Tags: KKR | Buy | Oil | Samson

KKR-Led Group to Buy Oil Firm Samson for $7.2 Billion

Wednesday, 23 Nov 2011 02:12 PM

A consortium led by private equity firm KKR & Co clinched a deal to buy oil and gas group Samson Investment Co for $7.2 billion, KKR said on Wednesday.

The deal is the second-largest global private equity transaction of the year, and its structure underscores how challenging debt markets are leading buyers to find partners to fund larger equity transactions.

KKR has a 60 percent participation in the consortium, people familiar with the matter previously told Reuters. The group includes Japanese trading house Itochu Corp and two smaller private equity houses.

Natural resources assets are a way for investors to beat the commodities cycle as commodity exchange-traded funds have generally underperformed spot commodity prices.

Samson, founded by the late Charles Schusterman in 1971, offers its new owners rich pickings for their natural resources portfolio. It has interests in more than 10,000 wells, including in oil-abundant areas such as the Bakken and Powder River.

COMING HOME

KKR co-founder and Chief Executive Henry Kravis sealed the deal in his native Tulsa, Oklahoma.

"For Samson, Tulsa is home. It has always been a Tulsa company and it will remain a Tulsa company," Kravis, who leads KKR together with co-founder George Roberts, said in a statement.

Some areas in which Samson is active are estimated to hold vast quantities of oil and gas locked in shale or other underground formations. These spots are also more expensive to tap than traditional oil and gas fields.

The deal ranks as the second-largest global private equity transaction of the year, behind Blackstone Group's $9.4 billion agreement to buy nearly 600 shopping malls from Australia's Centro Properties.

The deal excludes Samson's onshore Gulf Coast and offshore deepwater Gulf of Mexico assets, which carry more risk to develop and will remain with the Schusterman family. Samson Chief Operating Officer David Adams will be promoted to chief executive.

KKR's group will pay for more than 50 percent of the deal with equity since only 50 percent of a $2.35 billion asset-based loan for the deal is expected to be drawn down, financing sources said. There is also $2.25 billion of high-yield bonds arranged, these sources added.

The agreement, subject to regulatory approval, is expected to be completed by the end of the fourth quarter, the consortium said in the statement.

Jefferies & Company and Jones Day advised Samson while Mizuho and Evercore Partners advised Itochu alongside Simpson Thacher & Bartlett LLP.

© 2017 Thomson/Reuters. All rights reserved.

 
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A consortium led by private equity firm KKR Co clinched a deal to buy oil and gas group Samson Investment Co for $7.2 billion, KKR said on Wednesday. The deal is the second-largest global private equity transaction of the year, and its structure underscores how...
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2011-12-23
Wednesday, 23 Nov 2011 02:12 PM
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