Harman International to be Acquired by KKR, GS Capital Partners

by Josh Harris
in Uncategorised
WASHINGTON — Harman International Industries, Inc. today announced that it has entered into an agreement to be acquired by affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and GS Capital Partners (“GSCP”) in a transaction valued at approximately $8 billion. The transaction was unanimously approved by the Harman board of directors, following the recommendation of a special committee of independent directors. The company will continue to be named Harman International Industries, and Dr. Sidney Harman, founder and current executive chairman, will remain in his current post.

Henry R. Kravis, co-founding member of KKR, said, “Since founding Harman more than 50 years ago, Dr. Sidney Harman has brought exceptional vision to the company, and we are proud to work with him and the management team to continue building the value of their company.”

Harman stockholders will be entitled to receive $120 in cash for each share of Harman common stock they hold. As an alternative to receiving the cash consideration, Harman’s stockholders will be offered the opportunity to elect to exchange some or all of their shares of Harman stock for shares in the new corporation incorporated by KKR and GSCP in order to acquire Harman.

The total amount of Harman shares that may elect to receive shares in the post-transaction corporation is approximately 8.3 million, which would represent $1.0 billion (at the $120-per-share transaction value) and an approximate 27% equity stake in Harman following the transaction. If elections for post-transaction shares exceed the $1.0 billion cap, post-transaction shares will be allocated to electing stockholders on a pro-rated basis, and the remaining Harman shares will be exchanged for cash.

Dr. Harman, who owns approximately 5% of the outstanding common stock of Harman, has indicated that he will elect to exchange half of his current holdings for post-transaction shares.

Harman has reserved the right to solicit proposals for alternative transactions from third parties for a 50-day period ending on June 15, 2007. Harman’s board of directors will work with independent advisors to solicit proposals.

Completion of the transaction, which is expected to occur in the third quarter of 2007, is subject to the approval of Harman stockholders, customary closing conditions and regulatory approvals.

The stock of the new corporation issued to current shareholders in exchange for their existing shares will be registered with the U.S. Securities and Exchange Commission.

The parties to the merger agreement intend to file a registration statement that will include a proxy statement/prospectus and other relevant documents in connection with the proposed transaction. Interested parties may obtain a free copy of the proxy statement/prospectus (when it becomes available) and other filings containing information about Harman and the merger, when available, from the SEC at the SEC's Web site at http://www.sec.gov.

For more information, visit www.harman.com or www.kkr.com.

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