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Boston College Law School

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Friday, September 21, 2007

Harman: Yet Another Private Equity Deal Gone Bad

The press release follows. I'll have commentary on it on Sunday.  But my initial thought is that this is plain odd – there is no information out there which I have seen which would support a material adverse change claim. Still, given that KKR’s and GS’s liability is limited under the merger agreement to the reverse termination fee of $225 million they may as well give it a shot.  And of course, they may be trying to cover up the reputational issue which would arise if they simply walked away by asserting a claim of a MAC to cover it. 

Harman Comments on Previously Announced Merger Friday September 21, 3:53 pm ET WASHINGTON--(BUSINESS WIRE)--Harman International Industries, Incorporated (NYSE:HAR - News) announced that it was informed this afternoon that Kohlberg Kravis Roberts & Co. L.P. (KKR) and GS Capital Partners VI Fund, L.P. (GSCP) no longer intend to complete the previously announced acquisition of Harman by a company formed by investment funds affiliated with or sponsored by KKR and GSCP. KKR and GSCP have informed Harman that they believe that a material adverse change in Harman's business has occurred, that Harman has breached the merger agreement and that they are not obligated to complete the merger. Harman disagrees that a material adverse change has occurred or that it has breached the merger agreement.

http://lawprofessors.typepad.com/mergers/2007/09/harman-yet-anot.html

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