Kohlberg Kravis Roberts to merge with European arm

[July 20, 2009]  AMSTERDAM (AP) -- Kohlberg Kravis Roberts, the private equity firm, said Monday it plans to merge with its European arm and keep its Dutch stock market listing, abandoning plans for a U.S. initial public offering for the time being.

KKR & Co LP, one of the best-known private equity firms, announced in July 2007 that it would seek a U.S. public listing, but shelved those plans after the financial crisis began last fall.

KKR said no money would change hands in the deal announced Monday, which has been under negotiation for months. The deal would give shareholders of the European arm a 30 percent stake in the combined company.

In Monday's release, KKR said it had approximately $50.8 billion (euro35.8 billion) worth of assets as of June 30. It said it expects to report earnings of between $390 million and $425 million for the second quarter.

The European arm, KKR Private Equity Investors LP, has been listed on the Euronext stock exchange since April 2006 and invests primarily in projects undertaken by the mother company. It said it expected to have $3 billion in assets under management as of June 30, but didn't estimate earnings.

Its shares, which are notated in dollars, jumped 7.8 percent to $5.80 on the news. They were worth more than $10 a year ago.

The deal is conditional on approval by shareholders in the European arm. KKR said 44 percent have already said they will support the deal and it expects the merger to be completed by Oct. 1.

KKR said the combined company may seek a stock market listing on the New York Stock Exchange -- owner of Euronext -- at some future date.

KKR has headquarters in New York, but according to Monday's press release its group holding company is registered in the Cayman Islands. The European arm is registered in Guernsey, a dependency of Britain.

[Associated Press]

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