Harman, Buyers Settle Over Aborted Merger

Kohlberg Kravis Roberts & Co. and Goldman Sachs have agreed to invest $400 million in Harman International Industries in the wake of their decision to walk away from an $8 billion deal to buy the District company.

"Although we do not agree with the reasons for cancellation of the original merger agreement, we view this $400 million investment as a vote of confidence in our business and its prospects for continued growth," Haman's executive chairman Sidney Harman said in a statement.

According to a press release, KKR and Goldman's investment entity GS Capital Partners will "purchase $400 million of 1.25% senior notes convertible under certain circumstances into Harman common stock, convertible at a price of $104 per share."

Harman shares closed at $86.40 on Friday.

KKR and Goldman called off the deal, saying unspecified changes in Harman's business made it no longer feasible. The settlement means the investment firms will not have to pay a $225 million termination fee.

By Dan Beyers  |  October 22, 2007; 6:54 AM ET
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