Some Big Buyouts Encounter Trouble --- Market Is Seen to Be Correcting Excesses
NEW YORK -- In the wake of the biggest year ever in takeovers, some major deals are running into trouble.</br></br>For example, an R.H. Macy & Co. management group that wants to take the big retailer private cut its price on its proposed $3.6 billion buyout. Kohlberg, Kravis, Roberts & Co. wants to do the same with its proposed $6.2 billion buyout of Beatrice Cos.</br></br>Carl C. Icahn had to scuttle his plans to complete a planned merger with Trans World Airlines after he couldn't finance the original deal. And Turner Broadcasting System Inc.'s planned $1.5 billion acquisition of MGM/UA Entertainment Co. is in trouble, too.</br></br>All these transactions are being financed with large issues of high-yield, low-rated "junk" securities. All but the Macy deal depend on financing to be raised by Drexel Burnham Lambert Inc., the investment banking firm that dominates the junk-bond market.</br></br>Leon D. Black, a managing director and co-head of mergers and acquisitions at Drexel, insists that the spate of deal restructurings isn't a trend. The market for takeover deals is "very healthy," he says, and the restructurings are caused by factors unique to each one.