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| The Crusader weapon, developed by United Defense, Carlyle's largest investment in the defense industry, was cancelled in May 2002[11]
Carlyle developed a reputation for acquiring businesses related to the defense industry. In 1992, Carlyle completed the acquisition of the Electronics division of General Dynamics Corporation, renamed GDE Systems, a producer of military electronics systems.[12] Carlyle would sell the business to Tracor in October 1994.[13] Carlyle acquired Magnavox Electronic Systems, the military communications and electronic-warfare systems segment of Magnavox, from Philips Electronics in 1993.[14] Carlyle sold Magnavox for about $370 million to Hughes Aircraft Company in 1995. Carlyle also invested in Vought Aircraft through a partnership with Northrop Grumman.[15] Carlyle's most notable defense industry investment came in October 1997 with its acquisition of United Defense Industries. The $850 million acquisition of United Defense represented Carlyle's largest investment to that point.[11]In the late 1980s, Carlyle raised capital deal-by-deal to pursue leveraged buyout investments, including a failed takeover battle for Chi-Chi's.[7][10] The firm raised its first dedicated buyout fund with $100 million of investor commitments in 1990. In its early years, Carlyle also advised in transactions including, in 1991, a $500 million investment in Citigroup by Prince Al-Waleed bin Talal, a member of the Saudi royal family.[10] Carlyle developed a reputation for acquiring businesses related to the defense industry. In 1992, Carlyle completed the acquisition of the Electronics division of General Dynamics Corporation, renamed GDE Systems, a producer of military electronics systems.[12] Carlyle would sell the business to Tracor in October 1994.[13] Carlyle acquired Magnavox Electronic Systems, the military communications and electronic-warfare systems segment of Magnavox, from Philips Electronics in 1993.[14] Carlyle sold Magnavox for about $370 million to Hughes Aircraft Company in 1995. Carlyle also invested in Vought Aircraft through a partnership with Northrop Grumman.[15] Carlyle's most notable defense industry investment came in October 1997 with its acquisition of United Defense Industries. The $850 million acquisition of United Defense represented Carlyle's largest investment to that point.[11][16] Carlyle completed an IPO of United Defense on the New York Stock Exchange in December 2001, then sold the rest of the stock in April 2004.[17] In more recent years, Carlyle has invested less in the defense industry.[18] Carlyle's 2001 investor conference took place on September 11, 2001. In the weeks following the meeting, it was reported that Shafiq bin Laden, a member of the Bin Laden family, had been the "guest of honor", and that they were investors in Carlyle managed funds.[19][20][21][22][23] Later reports confirmed that the Bin Laden family had invested $2 million into Carlyle's $1.3 billion Carlyle Part Carlyle's 2001 investor conference took place on September 11, 2001. In the weeks following the meeting, it was reported that Shafiq bin Laden, a member of the Bin Laden family, had been the "guest of honor", and that they were investors in Carlyle managed funds.[19][20][21][22][23] Later reports confirmed that the Bin Laden family had invested $2 million into Carlyle's $1.3 billion Carlyle Partners II Fund in 1995, making the family relatively small investors with the firm. However, their overall investment might have been considerably larger, with the $2 million committed in 1995 only being an initial contribution that grew over time.[24] These connections would later be profiled in Michael Moore's Fahrenheit 911. The Bin Laden family liquidated its holdings in Carlyle's funds in October 2001, just after the September 11 attacks, when the connection of their family name to the Carlyle Group's name became impolitic.[25] Buyouts declined after the collapse of the dot-com bubble in 2000 and 2001. But after the two-stage buyout of Dex Media at the end of 2002 and 2003, large multibillion-dollar U.S. buyouts could once again obtain high-yield debt financing and larger transactions could be completed. Carlyle, together with Welsh, Carson, Anderson & Stowe, led a $7.5 billion buyout of QwestDex, [26] the third-largest corporate buyout since 1989.[27] QwestDex's purchase occurred in two stages: a $2.75 billion acquisition of assets known as Dex Media East in November 2002 and a $4.30 billion acquisition of assets known as Dex Media West in 2003.