August 12 (LPAC)--Many of the unprecedented 2007 wave of corporate "leveraged" takeovers are falling apart in the onrushing credit crisis hitting the international banking system; their demise will feed that crisis, by piling losses on the banks which were syndicating loans for the predatory takeover boom.

The Aug. 12 New York Times and Washington Post report lists of announced--but not yet financed--takeovers from which the principals are now trying to escape with their financial lives. The $10.4 billion takeover of British retail firm Sainsbury by a Qatar-backed fund, Delta Two, is being abandoned. Private equity firm J.C. Flowers is publicly trying to back out of buying the student loan company Sallie Mae. The takeover firms that "bought out" Home Depot's wholesale supply business for $10.3 billion wants to lower the price or quit the deal. These are only the divorce intentions that are being made public.

The reason is the syndicating banks' sudden inability, since early July, to get hedge funds or other funds to buy the junk-bond debt which either the target companies, or the takeover companies, were borrowing to pay for the takeovers. According to the firm Dealogic, at least $289 billion of this debt, for takeovers already announced, can't be sold by the banks. They are stuck with that debt; if they have to sell it at a discount and with much higher interest rates, the banks lose big, as well as losing their lucrative takeover "advice" fees.

Sallie Mae's stock has fallen 20% since its takeover by J.C. Flowers was announced. Tribune Company (takeover by Sam Zell's hedge fund) has dropped 22%; Hilton Hotels (takeover by Blackstone) has dropped 12%. These are clear indications that these deals will not go through: The buyouts are now far too high-priced to be financed in a credit market crisis.

The long-time leveraged takeover top gun firm, Kohlberg, Kravits, Roberts, fittingly now has the largest number of "hung deals," the Times reported, including a $44 billion buyout of TXU electric utility in Texas, and a $24 billion takeover of First Data Corp.