When: Thursday, February 28th
Where: CNBC's "Power Lunch"
Following is the unofficial transcript. All references must be sourced to CNBC.
SUE says to Ron Perelman that "LATELY NOT THAT MANY DEALS BEING MADE...."
RON PERELMAN: I THINK THAT ABILITY (TO DO DEALS) IS GOING TO BE CURTAILED FOR SOME TIME NOW. I DON'T THINK WE'VE GOT THE CREDIT MARKETS AVAILABLE TO DO LARGE FINANCIAL TRANSACTIONS OR EVEN SMALL FINANCIAL TRANSACTIONS TODAY. SO I THINK DEALMAKING AS WE KNOWN IT FOR THE LAST DOZEN YEARS IS GOING TO BE PUT ON THE SHELF FOR AWHILE. I THINK WE'LL SEE SYNERGISTIC DEALS - CORPORATE DEALS - BEING DONE - WHERE THERE'S REAL VALUE ADDED, WHERE THERE'S REAL PRODUCT EXTENSION, WHERE THERE'S REAL REVENUE GROWTH. THOSE KIND OF DEALS ARE TRADITIONALLY SMALLER, ADD MORE VALUE IN EBITA CREATION TO ACQUIRER AND THEY'RE MORE EASILY FINANCED. THE MEGA DEALS ARE DONE FOR A LONG LONG TIME.
SUE: EVEN THOUGH THE FED HAS BEEN AGGRESSIVE. YOU DON'T SEE THAT TURNING AROUND THE SITUATION ANYTIME SOON?
RON PERELMAN: NO, I THINK THE BANKS ARE STILL CHOCK A BLOCK WITH ASSETS THEY'D LIKE TO GET OFF THEIR BALANCE SHEETS BEFORE THEY BECOME LENDERS IN THE MARKET PLACE AGAIN. AND I THINK THERE'S GOING TO BE LOTS OF OPPORTUNITIES IN THE NEAR TERM BUT I THINK THE TRICK IS GOING TO BE GETTING THOSE OPPORTUNITIES FINANCED.
SUE HERERA ASKS ABOUT THE CURRENT ECONOMIC CONDITIONS...
RON PERELMAN: IN MY ENTIRE BUSINESS CAREER I'VE NEVER SEEN A CONVERGENCE OF NEGATIVE ISSUES LIKE WE'VE SEEN NOW. YOU'VE GOT THE CONSUMER BEING STRAPPED WITH HIGHER GAS PRICES, HIGHER FUEL PRICES, HIGHER LIVING COSTS. THE JOB MARKETS ARE NOT WHAT THEY WERE FIVE YEARS AGO. YOU'RE SEEING JOBS BEING TRANSFERRED OFFSHORE MORE RAPIDLY. AND YOU'VE GOT BASICALLY A BLOCKAGE IN THE FINANCIAL SERVICES MARKET. THERE'S NO LENDING BEING DONE EITHER TO CONSUMER OR CORPORATE. AND I THINK IT'S GOING TO BE AWHILE BEFORE THAT GETS FIXED. AND I THINK THERE'S MORE SURPRISES ON THE HORIZON OTHER THAN THE SUBPRIME ISSUE.
SUE: WHERE WOULD THOSE SURPRISES MIGHT COME?
RON PERELMAN: WE'VE SEEN A CREATION OVER LAST SEVERAL YEARS OF STRUCTURED PRODUCT THAT I THINK PEOPLE THOUGHT HAD DIFF. VALUES IN DIFF PLACES IN THE CAPITAL STRUCTURE THAN IN REALITY THEY HAD. SOME OF THESE MODERN LINE INSURANCE COMPANIES SUPPORT IS CLEARLY A QUESTION, AND THE RESULT OF THAT IS UNFATHOMABLE IN THE NEGATIVE. I THINK THERE ARE MANY ISSUES WE GOT TO KEEP OUR EYE ON. I THINK ONE BY ONE THEY'RE SOLVABLE. BUT I DON'T THINK THEY'RE GOING TO BE SOLVABLE IN THE NEAR TERM.
I THINK THE MAIN THING CONCERNS ME IS PROTECTING THE AMERICAN FAMILY AND THE LOSS OF THEIR HOUSING. AND I THINK THERE HAS TO BE LEGISLATION PUT IN PLACE RATHER QUICKLY TO DO THAT IN A WAY THAT PROTECTS THE REAL HOMEOWNERS WITHOUT THROWING THEM IN THE LOT OF THE SPECULATORS AND THOSE THAT SOUGHT TO PROFIT BY THE FINANCING THAT WAS AVAILABLE TO THEM TWO YEARS AGO.
Mr. Perelman appeared to discuss his gift of $50 million to the New York-Presbyterian Hospital/Weill Cornell Medical Center; the gift will establish the Ronald O. Perelman Heart Center Institute and support new research and clinical care initiatives at the Center for Reproductive Medicine, which will now be known as the Ronald O. Perelman and Claudia Cohen Center for Reproductive Medicine.
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.