KKR Is Selling Last Of Stake In Seven Media

Target: Seven West Media Ltd

Price: $260 million

Sponsor: Kohlberg Kravis Roberts & Co

Financial Advisers: Deutsche Bank, Goldman Sachs

Kohlberg Kravis Roberts & Co is selling a remaining stake in Australia’s Seven West Media Ltd valued at A$265 million ($260 million), exiting an investment made almost seven years ago at the height of a buyout boom, sister news service Reuters reported.

KKR’s December 2006 deal was its first media investment in Australia. Private equity firms typically hold their investments for five to seven years before exiting to return any profits to their investors. Like many media firms, Seven West has struggled to make revenue from advertising since the financial crisis. Over the past year, it has been on a cost-cutting drive to offset weaker advertising revenues and adapt to tough competition.

KKR’s investment in Seven Media was “net positive,” a source with direct knowledge of the matter told Reuters, meaning the firm is unlikely to record a loss once it fully exits the stake. The source declined to be identified as the information was not public.

KKR put its stake of around 12 percent up for sale on May 21. The sale is being managed by Deutsche Bank and Goldman Sachs, the source said, adding that the shares were offered at A$2.21 each, a 3.1 percent discount to Seven West’s last traded price of A$2.28.

KKR has fared better in its Australian media venture than rival firm CVC Capital, which last year realized a loss of A$1.8 billion from an investment in Nine Entertainment, the biggest ever loss in Asian private equity history. Creditors that had acquired Nine’s debt, including Apollo Global Management and Oaktree Capital Group, took control of Nine last year through a debt-for-equity swap.

Seven West Media went public in 2011 through a merger with West Australian Newspapers. The group is 33 percent owned by Seven Group Holdings, which is controlled by media mogul Kerry Stokes.

In addition to the Seven Television network, Seven West also owns The West Australian newspaper, 50 percent of website Yahoo!7, a joint venture with Yahoo, and the country’s second-largest magazine group, Pacific Magazines.

KKR’s planned exit comes on the same day that Seven West announced the appointment of Tim Worner as its new CEO. Seven West Media said KKR had not been able to sell its stake until the CEO appointment was made public.

KKR’s other Australia investments include mining services company BIS Industrial and aged care company Genesis Care.

Stephen Aldred and Rob Taylor are Reuters correspondents in Hong Kong and Sydney, respectively.