Wednesday, September 17, 2008

United States Government: Could It Be Next Acquisition Target?

Private Equity Firms rumored to be engaged in discussion to buy out U.S. Government, take it private

Stating that “Enough is simply enough.”, several Private Equity firms have reportedly submitted a stock and cash offer of undetermined size to Henry Paulsen and Ben Bernanke. If the offer is accepted, the first move would be to NOT require SEC approval of the deal. Reportedly, George W. Bush would be ousted as President/Commander-in-Chief.

One source suggested that former EDS founder Ross Perot would step in to run the newly privatized entity, which would reportedly be completely re-branded with a new name and logo.

One high ranking U.S. government official, speaking anonymously said: “Paulsen likes the deal, but Bernanke isn’t as sure. He thinks there could be a better deal out there. There seems to be a desire to get Greenspan to come out of his hot tub, and endorse the deal before they complete the thing.”

Due diligence is reportedly on-going, but rumor has it that in addition to the cash/stock transaction, the private equity companies would assume an incalculable amount of debt, and all current citizen would have to reapply in order to keep their homes, and meet minimum qualifications in order to maintain their citizenship.

“On the surface, this isn’t such a great deal, but we see a lot of value in the various pieces and parts of the whole enterprise,” said one of the principals, “it is likely that we could recoup a lot of our money right away by spinning of some of the more attractive assets to different owners right away. We see a lot of possibilities, but we have to spend at least a couple of days going over the books.”

Assets rumored for divestiture include the Military infrastructure, numerous pieces of prime real estate currently operated by the U.S. National Park System, and the quasi- private US Postal Service, which would reportedly be merged with Fed-Ex, and UPS in separate transactions.
Possible mergers with neighboring governments are also being explored, but are seen as less likely than the breakup of the US Government after the deal closes.

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The above post is completely false, but no so far fetched as it may seem. The government is currently nationalizing various companies almost overnight. From Reuters reporting on Fannie Mae and Freddie Mac:


The two companies, publicly traded but also serving a government mission to
support housing, were put in a conservatorship that allows their stock to keep
trading but puts common shareholders last in any claims.


Their top executives were ousted.


Freddie Mac chief executive Richard Syron and Fannie Mae's CEO,
Daniel Mudd, were replaced by David Moffett, a former top official at US Bancorp
and Herb Allison, formerly with Merrill Lynch and pension fund TIAA-CREF.

In addition, the U.S. Treasury will immediately take a $1 billion equity stake in
each company in the form of senior preferred stock and if needed could inject up
to $100 billion into each firm.

The government's senior preferreds stock would rank above both existing preferred and common shares and will carry warrants that could give the government an ownership stake of 79.9 percent.


And from the Associated Press via the Hartford Courant, this report:



In the most far-reaching intervention into the private sector ever for the
Federal Reserve, the government stepped in Tuesday to rescue American
International Group Inc. with an $85 billion injection of taxpayer money.


Under the deal, the government will get a 79.9 percent stake in one of the
world's largest insurers and the right to remove senior management.


AIG's chief executive, Robert Willumstad, is expected to be replaced by Edward Liddy, the former head of insurer Allstate Corp., according to The Wall Street Journal, citing a person it did not name.


Willumstad had been at the helm of AIG since June

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Who says the shoe can't suddenly switch to the other foot???




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