KKR & Co. Inc. (NYSE:KKR) shares are trading lower on Thursday after the company reported mixed fourth-quarter FY25 earnings.
Also, the company disclosed a deal to acquire Sports Investment Group b for $1.4 billion.
Acquisition Deal
The initial consideration comprises $300 million in cash, $900 million in equity to existing Arctos shareholders (with management's portion vesting through 2030), and $200 million in additional equity to be allocated by 2028, vesting through 2033.
This includes equity vesting through 2033, with up to an additional $550 million in future equity tied to KKR's share price and Arctos' performance, vesting through 2031.
Benefits & Synergies
The buyout supports KKR's strategy to grow its platform by acquiring complementary businesses in large, high-potential markets.
Arctos will significantly broaden KKR's proprietary origination and sourcing capabilities, creating complementary synergies across private equity, credit, infrastructure, real estate, insurance, and capital markets.
The integration of Arctos will provide additional capital and capabilities to expand its existing operations, while enhancing KKR's sourcing, origination, and long-duration capital capabilities.
The acquisition is expected to be immediately accretive on a per-share basis across key financial metrics and is subject to closing conditions.
Including this transaction, perpetual and long-duration capital would account for about 53% of KKR's $759 billion in assets under management.
Earnings Snapshot
In a separate release, KKR reported fourth quarter adjusted EPS of $1.12, topping estimates of $1.11, while revenue of $1.64 billion came in slightly below the $1.65 billion consensus.
Fee Related Earnings (FRE) rose 15% year over year (Y/Y) to $1.0 billion ($1.08/adjusted share) in the quarter.
The company invested capital of $32 billion in the quarter and $95 billion in the year.
KKR’s assets under management (AUM) stood at $744 billion, up 17% Y/Y, with organic new capital raised of $27 billion for the year.
KKR Price Action: Kkr shares were down 6.29% at $98.18 at the time of publication on Thursday, according to Benzinga Pro data.
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