Tuesday, 3 May 2016
Last updated 21 min ago
Apr 22 2014 | 12:20pm ET
Kohlberg Kravis Roberts’ plan to merge with its publicly-listed specialty finance company should be rejected, a union pension advisory has recommended.
CtW Investment Group said that the $2.6 billion stock deal is a bad one for shareholders of KKR Financial Holdings, which is run by KKR. The advisory argues that the price offered by the latter for the former is too low, and that the “close ties” between the two companies made it impossible to come to a fair price.
“This deal’s low valuation and lackluster negotiation process further demonstrate that KFN’s directors failed to discharge their fiduciary duties and adequately negotiate on behalf of KFN’s business shareholders,” CtW executive director Dieter Waizenegger wrote.
The group also alleges that KFN’s board “made no effort to pursue alternatives or solicit competing bids,” and criticized its decision to “forgo an auction process.”
Those concerns echo those of two major proxy advisories, Institutional Shareholder Services and Glass Lewis. Both of those groups still endorsed the deal.
It is unclear whether CtW’s opposition will mean much: Investors it advises own just 0.1% of KFN shares.