Kohlberg Kravis Roberts, the US private equity group, on Sunday night teamed up with a consortium including banks and hedge funds to buy Laureate Education, the Baltimore-based university group, in a $3.8bn deal.
The deal, clinched at $60.50 per share, or nearly 20 per cent higher than Laureate’s value over the last month, is the latest in a string of management buy-outs in the US.
Douglas Becker, founder and chief executive of Laureate, is participating in the transaction along with KKR, Citigroup’s private equity arm, SAC Capital, the Connecticut-based hedge fund, and other investors including SPG Partners, Bregal Investments, Caisse de depot et placement du Quebec, Sterling Capital, Makena Capital, Torreal, and Southern Cross Capital.
Such management-led deals have attracted criticism from shareholders concerned that the economic incentives for executives to take companies private is resulting in unfairly low takeover prices.
But people close to the deal on Sunday pointed out that the ebitda multiple on the Laureate offer exceeded that paid last year by Providence Equity Partners and the buy-out unit of Goldman Sachs for Education Management, another for-profit education group. Laureate also structured the deal to allow the company to look for higher offers over the next 45 days, leaving the door open for a higher bid.
Although it is based in the US, Laureate operates in 15 countries providing university-level education to some 240,000 students.