Transcripts

Congress Takes A Very Public Look At Private Equity

SUSIE GHARIB: Bausch & Lomb caught the eye of private equity today. Its shares soared almost 10 percent on word it is being taken private by Warburg Pincus in a $4.5 billion deal. Warburg will acquire all outstanding shares of Bausch & Lomb for $65 each in cash. It`s also assuming $830 million in debt. The move comes just a year after Bausch & Lomb was rocked by a worldwide recall of one of its key brands for contact lens solution. The company still faces over 300 product-liability lawsuits stemming from that recall. Today`s deal also carries a go- shop provision, letting Bausch & Lomb hunt for a higher bid in the next 50 days.

JEFF YASTINE: Over the last year, we have seen an explosion of private equity deals, like today`s buyout of Bausch & Lomb. The value of those deals has soared into the billions of dollars and that now has the House Financial Services Committee taking a closer look at private equity. As Stephanie Dhue reports, lawmakers are concerned workers aren`t sharing in the buyout boom.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: There were $406 billion worth of leveraged buyouts in the U.S. last year. And with no sign of that pace slowing, House Financial Services Committee Chairman Barney Frank wants to be sure workers aren`t left behind.

REP. BARNEY FRANK (D) MASS. AND CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE: If we have a situation in private equity, where enormous values are created as apparently they are, people get these large sums of money and the workers are either no better off or worse off, then from a public policy standpoint that seems to be undesirable.

DHUE: The Service Employees International Union is waging a campaign to pressure buyout firms to share the wealth with workers. Stephen Lerner heads the union`s private equity project.

STEPHEN LERNER, DIRECTOR, PRIVATE EQUITY PROJECT, SEIU: We`re going to be putting a spotlight on individual deals, on problems that arise and also if there are good things. We`d love to talk about those, but we are going to keep raising the same issue. How do people who are working hard, trying to send their kids to college and buy a house have an opportunity to put a better life in this country?

DHUE: Dunkin brands CEO John Luther told lawmakers private equity freed his firm to focus on growing its business for the long term. Dunkin has already distributed stock and options to 150 employees.

JON L. LUTHER, CEO, DUNKIN BRANDS: That`s 15 percent of our company now has some opportunity perhaps for their children to go to college without borrowing money or whatever, so our goal is to continue to distribute that, those stock options and equity opportunities into our organization deeper and deeper.

DHUE: Republicans on the committee threw their support behind private equity, noting it can free companies from Wall Street short-term focus and generate wealth for average investors in pension and mutual funds. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.