Why Bain hired David Brandon to operate Toys r us: He has a successful IPO history
Why did Boston-based leveraged-buyout specialists Bain Capital hire David Brandon to helm Toys R Us?
Easy: He’s built them into a lot before, and certain is going to do it again.
Before his five years as athletics director for the University of Michigan ended ignominiously along with his resignation last fall, Dave Brandon spent 1999-2010 as CEO of Ann Arbor-based Domino’s Pizza Inc.
Bain had paid Domino’s founder Tom Monaghan $1.1 billion in September 1998 for your company, plus it hired Chicago-based corporate headhunters Heidrick & Struggles Inc. to seek out a professional to operate the pizza chain.
Looking came up with Brandon, who had been running Livonia-based direct-mail giant Valassis Communications Inc. since 1989.
His time at Valassis included the firm’s 1992 dpo - something interesting to Bain because its core business strategy is buying companies and after that later selling them for many additional money.
Brandon led Valassis’ March 1992 IPO that raised nearly $376 million by selling 22.$ 1 million shares of stock at $17 per share.
The business has been bought in 1986 for almost $400 million by Australia’s Consolidated Press Holdings Ltd., and yes it kept 49 percent of Valassis’ shares during the IPO. It sold its remaining stake in 1997.
(In 2014, San Antonio-based Harland Clarke Holdings Corp. bought Valassis for $1.84 billion and took it private. Valassis shares were trading at $34 if your company was de-listed.)
At Domino’s, Brandon was tasked with doing such like.
The pizza giant - it can be second in proportion to Pizza Hut - went public at $14 a share, which raised about $337 million in 2004 to the sale of 24.1 million shares. The IPO was handled by JP Morgan and Citigroup.
The $14 initial price was below analyst expectations, that have the IPO price at $15 to $17 per share. It dropped under $14 in first-day trading, but Brandon noted right at that moment that it was the main restaurant industry IPO in history.
Any disappointment on the IPO price has long since evaporated: Domino’s shares (NYSE: DPZ) today are trading at above $109. That’s a 678 percent rate of increase on the $14 IPO stock price.
Domino's today incorporates a $6 billion market cap.
Not a bad roi, but Bain missed a chunk of the usb ports given it sold its remaining 15 % stake really.
Still, Bain as well as other investors took an $897 million Domino's dividend in 2007. Not very shabby, although a resource of political criticism of Bain when its founder, Mitt Romney, was running for president next year.
Domino’s reported $162.Six million in net gain on revenue of $1.4 billion not too long ago. They have $1.5 billion in long-term debt stemming from a few recapitalizations, which its executives and industry sources say has not been problems for your pizza company.
With the toy giant, Dave Brandon is required to quarterback its long-expected IPO.
In a interview while using the Wall Street Journal , he acknowledged that going public was likely, and not immediate.
“The focus is now on execution, performance and growth,” he stated. “If we focus on one goal, the ownership situation will resolve itself.”