Kohlberg Kravis Roberts and Goldman Sachs avoided a lawsuit by Harman International when they agreed to buy $400 million in convertible senior notes that Harman will use to repurchase Harman common stock.
Both sides also agreed to terminate their merger agreement "without litigation or payment of a termination fee," Harman said.
The announcement followed a decision by KKR and Goldman Sachs to back out of their plan to take the company private in an acquisition valued at about $8 billion. The two investors claimed they were under no obligation to complete the planned merger, announced in April, because of "a material adverse change" in Harman's business and because Harman breached the merger agreement, a Harman statement said at the time. Harman disagreed with both contentions.
As part of the latest agreement, KKR and Goldman agreed to buy 1.25 percent senior notes "convertible under certain circumstances" into Harman common stock, Harman said. The two ex-suitors also said they won't sell or hedge their position for at least one year, Harman stated.
