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Encyclopedia > Kohlberg Kravis Roberts

Kohlberg Kravis Roberts & Co (commonly referred to as KKR) is a New York City-based private equity firm that focuses primarily on late-stage leveraged buyouts. It was founded in 1976 by Jerome Kohlberg, Jr., and cousins Henry Kravis and George R. Roberts, all of whom had previously worked together at Bear Stearns. From [1] This work is copyrighted. ... New York, New York and NYC redirect here. ... Private equity is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market. ... A leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or bootstrap transaction) occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt. ... Year 1976 Pick up sticks(MCMLXXVI) was a leap year starting on Thursday (link will display full calendar) of the Gregorian calendar. ... Jerome Kohlberg, Jr. ... Henry R. Kravis (born January 6, 1944 in Tulsa, Oklahoma, United States) is an American business financier and investor, notable for co-founding and heading the leading private equity firm, Kohlberg Kravis Roberts & Co. ... George R. Roberts (1945-) is a financier and was one of the founders of Kohlberg Kravis Roberts & Co. ... The Bear Stearns Companies, Inc. ...

Contents

The KKR approach

KKR specializes in leveraged buyouts (LBO) and suggest that they developed the principle of creating a series of limited partnerships to acquire various corporations which they deemed to be underperforming. In most cases, KKR (often with management) financed up to twenty-five percent of the acquisition price with its own capital and borrowed the remainder through bank loans and by issuing high-yield bonds, while having a more favorable approach towards the latter. KKR would often ensure that the target company's management retained an equity interest to create a personal financial incentive for them to approve of the takeover and work diligently towards the success of the investment. A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). ... For other uses, see Corporation (disambiguation). ... Capital has a number of related meanings in economics, finance and accounting. ... High yield debt (non-investment grade or junk bond) is a business term referring to a corporate debt instrument, usually a bond, that has a higher yield (compared to investment grade debt) because of a high perceived credit risk (default risk). ... This article or section is in need of attention from an expert on the subject. ...


The bank loans and bonds used to finance the acquisition were collateralized by the tangible and intangible assets of the target company. Because the bondholders only received their interest and principal payments after the banks were repaid, these bonds were deemed riskier than investment grade bonds in the event of default or bankruptcy, and popularly became known as "junk bonds." In business and accounting an asset is anything owned, whether in possession or by right to take possession, by a person or a group acting together, e. ... High yield debt (non-investment grade or junk bond) is a business term referring to a corporate debt instrument, usually a bond, that has a higher yield (compared to investment grade debt) because of a high perceived credit risk (default risk). ... In finance, default occurs when a debtor has not met its legal obligations according to the debt contract, e. ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration—see text) in the United Kingdom. ... High yield debt (non-investment grade or junk bond) is a business term referring to a corporate debt instrument, usually a bond, that has a higher yield (compared to investment grade debt) because of a high perceived credit risk (default risk). ...


Investment banks such as Drexel Burnham Lambert, led by Michael Milken, helped raise money for leveraged buyouts. Once the targeted company was acquired, KKR would help restructure the company, usually selling off certain underperforming assets and implementing a series of cost-cutting measures. The new "leaner and more efficient" company could then be resold, often at significant return on investment. To meet Wikipedias quality standards, this article or section may require cleanup. ... Drexel Burnham Lambert was one of the most profitable Wall Street investment banking firms during the late 1970s and most of the 1980s. ... Michael Robert Milken, born July 4, 1946, in Encino, California, is an American financier best known as the Junk Bond King of 1980s era Wall Street. ... Restructuring is the corporate management term for the act of partially dismantling or otherwise reorganizing a company for the purpose of making it more efficient and therefore more profitable. ... In finance, the return on investment (ROI) or just return is a calculation used to determine whether a proposed investment is wise, and how well it will repay the investor. ...


