KKR agrees to $3.55bn PanAmSat buyout

In the year’s biggest US private equity deal, KKR has agreed to buy PanAmSat from its majority stakeholder, DirectTV Group.

Kohlberg Kravis Roberts today announced an agreement to buy satellite operator PanAmSat in a deal worth $3.55 billion (€2.98 billion).


The New York buyout giant announced the deal along with DirectTV Group, PanAmSat’s current 80.5 percent stakeholder.


The proposed deal is 2004’s largest to date in the US private equity market, which has already seen a number of mega-buyouts.


With approximately $750 million in assumed debt, the deal’s total value is $4.3 billion.


According to reports, KKR won the bidding for PanAmSat over two consortia of private equity firms including Blackstone, Carlyle and Providence Equity; and Thomas H. Lee Partners, Bain and Quadrangle.


Joe Wright, president and chief executive officer of PanAmSat, will continue to lead the satellite company under KKR’s ownership. “With KKR as our partner, we will have the opportunity to enhance our competitive position and significantly expand PanAmSat’s capabilities,” Wright said in a statement.


Credit Suisse First Boston served as financial advisor to DirectTV. Evercore Partners was the ‘special committee’ to PanAmSat.


DirectTV, formerly Hughes Electronics, is a broadband satellite services company 34 percent owned by Fox Entertainment Group, which is approximately 82 percent owned by Rupert Murdoch’s News Corporation. The company is also currently shopping its satellite-based data networks company called Hughes Network Systems.


PanAmSat operates 29 satellites, 24 of which are wholly-owned by the company. According to the press release, this fleet is capable of reaching more than 98 percent of the world’s population.


KKR has been on an investment tear of late. The firm recently announced its portfolio company Rockwood Specialties Group, a Princeton, New Jersey-based specialty chemicals and advanced materials producer, will acquire four businesses of German company Dynamit Nobel, the chemical arm of Frankfurt-based mg technologies. The size of the deal was not disclosed, but it will create a company with $2.5 billion in revenue.


Earlier this month, the firm agreed to acquire Sealy, the world’s largest maker of bedding products, from a group of private equity firms for $1.5 billion.