Private equity firms Kohlberg Kravis Roberts and Goldman Sachs Capital Partners have teamed up to buy Washington, DC-headquartered Harman International Industries in a transaction valued at roughly $8 billion (€6 billion).
KKR initiated discussions with the high-end audio and electronics maker, and has structured the deal “so that current Harman stockholders have the opportunity to participate in the future upside potential of the enterprise”, the company said.
Under terms of the agreement, stockholders will receive $120 cash per share, or may choose to exchange some or all of their shares for shares in the post-transaction company, which will continue to be called Harman International Industries and be led by founder and executive chairman Sidney Harman.
Approximately 8.3 million shares total are available to stockholders in the post-transaction Harman. The amount represents $1 billion at the $120 per share price and a stake in the firm of approximately 27 percent.
Should demand for stock exceed that limit, shares will be allocated to electing stockholders on a pro-rated basis with the remainder exchanged for cash.
The transaction is expected to close in the third quarter of 2007, and is subject to regulatory and shareholder approval as well as customary closing conditions.
Harman has 50 days to solicit alternative bids.
Bank of America Securities, Credit Suisse, Goldman Sachs and Lehman Brothers have committed debt financing for the deal; the firms are also acting as financial advisors to KKR and GSCP, while Simpson Thacher & Bartlett is providing legal counsel.
Bear Stearns is acting as Harman’s financial advisor, while Jones Day is providing legal counsel.
Wachtell, Lipton, Rosen & Katz is providing legal counsel to both Harman and its special committee reviewing the bid.
Harman makes audio products and electronic systems for the automotive, consumer and professional markets. Its brands include Harman Kardon, JBL, Mark Levinson and Infinity. It employs more than 10,500 people in 16 countries.