Deals

After the 1987 resignation of Jerome Kohlberg at age 61 (he later founded his own private equity firm, Kohlberg & Co.), Henry Kravis succeeded him as senior partner. Under Kravis and Roberts, the firm was responsible for the 1988 leveraged buyout of RJR Nabisco. At a cost of $31.4 billion including net debt of $6.3 billion, it was then the highest price ever paid for a commercial enterprise, financed with a combination of bank debt, high yield bonds, and a $3.6 billion equity investment by KKR. The deal was only rivaled in July 2006 by the $33 billion buyout of U.S. hospital operator Hospital Corporation of America, in which KKR also participated, though the RJR deal was larger, adjusted for inflation. A leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or bootstrap transaction) occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt. ... RJR Nabisco, Inc. ... The Hospital Corporation of America (HCA) NYSE: HCA is the largest private operator of health care facilities in the world. ...


The publicity surrounding the RJR Nabisco buyout led to a book, Barbarians at the Gate: The Fall of RJR Nabisco and subsequent film. The initial equity injection by KKR was $1.5bn, in July 1990 they were forced to put in an additional $1.7 bn. Barbarians at the Gate: The Fall of RJR Nabisco (ISBN 0060161728) is a book by Bryan Burrough and John Helyar, about the leveraged buyout (LBO) of RJR Nabisco. ... Barbarians at the Gate is a made-for-TV movie based upon the book by Bryan Burrough and John Helyar, about the leveraged buyout (LBO) of RJR Nabisco. ...


The RJR transaction benefited many of the parties involved. Investment bankers and lawyers who advised KKR walked away with over $1 billion in fees, and Henry Kravis and George Roberts attracted unprecedented amount of publicity that turned the cousins into instant celebrities.


However, KKR's investors, mainly public and private pension funds who provided KKR with the capital for this buyout, did not do so well. After over fifteen years of efforts that included taking RJR public, as well as exchanging shares of RJR for the ownership of Borden Foods, formerly chemicals-to-pasta conglomerate, KKR finally exited the investment in 2005, selling the remnants of its stake in Borden's Chemical division to Apollo group at a significant loss.


In the recent years, KKR's track record has been mixed. Heavy losses on such investments as Regal Entertainment Group, Spalding, and Primedia were offset by successes in Willis Group, Wise Foods, Inc., Shoppers Drug Mart, Bell Canada Yellow Pages, Wincor Nixdorf, MTU Aero Engines and TXU, among others. KKR opened a successful office in London led by Johannes Huth, but it lost many of its original partners, including Saul Fox, Ted Ammon, Ned Gilhuly, Mike Tokarz and Scott Stuart who were instrumental in establishing KKR's reputation and track record in the 1980s. KKR remains tightly controlled by Kravis and Roberts. The issue of succession will likely continue to leave a large dark cloud over KKR's future. Regal Entertainment Group (NYSE: RGC) is North Americas largest movie theatre chain, operating 6,273 screens in 584 locations in 40 U.S. states. ... Spalding is a sporting goods company started in Chicago by A.G. Spalding in 1876. ... Primedia Logo Primedia Inc. ... The WISE Owl eye logo Wise Foods, Inc. ... Shoppers Drug Mart Corporation TSX: SC is Canadas largest pharmacy chain with almost 1000 stores operating under the names Shoppers Drug Mart across Canada (outside of Quebec) and Pharmaprix in Quebec. ... Yellow Pages Income Fund TSX: YLO.UN is a Canadian income trust which is a publisher of printed and online telephone directories and classified advertising through its subsidiaries Yellow Pages Group and Trader Corporation. ... Wincor Nixdorf (FWB:WIN) is a corporation that provides retail and retail banking hardware, software, and services. ... MTU Aero Engines, Germanys leading aircraft engine manufacturer, develops, manufactures and provides service support for aircraft engines, military and civil alike. ... TXU (formerly TU Electric) NYSE: TXU is an energy company headquartered in Energy Plaza in Dallas, Texas. ...


