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Understanding the GfK-KKR Shareholder Agreement
GfK SE, a German research company, and KKR, a leading global investment firm, announced a shareholder agreement in 2016. This agreement saw KKR take a 18.5% stake in GfK and have two board seats. Let`s take a closer look at what this agreement means for both parties.
Background of the Agreement
Before the agreement, GfK had struggled financially for years, with declining revenue and profits. As a result, the company`s share price had plummeted, and there were calls from shareholders for its management to restructure and sell non-core businesses.
KKR`s investment and board seats were seen as crucial to GfK`s turnaround, bringing in fresh capital and expertise. KKR`s investment would allow GfK to invest in areas such as data analytics, digital marketing, and consumer research.
Terms of the Agreement
The agreement between GfK and KKR stipulated several conditions, including:
1. KKR`s investment: KKR would buy an 18.5% stake in GfK for €46 per share, valuing the company at approximately €1.5 billion.
2. Board membership: KKR would have two seats on GfK`s board of directors.
3. Lock-up period: KKR agreed not to sell its shares for at least two years after the transaction.
4. Non-compete clause: KKR agreed not to compete with GfK`s core businesses for the duration of the agreement.
Impact on GfK
The GfK-KKR agreement had an immediate impact on GfK, with its share price increasing by over 20% after the announcement. The investment allowed GfK to make strategic acquisitions, such as Consumer Panels in Europe, and expand its international business.
The agreement also led to changes in GfK`s leadership and strategy. Following the agreement, GfK`s CEO resigned, and KKR`s representatives joined the board. GfK also initiated a cost-cutting program, which included reducing its workforce.
Impact on KKR
For KKR, the agreement with GfK provided an opportunity to invest in a leading market research company and strengthen its position in Europe. The investment also aligned with KKR`s focus on companies that have a strong market position, sustainable business models, and growth potential.
The GfK-KKR shareholder agreement was a significant development for both companies. For GfK, it brought in much-needed capital and expertise, enabling it to focus on growth and expansion. For KKR, it provided an opportunity to invest in a market leader and further its presence in Europe.
Overall, the agreement demonstrates the importance of partnerships and strategic investments in driving business growth and success.