DYNCORP – Still Making A Killing
You may have heard that Cerebus Capital Investment recently purchased DynCorp. Dyncorp was a publicly traded DOD contractor that has been awarded billions of dollars for a myriad of defense contracts in Iraq, Afganistan, the Balkans, and other hot vacation spots. Cerebus Capital Management LP has a track record of making investments in a variety of dubious enterprises so the Dyncorp acquisition should come as no surprise. Be it either Chrysler or GMAC, Cerebus has demonstrated it’s effectiveness in acquiring companies with terrible reputations. Cerebus’s own mission statement is “We invest in undervalued companies and their people…” and what happens after that is a tossup.
Now why was Cerebus so interested in Dyncorp International? A company with more public relation problems than Tiger Woods. Dyncorp has human trafficking allegations, shareholder investigations, State Dept. investigations, accounting issues, lawsuits, and prostitution problems and these tend to make a public relation meeting…awkward. With all these distractions getting in the way from their main goal of getting more taxpayer money for unproductive labor and services, the stock price suffered and Afghan police still needed training since they weren’t so successful the first time.
What better way to deal with an image problem then going private. Shareholders can sometimes be such a nuisance and this will relieve the SEC from being overworked with so much effort being spent with Goldman Sachs – who just so happens to have been the financial analyst for the acquisition. It’s that kind of government-corporate cooperation that makes me proud to be an American. In comes Cerebus Capital Management.
Cerebus saw this as an opportunity since war is big business these days and the future is looking bright. With troop surges, defense contractors can make alot of money with support contracts, service contracts, mercenary missions, security services, prostitution, torture, etc. With troop drawdowns, contractors can make a lot of money with support contracts, service contracts, mercenary missions, security services, prostitution, torture, etc. Actually, Dyncorp can make a lot of money no matter what situtation as long as the U.S. keeps bombing, occupying, and destabilizing countries worldwide.
According to Defense Industry Daily:
Private investment firm Cerberus Capital Management, LP has reached a $1.5 billion deal to buy the support and security contractor DynCorp International, including the assumption of debt. The purchase price would be $17.55 per share – a 49% premium to the April 9/10 close of $11.75, and 12.4x the FY 2010 consensus forecast of $1.41 earnings per share
Now if that share price isn’t optimistic about the United States maintaining and expanding the empire I don’t know what is. It may be expensive to U.S. citizens for all these billions in contracts but no price is too high when it comes to world domination peace.
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