collapse, they'd have to search long and hard for any other buyer at any price. But there's another reason for them to speed-dial this deal. The next administration is likely to oppose such an anti-consumer combo no matter who is in the White House. Even at the merger-happy Bush administration, an Alltel-Verizon marriage faces "head winds" and is "vulnerable to challenge," Stifel Nicolaus analysts wrote to clients last week.