Recent activities

(may 2006 : consortium to buy Nielsen (former VNU) ) (nov 2006 : buys French Yellow Pages) is the 148th day of the year (149th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... CVC Capital Partners is a European private equity firm. ... Coles Group Limited (formerly Coles Myer Limited) is an Australian public company which operates numerous retail chains. ... is the 116th day of the year (117th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... Harman International Industries is an international audio equipment company. ... is the 92nd day of the year (93rd in leap years) in the Gregorian calendar. ... 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Boots is the name of at least five different albums and singles: Boots by Nancy Sinatra (1966) Boots by Mighty Gabby (1984) Boots by Condemned Eighty Four (2001) Boots by KMFDM (2002) Boots by Noe Venable (2003) It is also the name of a large chain of chemists in the... is the 114th day of the year (115th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... Dollar General (NYSE: DG) is a chain of limited-selection consumable retail stores operating in 30 U.S. states. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... This article is about the U.S. state of Tennessee. ... A 99 cent store A variety store or price-point retailer is a retail store that sells inexpensive items, usually with a single price point for all items in the store. ... 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Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ... Mohave Generating Station, a 1,580 MW coal power plant near Laughlin, Nevada A fossil fuel power plant is an energy conversion center that burns fossil fuels to produce electricity, designed on a large scale for continuous operation. ... Alternative energy is energy derived from sources that do not harm the environment or deplete the Earths natural resources. ... is the 23rd day of the year in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... Sun Microsystems, Inc. ... is the 335th day of the year (336th in leap years) in the Gregorian calendar. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... The Texas Pacific Group (commonly referred as TPG) is a private equity investment firm founded by David Bonderman, James Coulter and William Price in 1993. ... The Home Depot (NYSE: HD) is an American retailer of home improvement and construction products and services. ... is the 324th day of the year (325th in leap years) in the Gregorian calendar. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... The Seven Network is an Australian television network, owned by the Seven Media Group. ... Tarkett is today one of the largest producers and distributors of resilient floorings worldwide. ... Philips HQ in Amsterdam Koninklijke Philips Electronics N.V. (Royal Philips Electronics N.V.), usually known as Philips, (Euronext: PHIA, NYSE: PHG) is one of the largest electronics companies in the world, founded and headquartered in the Netherlands. ... is the 215th day of the year (216th in leap years) in the Gregorian calendar. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... Silver Lake Partners is a notable American private equity firm founded in 1999 and headquartered on Sand Hill Road in Menlo Park, California. ... For other uses of NXP, see NXP (disambiguation). ... A Supervisory board is a group of individuals chosen by the stockholders of a company to promote their interests through the governance of the company and to supervise and control the executive directors and CEO. Germany In Germany the Aufsichtsrat or Supervisory Board is composed of 11 non-executive directors...

  • In 2005 KKR bought the German company Duales System Deutschland, which has a monopoly on recycling the packaging of consumer goods.
  • According to Germany's Handelsblatt, KKR and financial investor Permira bought Germany's second largest private television chain ProSiebenSat.1 Media.
  • In 2007, after being hit by the US credit markets chaos, KKR had to postpone a $1.25 billion public offering after investors showed little interest.[12]

The Handelsblatt is the leading German commercial economy newspaper published by the Verlagsgruppe Handelsblatt in Düsseldorf, a subsidiary of Georg von Holtzbrinck Publishing Group. ... Permira is an international, private equity firm based in the United Kingdom. ... ProSiebenSat. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ...

Notable current and former employees

As of 1996, general partners (as opposed to associates) included Henry Kravis, George R. Roberts, Paul E. Raether, Robert I. MacDonnell, Michael W. Michelson, Saul A. Fox, James H. Greene, Jr., Michael T. Tokarz, Clifton S. Robbins, Scott M. Stuart, Perry Golkin and Edward A. Gilhuly. Gilhuly was the Managing Partner of KKR's European operations, based in London until November 2004, when he returned back to the United States. Johannes Huth, then a 44 year old (now 46) German national, was appointed head of the London office. Along with these partners and employees is one of the investors and share owner, Robert Rosner. Year 1996 (MCMXCVI) was a leap year starting on Monday (link will display full 1996 Gregorian calendar). ... Henry R. Kravis (born January 6, 1944 in Tulsa, Oklahoma, United States) is an American business financier and investor, notable for co-founding and heading the leading private equity firm, Kohlberg Kravis Roberts & Co. ... George R. Roberts (1945-) is a financier and was one of the founders of Kohlberg Kravis Roberts & Co. ... For other uses, see Europe (disambiguation). ... This article is about the capital of England and the United Kingdom. ... This article is about the capital of England and the United Kingdom. ...


