Harman Takes Kohlberg & Goldman Investment – Slaughterhouse A Year Away
Although Kohlberg Kravis Roberts & Co. and Goldman Sachs Group buyout of Harman was called off without notice, the two affiliates have now entered into an investment agreement with the jilted bride.
The terms of the new agreement include the following nails in the coffin:
â€¢ KKR and GSCP will purchase $400 million of 1.25 percent senior notes convertible under certain circumstances into Harman common stock, convertible at a price of $104 per share. KKR and GSCP have agreed to not sell or hedge their position for at least one year.
â€¢ The parties have agreed to terminate their Merger Agreement dated April 26 without litigation or payment of a termination fee.
The company also announced that Brian F. Carroll, member of KKR, will join Harman’s Board of Directors. The company will use the proceeds from the KKR/GSCP investment to repurchase Harman common stock through an accelerated share repurchase program.
Dr. Sidney Harman, executive chairman of Harman, noted, “We are pleased to have reached an understanding with KKR and GSCP. Although we do not agree with the reasons for cancellation of the original merger agreement, we view this $400 million investment as a vote of confidence in our business and its prospects for continued growth.”
The Future: The whole thing stinks. If you’re Harman, it looks like you have about 365 days before Kohlberg Kravis Roberts and Goldman Sachs take out their Ginsu’s and give Harman the ol’ Hedge Slice ‘n’ Dice.