Kohlberg Kravis Roberts (KKR) has completed its merger with its Euronext-listed affiliate KKR Private Equity Investors (KPE). In doing so the alternatives firm has taken the first step on its two-stage journey to an expected listing on the New York Stock Exchange (NYSE).
Following the merger, the combined entity – which from tomorrow will be renamed KKR & Co and trade under the ticker KKR – will have the option to seek a future listing on the NYSE.
KKR was established in 1976 and during its history has participated in some of the industry’s landmark deals, such as the 1989 take-private of tobacco and food company RJR Nabisco. The battle for the company, which culminated in KKR paying $31.4 billion for the company, was subsequently documented in the book and film Barbarians at the Gate. The firm was also behind Europe’s largest ever leveraged buyout: the £11.1 billion (€12.2 billion; $17.7 billion) take-private of pharmaceutical and retail group Alliance Boots in 2007.
Co-founders of KKR Henry Kravis and George Roberts described this morning’s merger as a milestone in the firm’s development. “Our mission is to create attractive returns for our investors. This transaction is a milestone that will enhance this mission and provide capital to grow our firm,” they said in a statement.
The management of KKR has coveted a public listing of its management company for some time. The intention to float the firm was first aired in 2007, shortly after rival firm The Blackstone Group listed on NYSE. The subsequent problems in the debt markets caused the firm to shelve the plans, which were then restated in July 2008. Once again turmoil in the financial markets caused the buyout giant to suspend its plans, which were resurrected again in June this year.
The transaction today sees shareholders in KPE allocated 30 percent of the equity in the combined group, with the rest being owned by KKR’s existing shareholders. No existing shareholders have taken any cash off the table as a result of the merger, the firms said.
KPE was advised by Citi, with Lazard acting as adviser to KPE’s independent directors. Goldman Sachs and Morgan Stanley advised KKR.