KKR Completes Merger with Amsterdam Affiliate, Becomes Publicly-Traded

NEW YORK (Reuters) – Private equity firm Kohlberg Kravis Roberts & Co. closed a long-awaited deal on Thursday to buy its Amsterdam-quoted fund, becoming a Euronext- listed company and completing the first step towards an expected move to the New York Stock Exchange.

The New York firm, co-founded by “buyout king” Henry Kravis, had been planning to follow rival Blackstone Group LP (BX.N) to become a publicly traded company for two years, but its plans were held up by market turmoil.

KKR’s complicated deal to become a publicly traded entity involves combining with KKR Private Equity Investors LP (KKR.AS), a Guernsey-limited partnership traded on Euronext and known as KPE.

KPE was on Thursday renamed KKR & Co (Guernsey), which owns 30 percent of the combined firm.

The company’s stock ticker will be KKR from Friday. The stock is currently listed on some systems as KPE. Shares were up 1.1 percent at $9.45 at 0945 GMT in Amsterdam.

“Our mission is to create attractive returns for our investors,” co-founders Henry Kravis and George Roberts said in a statement. “This transaction is a milestone that will enhance this mission and provide capital to grow our firm.”

KKR is not issuing new capital under the deal and KKR executives are not selling any shares.

KKR originally announced plans to list on the NYSE via a traditional initial public offering in July 2007, a month after Blackstone went public and just before the markets started to tumble. Blackstone’s shares are currently trading at around half their IPO price of $31.

KKR later proposed a more complex method of going public, by combining with KPE. In June, it formally withdrew the proposed New York IPO plan, but kept the door open for such a move, saying it had the ability to seek a listing in the future.

It has said in recent filings that, after the pair combine, either KKR or KPE has the right to require the other to use “reasonable best efforts” to list the combined business in the United States.

A move to a New York listing would likely be in the spring of 2010, a source familiar with the situation previously told Reuters.

KKR appointed its first head of investor relations on Tuesday as it readied itself to become publicly listed.

The transaction is expected to be a non-event for the stock, as the market has been aware of its terms for some time, analyst Michael Kim at Sandler O’Neill said earlier in the week.

“Since the time that they announced the revised terms and indicated a high likelihood that the reverse merger would get approved, I think the stock (KPE) has essentially traded as a proxy for the overall KKR,” said Kim.

KPE’s shares have risen more than 50 percent since the revised terms of the deal were announced on July 20. The shares closed at $9.35 on Wednesday.

KKR has investments in numerous household names such as Toys R Us Inc [TOY.UL], mattress maker Sealy Corp (ZZ.N) and asset manager Legg Mason Inc (LM.N).

(Reporting by Megan Davies, additional reporting by Ben Berkowitz in Amsterdam; editing by Andre Grenon, John Stonestreet)