8-KMaterial AgreementsRegulation FDExhibits & Filings

KKR & Co. Inc. 8-K Report, Material Agreement (Dec 17, 2013)

Filed December 17, 2013For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. (KKR) announced on December 16, 2013, the execution of a definitive Agreement and Plan of Merger to acquire KKR Financial Holdings LLC (KFN). This transaction, structured as a merger where KFN will become a wholly-owned subsidiary of KKR Fund Holdings, aims to streamline KKR's operations and consolidate its financial services arm. Under the terms of the merger, KFN common shareholders will receive 0.51 KKR common units for each KFN common share. Outstanding KFN stock options will be converted into cash payments representing the difference between the KKR unit value and the option's exercise price. The proposed transaction has received approval from the respective boards and is subject to KFN shareholder approval and regulatory clearances, including HSR Act review. The merger is anticipated to close by September 16, 2014, with potential termination fees and expense reimbursements outlined in the agreement.

Key Highlights

  • 1KKR to acquire KKR Financial Holdings LLC (KFN) via a merger, making KFN a wholly-owned subsidiary of KKR Fund Holdings.
  • 2KFN common shareholders to receive 0.51 KKR common units per KFN common share.
  • 3KFN stock options will be cashed out based on the difference between the KKR unit value and the exercise price.
  • 4Transaction requires KFN shareholder approval and customary regulatory approvals, including antitrust review.
  • 5Merger Agreement includes exclusivity provisions and potential termination fees for KFN.
  • 6The closing deadline for the merger is September 16, 2014.
  • 7The filing also includes a joint press release announcing the merger as an exhibit.

Frequently Asked Questions

This 8-K filing announces the execution of a material definitive agreement, specifically an Agreement and Plan of Merger, between KKR & Co. L.P. (KKR) and KKR Financial Holdings LLC (KFN). The merger will result in KFN becoming a wholly-owned subsidiary of KKR.

Each common share of KFN outstanding immediately prior to the merger will be converted into 0.51 KKR common units, plus cash in lieu of any fractional units. KFN's 7.375% Series A LLC Preferred Shares will remain outstanding as preferred shares of KFN post-merger.

The completion of the merger is subject to several conditions, including: approval by a majority of KFN's outstanding common shares (including a majority held by unaffiliated shareholders), expiration of antitrust waiting periods (e.g., Hart-Scott-Rodino Act), absence of any prohibitive legal orders, effectiveness of the Form S-4 registration statement for KKR units, and listing of these units on the NYSE. Accuracy of representations and warranties, compliance with covenants, termination of KFN's credit facility, and a tax certificate are also conditions.

The Merger Agreement outlines termination rights for both parties. If the merger is terminated under certain circumstances, KFN may be required to pay a termination fee of $26,250,000 to KKR. In other termination scenarios, KFN might be required to reimburse KKR for expenses up to $7.5 million.