PE-backed groups vie for IMG as KKR exits

KKR withdrew last week, leaving Silver Lake in partnership with William Morris Endeavor Entertainment LLC, CVC Capital Partners Ltd in partnership with Chernin Group LLC and Carlyle Group LP in partnership with ICM Partners Inc as the private equity-backed groups in the race, the people said.

Private equity firms that own or partner with companies that have synergies with the companies they want to acquire have an advantage in auctions over buyout firms without a strategic angle.

KKR was pursuing IMG alone after another buyout firm, New Mountain Capital LLC, dropped discussions about a potential joint bid, the people said on condition of anonymity, because details of the auction are confidential.

Final bids for IMG, whose clients include top tennis player Novak Djokovic and supermodel Gisele Bundchen and which owns the rights to numerous sports leagues, are expected by December, the people said.

It remains unclear if another party, not associated with private equity, is still involved in the process as a suitor.

Spokespeople for IMG, ICM and Silver Lake did not immediately respond to a request for comment while William Morris, KKR, CVC, New Mountain and Chernin Group declined to comment.

The sale of IMG is being driven by the trustee that runs the estate of Teddy Forstmann. His private equity firm, Forstmann Little & Co, acquired IMG for $750 million in 2004.

Forstmann Little has held onto IMG for longer than a typical investment period for private equity, and for years it has rebuffed overtures from prospective buyers. Buyout interest increased following Teddy Forstmann’s departure in April 2011 as IMG chairman and CEO, and his death later that year.

Buyers that had approached Teddy Forstmann included former Yahoo CEO Terry Semel, who was willing to pay $1.5 billion in 2008. Sources told Reuters at the time that Teddy Forstmann wanted at least twice the amount.

Last month, advertising agency WPP Plc CEO Martin Sorrell described IMG as an asset he would love to own but said his company cannot afford it, as a frothy auction process pushed valuation towards the $2.5 billion mark. 

Akin Gump Strauss Hauer & Feld litigation partner Mark MacDougall and corporate practice co-chair J. Kenneth Menges, Jr., are managing the wind down of Teddy Forstmann’s private equity empire. Forstmann Little tried to sell 24 Hour Fitness last year, but the process has since stalled.

Sports Business Daily first reported on Friday that KKR had withdrawn its bid for IMG.

Greg Roumeliotis, Soyoung Kim and Nicola Leske are reporters for Reuters News in New York