Kohlberg Kravis Roberts is not becoming an activist investor, said Co-President Scott Nuttall, despite the firm building a minority position in U.S. restaurant chain Dave & Buster’s with the intention of pushing for changes.
In filing dated Jan. 9, KKR disclosed it had boosted its stake in the company to 10.7 percent, which grew from 2.65 percent in September.
The disclosure said KKR has and intends to continue discussions with management or the board about the business, strategy, plans and prospects. The firm also may enter discussions with management, the board and shareholders about a sale, change of board or management or other material changes, according to the regulatory filing.
The Dave & Buster’s investment got attention “because of its consumer services nature, but to be clear, there’s nothing new here from our standpoint,” Nuttall said during the firm’s fourth quarter and full-year earnings call in late January.
“We’ve made 40 investments over the last seven years in public companies,” he said. “We’re not activists in the traditional sense. We’re working with management teams of those companies. I think the press ran with it a bit.”
Hedge funds are known for their “activism,” which generally means buying stakes and then agitating for changes in strategy and management without the cooperation of company leadership. This type of strategy is also called a hostile takeover, and was once a big part of the private equity arsenal.
Private equity firms don’t generally get involved in hostile takeover attempts these days, preferring to buy private businesses that are exploring sales and either keeping on management, or bringing in their own expertise.
Dave & Buster’s can use a shot of something, though. Its share price was down 7.5 percent in 2019, according to Forbes. The company saw its share price drop 20 percent in one day in June and said in January it expected comparable store sales to decline between 2.5 percent and 3 percent in fiscal 2019.
The company closed trading Friday Jan. 31 at $44.16.
Oak Hill Capital Partners acquired Dave & Buster’s in 2010 from Wellspring Capital Management in a deal valued at $520 million. Oak Hill took the company public in 2014.