As one of the alpha dogs in the private equity world, it’s likely that KKR doesn’t often have deals fall through in their final stages.
But the buyout giant received a recent double dose of late-inning heartbreak.
In one setback, struggling music-streaming company Pandora (NYSE: P) has opted out of the $150 million investment from KKR it agreed to last month, instead accepting a $480 million cash injection from SiriusXM on Friday. Additionally, Pandora has decided to sell its Ticketfly business to ticket promoter EventBrite for $200 million. The news comes a day after Pandora extended a deadline to terminate the original PIPE deal that would have gained KKR a minority stake in the company through the purchase of Series A preferred shares, according to reports. Pandora is said to owe KKR a $22.5 million termination fee for backing out of the deal.
Carlson Capital's Double Black Diamond Fund returned 85 basis points net in August, bringing its year-to-date net return to 4.51%. According to a copy of the fund's September update, which ValueWalk has been able to review, its equity relative value and event-driven strategies outperformed during the month, contributing 131 basis points to overall P&L. Double Read More
In a separate development, KKR has dropped out of a Japanese-state-backed consortium’s bid for the memory chip business of Toshiba (TKO: 6502) and been replaced by Bain Capital, according to a Reuters report. Toshiba’s memory chip unit is reportedly valued at $18 billion or more. Reeling after its nuclear power plant Westinghouse Electric went bankrupt earlier this year, the company is expected to announce the winner of the auction for its chip unit in less than a week, again per Reuters.
Neither development qualifies as good news for KKR, which has been the most active PE firm in the world this year, with 40 completed deals, per PitchBook data. Blackstone, the second most active investor, has completed 31 transactions in 2017.
In particular, KKR’s failed bid to make a PIPE investment in Pandora perhaps reflects a broader industry trend. PE PIPE deals peaked with 401 transactions in 2015, dropped to 391 last year and are off to an especially sluggish start in 2017, with just 92 deals completed so far, according to PitchBook data.
Read more about KKR’s recent dealing here.
Article by Adam Lewis, PitchBook