Business

Theodore Robert Ammon (August 30, 1949 in Pittsburgh, Pennsylvania - October 20, 2001 in East Hampton, New York) was an American financier and Investment Banker. ... This page is a candidate for speedy deletion. ... An older Wells Fargo branch, located in Berkeley, California Wells Fargos corporate headquarters and main branch Wells Fargo & Co. ... The Right Honourable Clive Richard Hollick, Baron Hollick (born 19 May 1945) is a British businessman with media interests. ... UBM Logo United Business Media provides business information services principally to the technology, healthcare, media, automotive and financial services industries. ...

See also

A leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or bootstrap transaction) occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt. ... A leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or bootstrap transaction) occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt. ... Toys R Us (currently typeset as Toys Я Us in the logo) is a toy store chain based in the United States, Canada, Australia, the Netherlands, South Africa, Hong Kong and the United Kingdom. ... A Real Estate Investment Trust or REIT (rhymes with meet) is a specialized form of investment company in the United States that effectively allows its (usually public) investors to share the ownership of a group of real estate properties. ...

References

  1. ^ [1]
  2. ^ Harman International press release
  3. ^ http://www.secinfo.com/$/SEC/Filing.asp?D=Vut2.u4Ux
  4. ^ http://www.sec.gov/Archives/edgar/data/800459/000080045907000054/har8kexh991.htm
  5. ^ NY Times article
  6. ^ "Terra Firma drops Boots bid plan", BBC, Apr 24, 2007. 
  7. ^ "Dollar General being acquired for $6.87B by equity firm", The Tennessean, 2007-03-12. Retrieved on 2007-03-12. 
  8. ^ "KKR, Texas Pacific-led group to buy TXU Corp", Reuters, Feb 26, 2007. 
  9. ^ DAVID KOENIG. "TXU's $32B takeover by KKR-led group draws only muted criticism", Houston Chronicle, Feb 26, 2007. 
  10. ^ [2]
  11. ^ [3]
  12. ^ KKR postpones $1.25 bn float as credit chaos deters buyers (Times Online)

For other uses, see BBC (disambiguation). ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... is the 71st day of the year (72nd in leap years) in the Gregorian calendar. ... Reuters Group plc (LSE: RTR and NASDAQ: RTRSY); pronounced is known as a financial market data provider and a news service that provides reports from around the world to newspapers and broadcasters. ... The Houston Chronicle is a daily newspaper in Houston, Texas, United States. ...

External links


  Results from FactBites:
 
Kohlberg, Kravis, Roberts (KKR): Merchants of Debt (2207 words)
Kohlberg would find lenders who would provide the bulk of the capital for the purchase of the business in return for an appropriate interest rate on the debt and perhaps a share of the equity.
Although later KKR came to consider a sinister element in the market, in 1986 KKR was still considered a "white knight." Henry Kravis and George Roberts were polite, considerate and charming while the Hafts were considered abrasive and abusive.
KKR had found that the most difficult component of the financing of one of their LBO's was the subordinated debt.
Kohlberg Kravis Roberts - Wikipedia, the free encyclopedia (991 words)
Kohlberg Kravis Roberts and Co (commonly referred to as KKR) is a New York City-based private equity firm that focuses primarily on late stage leveraged buyouts.
KKR helped develop and popularize the acquisition concept known as the leveraged buyout (LBO) by creating a series of limited partnerships to acquire various corporations, which they deemed to be underperforming.
KKR would often ensure that the target company's management retained an equity interest to create a personal financial incentive for them to approve of the takeover and work diligently towards the success of the investment.
  More results at FactBites »

 
 

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