Q: | What is happening? | |
A: | The Company has entered into an agreement with Kohlberg Kravis Roberts & Co. (KKR) and GS Capital Partners (GSCP). The transaction is in the form of a merger with present Harman shares to be acquired at $120 per share. The Company will continue in its present form and retain its name. For the most part it will look, act, and feel as it does now except that a new group of world-class majority investors will replace the present group of world-class majority investors. | |
Q: | Who will the new investors be? | |
A: | The principal investors will be KKR and GSCP but, subject to a limitation on the total number of shares that may be issued, existing Company shareholders will have the right to elect to receive stock in the successor company, instead of the $120 per share cash price. | |
Q: | What can you tell us about KKR and GSCP? | |
A: | KKR is one of the worlds oldest and most experienced private equity firms. Founded in 1976, it has offices in New York, Menlo Park, London, Paris, Hong Kong and Tokyo. Throughout its history, KKR has brought a long-term investment approach to its portfolio companies, focusing on working in partnership with management teams and investing for future competitiveness and growth. KKR has completed and announced over 150 transactions with an aggregate value of over $345 billion. I have the highest regard for the principals at KKR. | |
Established in 1992, the GSCP family of funds is part of the Goldman Sachs Principal Investment Area in the Merchant Banking Division. Goldman Sachs Principal Investment Area has formed 13 investment vehicles, aggregating $56 billion of capital raised. GS Capital VI is the current primary investment vehicle for Goldman Sachs to make large, privately negotiated equity investments. Founded in 1869, Goldman Sachs is one of the oldest and largest investment banking firms in the world, and I have known them virtually from the establishment of our Company. | ||
Q: | What are the benefits of the merger? | |
A: | The merger is expected to generate many benefits for our shareholders, customers and employees. Our shareholders will receive an attractive, immediate and certain cash premium to the value of their shares, with an option to continue to own shares in the new |
company. The merger will allow us greater flexibility to make the strategic, long-term investments for the future that are necessary to advance our business and which best serve our customers and employees. | ||
Q: | When will the transaction close? Will we know when that happens? | |
A: | Harman shareholders must approve the merger at a meeting. Before the meeting, a proxy statement must be mailed to all shareholders, describing the merger. The merger is also subject to other conditions, such as regulatory approvals. We expect the closing to occur during the third calendar quarter of 2007. We will make a public announcement when the merger closes and you will, therefore, know when it happens as quickly as anyone else. | |
Q: | What is happening to management? | |
A: | I intend to continue as Executive Chairman. I expect Dinesh Paliwal to join the Company on July 1, 2007 as Chief Executive Officer, and I expect the other senior executives in management to continue their current roles. Further, Ive committed to exchange up to half my shares of Harman stock for stock in the new company. I do it because I have total commitment and belief in the future of Harman International, and I am eager to be a continuing part of it. | |
Q: | Who selected the new CEO? | |
A: | I did along with our Board of Directors. Fortunately Dinesh Paliwal was known to KKR and is highly respected by KKR. | |
Q: | How does the merger affect annual reviews and salary increases? | |
A: | We do not expect any change in the timing of annual reviews and salary increases. | |
Q: | Will there be any layoffs as a result of the transaction? | |
A: | Except for strategic changes the Company already has underway, there are no plans for layoffs as a result of the transaction. The success of the transaction will depend on growing the businessnot on eliminating jobs. | |
Q: | Is the merger defined as Betriebsübergang? | |
A: | This merger is not a business transfer under Section 613a of the German Civil Code. This transaction concerns a change in stockholder structure at the level of the parent company. |
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Q: | Will any of my benefits change? | |
A: | There is no present plan to change our benefit programs. As always, the Company retains the right to revise its benefit plans and programs when conditions change. | |
Q: | Will all the Harman groups be part of the new company? | |
A: | Yes, we expect the new company will include the Professional, Consumer, and Automotive groups. | |
Q: | Whom should I contact with human resources-related questions? | |
A: | You should continue to contact your business units HR professional. Please know that we are committed to keeping you informed throughout. We know that this news can be distracting, but additional information will be distributed as quickly as it becomes available. I remind you again that, in my view, this transaction boils down to the exchange of one group of world-class investors for another. Our Company will continue to operate as you have known it and I thank you for your work and support. |
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