Why Global Investment Firm KKR's Shares Are Shooting Higher Today

KKR & Co. Inc. KKR has agreed to acquire the remaining 37% stake of leading insurance company Global Atlantic, increasing its ownership to 100%.

In 2021, KKR completed a strategic transaction that valued Global Atlantic at approximately $4.7 billion by acquiring a controlling 60% interest. Global Atlantic's assets under management have more than doubled, increasing from $72 billion in 2020 to $158 billion today, KKR said.

"The strategic partnership we envisioned three years ago has exceeded our expectations...We expect the new ownership structure will foster even closer collaboration, allowing us to fully leverage our complementary strengths and grow faster together," commented Joe Bae and Scott Nuttall, Co-Chief Executive Officers of KKR.

The terms of the acquisition include a cash payment to Global Atlantic's minority shareholders, based on the company's book value, with the total estimated cash purchase price being approximately $2.7 billion.

Post-acquisition, Global Atlantic will continue operating under its existing brand and management team. The transaction, anticipated to close in 1Q24.

KKR will fund the transaction from its balance sheet, which had $23 billion of cash and investments as of September 30, 2023.

Alongside the acquisition, KKR has unveiled a series of strategic initiatives. These include the formation of a new business segment named Strategic Holdings, a shift in compensation structure to emphasize success-based rewards, and the introduction of a new reporting framework. These initiatives are aimed at enhancing shareholder value and highlighting the firm's recurring revenue streams.

KKR anticipates the strategic initiatives, along with the expanded ownership of Global Atlantic, will positively contribute to all of its per-share earnings metrics.

Price Action: KKR shares are trading higher by 5.23% at $73.01 on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was Reviewed And Published By Benzinga Editors.