KKR to acquire KKR Financial Holdings for USD2.6bn
KKR & Co and KKR Financial Holdings (KFN) have signed a definitive merger agreement where KKR will acquire KFN through a stock-for-stock merger that values KFN at USD2.6bn.
KFN is a specialty finance company with a portfolio of assets spanning a complementary range of strategies, principally leveraged credit through ownership of subordinated and mezzanine notes across a number of CLOs, special situations and private markets strategies including natural resources, commercial real estate and private equity. KFN is externally managed by KKR.
Under the agreement, which has been approved by the boards of directors of both KKR and KFN, in KFN’s case based on the unanimous recommendation of a committee of independent directors of KFN, shareholders of KFN will receive 0.51 common units of KKR for each common share of KFN.
Based on KKR’s closing price as of 16 December, 2013, the exchange ratio equates to a value of USD12.79 per common share of KFN, implying a 35 per cent premium to KFN’s closing price on 16 December 2013, or USD2.6bn in total common equity value.
Based on the volume-weighted average closing price of KKR common units over the 30 trading days ended 16 December 2013, the exchange ratio implies a 27 per cent premium to the volume-weighted average closing price of KFN common shares over the same time period.
Henry Kravis (pictured) and George Roberts, co-chairmen and co-chief executive officers of KKR, say: “Through this transaction, we are acquiring a business with a fully invested, complementary portfolio of assets while increasing the scale and diversity of KKR’s balance sheet. Furthermore, through the distribution of KFN’s realized earnings, the transaction is expected to provide a meaningfully greater recurring component to KKR’s distribution and also be immediately accretive on a total distribution per unit basis.”
Paul Hazen, chairman of the board of directors of KFN, says: “KFN has built a strong business with a diversified portfolio of assets. This transaction offers KFN shareholders a substantial premium for that business, with an implied value in excess of the company’s trading price over the last five years, while enhancing holders’ liquidity. Furthermore, through the ownership of KKR common units, KFN common shareholders will gain access to the performance of the entire KKR platform, including asset management, capital markets and the KKR balance sheet, in addition to participating in KFN’s legacy portfolio.”
- By Category
- News from other sites
- Special Reports
- By Location
- By Subject
Latest Special Report