KKR Abandons Harman Buyout

Suitor cites 'material adverse change' in target's performance
By Nick McMaster,  Newser Staff
Posted Sep 21, 2007 6:39 PM CDT
harman/kardon speakers   (Harman/Kardon)
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(Newser) – Kohlberg Kravis Roberts and Goldman Sachs today called off their deal to buy out audio giant Harman International for $8 billion. The firms announced that a "material adverse change in Harman's business has occurred,'' one of the limited circumstances in which they could abandon the deal without getting stuck with a $225 million break-up fee, Bloomberg reports.

The news caused Harman's stock to plummet 26% despite a statement that it disagreed with the assessment. The $120-a-share deal had dictated that the buyers could not cite a slowdown in the audio industry or overall economy as reasons for scotching the deal, but worries about the credit crunch may nonetheless be behind the pullout.