As U. S. leveraged buyouts began to wilt in late 1989, dealmakers Nelson Peltz and Peter May thought they saw fresh pickings in Europe. So they took $150 million of their takeover haul and parlayed it into control of Mountleigh Group PLC. It looked like a perfect investment vehicle.
Their plan for Mountleigh, an erratically performing London-based property developer, echoed the tactics in the U. S. during the go-go 1980s. They wanted to unload real estate and toturn Mountleigh into a takeover machine. Butthe high-powered duo quickly found that their new-world style clashed with London's conservative financial community. And their high-stakes strategy was ill-timed for Britain's sharp recession.
Now, Peltz is moving back to the U. S., abandoning his acquisition goals in Europe in favor of what he calls the "more familiar" market at home. "We see more opportunities in the U. S.," says Peltz, who will spend most of his time with his New York investment company, Trian Group LP, a $1 billion collection of industrial and real estate operations. Peter May never moved to Britain.
Mountleigh is struggling with $1.1 billion in debt and a share price of 42~, 87% less than when Peltz and May bought. The extent of Mountleigh's problems was unveiled in early July when it announced that property write-offs had contributed to a $155 million pretax loss for fiscal 1991 and forced the company to renegotiate bank credit lines for the second time in a year.
GLITZKRIEG. At Mountleigh, the golden touch Peltz had shown for making huge profits from prosaic U. S. companies turned to lead. With the help of Michael Milken's junk bonds, Peltz turned New York-based Triangle Industries Inc. into the world's largest can maker. He then sold it to France's Pechiney and others for $1.3 billion.
But Peltz's London foray was less fortunate. Peltz's glitzy lifestyle was fodder for the rough-and-tumble British media. And Peltz took his stake in Mountleigh just as the British real estate market was about to crash and as banks were pulling in their horns on takeover financing. Property sell-offs went far slower than anticipated, and as a developer, Mountleigh operations generated little income.
Still, Peltz hunted for European deals. With developer Elliott Bernerd, he looked at buying British retailer Sears PLC, owner of Selfridges Ltd., the landmark London department store. In February, he surprised investors by shifting his buying interest to the U. S., where he attempted an exceedingly complicated takeover of Fairchild Corp., an industrial conglomerate. "Nelson tried very hard," says Jeffrey Steiner, chairman of Fairchild and a longtime friend. "But the bankers in England don't have the same way of doing business Drexel did."
In the meantime, Clive Strowger, a respected former finance chieitzker family and a trust controlled by oil scion Gordon P. Getty.
As he heads back home, Peltz is still hungry for deals. But he'll find that the U. S. is now gripped with the sort of old-world stodginess found in London. That could crimp his style.