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

(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.

harman/kardon speakers   (Harman/Kardon)
Kohlber Kravis Roberts   (Kohlber Kravis Roberts)
Harman Kardon Cinespecial 29 in a new industrial design. (Photo   (Associated Press)
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, is shown in this June 12, 2007 file photo. Goldman Sachs Group Inc. on Thursday, Sept. 20, 2007...   (Associated Press)
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