What happens in Vegas…

July 23, 2008

Back in April, Perini Corp. (PCR), a large general contracting company whose projects include the MGM CityCenter in Las Vegas and the Foxwoods Resort and Casino in Connecticut, announced that it was acquiring the privately-held Tutor-Saliba Corporation in an $862 million deal. One of the things that makes the deal interesting is that Perini’s Chairman, Ronald Tutor, was also the principal shareholder of the privately held company. As the release noted, Tutor, who willl be chairman and CEO of the combined companies, did not participate in the negotiations.

But some interesting details are coming out as the merger goes forward. For example, in the revised proxy filed on Monday, the company provided further explanation on the hefty goodwill chunk — $746 million — of the purchase price”

“The preliminary estimated amount of goodwill resulting from the merger of $746.4 million generally represents the value of Tutor-Saliba’s geographic market presence, accumulated experience as a general contractor, relationships with suppliers and subcontractors, management team and assembled workforce and the ability of these elements to contribute to the generation of significant future cash flows.

Also interesting are the perks that Tutor will receive as chairman and CEO of the combined company: a car and driver, use of an apartment in Vegas, and 150 hours of flying time a year on the company’s Boeing 737. Granted, all of this was disclosed in Tutor’s employment contract back in April. Still, the ability to carry the flight time forward is pretty interesting and relatively uncommon.

Now presumably, Tutor had access to these types of perks from the privately held company. But once the privately-held company disappears, there won’t be as many opportunities to shift these sorts of expenses out of the public eye.

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