The Teamsters Take On KKR

A labor union is criticizing KKR for stripping too much value out of Dollar General, as part of the retailer’s proposed IPO. No, not the SEIU (that’s so 2008), but rather the International Brotherhood of Teamsters.

The Teamsters last week sent a letter to KKR, expressing concerns over the dividend and fees that KKR and fellow shareholder Goldman Sachs will pay themselves via the IPO. The letter also raises issues such as Dollar General’s ability to repay its debt (in light of expansion plans and the company’s perceived counter-cyclicality), executive compensation, board structure and possible regulatory risks related to OSHA compliance.

I spoke with a couple union execs yesterday, who said this is an investment issue rather than a labor issue. After all, it isn’t like Teamsters are manning the cash registers (quite the image).

More specifically, most Teamster pension funds invest a majority of their assets in public equities – and the parent group wants to warn those sub-investment managers of possible pitfalls to investing in the Dollar General IPO, in particular, and private equity-backed IPOs in general (which the Teamsters correctly sense are increasing in volume). I asked if this is the beginning of a prolonged campaign, but they honestly didn’t seem to have decided yet. For now, they seem content to see what happens with Dollar General.

A KKR spokesman declined comment, of course, due to SEC restrictions related to Dollar General. He did say, however, that his firm has received the letter and is reviewing it.

Here are some of my thoughts on the matter, in a video done this morning for Reuters: