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Kohlberg Kravis Gains on Acquisition News

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Stock price of Kohlberg Kravis Roberts & Co. L.P. (KKR) appreciated by 2.7% since the company announced a definite agreement with Qingdao Haier Co., Ltd on Monday to acquire 10% stake in the latter. While Kohlberg Kravis is a private equity investment firm, Qingdao Haier specializes in home appliances and is a leader in the Chinese market for the same.

Focused on meeting consumer demands and improving the product mix, Qingdao Haier encourages innovations and effective distribution systems. The company has witnessed sustainable growth and is an attractive pick for private equity firms like Kohlberg Kravis.

Kohlberg Kravis, with its 37-year market expertise will support Qingdao Haier in boosting long-term growth and also help it to gain exposure on the global front. This collaboration will see the companies working together to achieve mutually beneficial results.

Further, last week, Kohlberg Kravis signed a share purchase and a shareholders' agreement with Panasonic Corporation, which sanctioned both the companies’ joint ownership of Panasonic Healthcare Co., Ltd. As per the deal, Kohlberg Kravis’s wholly owned company – PHC Holdings Co, Ltd. (:PHCHD) – will buy all the outstanding shares of Panasonic Healthcare worth $1.67 billion. Further, through third-party allocation, PHC Holdings will distribute 80% of the acquired stock to Kohlberg Kravis and the remaining 20% to Panasonic.

Last month, Kohlberg Kravis reaffirmed its plan to buy software company Mitchell International Inc. from Aurora Capital Group. According to Bloomberg, the deal value could be around $1.1 billion (including debt). The transaction is expected to close by fourth-quarter 2013.

In Aug 2013, Kohlberg Kravis announced an agreement to purchase clinical research firm ReSearch Pharmaceutical Services Inc (:RPS) from N.Y.-based global private equity firm, Warburg Pincus.

Having ventured in 25 industries across the U.S. with an investment of $470 billion, Kohlberg Kravis is now keen to explore opportunities beyond the national borders. The company’s investment pattern brings forth the intention of expanding its foothold not only globally but also across industries ranging from software to healthcare.

Moreover, with sluggish economic recovery in the U.S, the booming East Asian and South Asian economies appear to be attractive markets for global investors.

Currently, Kohlberg Kravis carries a Zacks Rank #4 (Sell). Some better-performing financial institutions include GAMCO Investors, Inc. (GBL), Artisan Partners Asset Management Inc. (APAM) and The Blackstone Group L.P. (BX). While GAMCO Investors and Artisan Partners Asset Management carry a Zacks Rank #1 (Strong Buy), The Blackstone Group holds a Zacks Rank #2 (Buy).

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