[28] R. H. Donnelley Corporation acquired Dex Media in 2006.[29] Shortly after Dex Media, other larger buyouts would be completed signaling a resurgence in private equity. Lou Gerstner, former chairman and CEO of IBM and Nabisco, replaced Frank Carlucci as chairman of Carlyle in January 2003.Lou Gerstner, former chairman and CEO of IBM and Nabisco, replaced Frank Carlucci as chairman of Carlyle in January 2003.[30][31][32] Gerstner would serve in that position through October 2008.[33][34] The hiring of Gerstner, was intended to reduce the perception of Carlyle as a politically dominated firm.[35] At the time, Carlyle, which had been founded 15 years earlier had accumulated $13.9 billion of assets under management and had generated annualized returns for investors of 36%.[32] Carlyle also announced the $1.6 billion acquisition of Hawaiian Telcom from Verizon in May 2004.[36] Carlyle's investment was immediately challenged when Hawaii regulators delayed the closing of the buyout. The company also suffered billing and customer-service issues as it had to recreate its back-office systems. Hawaiian Telcom ultimately filed for bankruptcy in December 2008, costing Carlyle the $425 million it had invested in the company.[37] As the activity of the large private equity firms increased in the mid-2000s, Carlyle kept pace with such competitors as Kohlberg Kravis Roberts, Blackstone Group, and TPG Capital. In 2005, Carlyle, together with Clayton Dubilier & Rice and Merrill Lynch completed the $15.0 billion leveraged buyout of The Hertz Corporation, the largest car rental agency from Ford.[38][39] The following year, in August 2006, Carlyle and its Riverstone Holdings affiliate partnered with Goldman Sachs Capital Partners in the $27.5 billion (including assumed debt) acquisition of Kinder Morgan, one of the largest pipeline operators in the US. The buyout was backed by Richard Kinder, the company's co-founder and a former president of Enron.[40] In September 2006, Carlyle led a consortium, comprising Blackstone Group, Permira and TPG Capital, in The following year, in August 2006, Carlyle and its Riverstone Holdings affiliate partnered with Goldman Sachs Capital Partners in the $27.5 billion (including assumed debt) acquisition of Kinder Morgan, one of the largest pipeline operators in the US. The buyout was backed by Richard Kinder, the company's co-founder and a former president of Enron.[40] In September 2006, Carlyle led a consortium, comprising Blackstone Group, Permira and TPG Capital, in the $17.6 billion takeover of Freescale Semiconductor. At the time of its announcement, Freescale would be the largest leveraged buyout of a technology company ever, surpassing the 2005 buyout of SunGard. The buyers were forced to pay an extra $800 million because KKR made a last-minute bid as the original deal was about to be signed. Shortly after the deal closed in late 2006, cell phone sales at Motorola Corp., Freescale's former corporate parent and a major customer, began dropping sharply. In addition, in the recession of 2008–2009, Freescale's chip sales to automakers fell off, and the company came under great financial strain.[41][42] Earlier that year, in January 2006, Carlyle together with Blackstone Group, AlpInvest Partners, Hellman & Friedman, Kohlberg Kravis Roberts and Thomas H. Lee Partners acquired Nielsen Company, the global information and media company formerly known as VNU in an $8.9 billion buyout.[43][44][45] Also in 2006, Carlyle acquired Oriental Trading Company which ultimately declared bankruptcy in August 2010[46] as well as Forba Dental Management, the owner of Small Smiles Dental Centers, the largest US chain of dental clinics for children.[47] In 2011, The Carlyle Group- Carlyle Asia Growth Partners IV and Yunfeng Capital[48][49][50] acquired an approximately 80% stake[51][52][53][54] in GDC Technology Limited, a digital cinema solutions provider. 2020On 2 June 2 On 2 June 2020, The Carlyle Group and T&D Holdings reported that they had concluded their purchase of a 76.6% stake in Fortitude Group Holdings, the latter of which comprises Fortitude Re, and American International Company Inc.[55] Also in June 2020, Unison had been purchased by the Carlyle Group and Unison management strategic investment company.[56] In September 2020, The Carlyle Group acquired a majority stake in Minneapolis-based sanitizing machine maker Victory Innovations. Terms of the deal were not disclosed.[57] [57]
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