HQ Sale Funds Telcordia Deal
Yep, that's right. Buyout firms Providence Equity Partners and Warburg Pincus sold Telcordia's Piscataway, New Jersey, campus -- all six buildings with their 891,319 square feet -- to investment firm W. P. Carey & Co. (NYSE: WPC) for $119.3 million in a sale-leaseback deal.
Telcordia maintains operational control of the campus under a long-term lease that includes renewal options.
The sale of Telcordia's property gave the buyout firms the cash they needed to complete their acquisition and settle up with the OSS firm's previous owner, Science Applications International Corp. (SAIC). (See Telcordia D-Day Approaches.) SAIC said the sale was completed for "approximately $1.35 billion in cash subject to certain adjustments."
Such a sale-leaseback deal to help fund an acquisition is increasingly common [Ed. note: Hey, it beats selling cookies.] A prepared statement from W. P. Carey says the deal "reflects how private equity firms can... fund major acquisitions. Over the years private equity firms have come to realize the benefits of converting the real estate assets of their current, and future, portfolio companies into working capital."
In the same statement, Larry Bettino, a managing director at Warburg Pincus, said: “By converting Telcordia’s real estate assets into cash we were able to maximize our bid and in the end win the deal.”
That Warburg Pincus and Providence equity saw the need to sell Telcordia's HQ to raise the necessary cash for the deal might dent the M&A aspirations of Telcordia's CEO Matt Desch, who had been hoping that his new bosses would provide an expansion warchest (see Telcordia Craves M&A Warchest).
Desch's mind might be on other financial matters at present, though, as the completion of the sale means he's due a bonus that would make the average salaried worker weep with joy (see Telcordia CEO $trikes $ell-Off Deal).
Telcordia couldn't be reached for comment before this article was published.
— Ray Le Maistre, International News Editor, Light Reading