Henry Kravis’ KKR is leading a buying group that is near a $1 billion plus deal to snap up Web hosting giant Go Daddy, The Post has learned.
The move by KKR and its lenders on Go Daddy Group surprised some in the industry as it is getting increasingly difficult to secure leveraged financing.
Not only that but Go Daddy, sources said, is using adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, as its key metric — but that adjusted number is twice is actual Ebitda, a spread that is higher than usual.
Kravis, a very strong personality in the boardroom, is putting his faith in Go Daddy CEO and founder and decorated military veteran Bob Parsons, who received the Combat Action Ribbon, Vietnamese Cross of Gallantry and a Purple Heart Medal.
Parsons, too, is a big personality and his business this year ran a Super Bowl ad featuring scantily clad women who were announcing the new GoDaddy.com girl.
PE firms as powerful as KKR are running into trouble when pricing leveraged buyouts.
Apollo Advisors in May reached a $510 million deal to buy American Idol owner CKX in a deal financed by Goldman. Now, Goldman, which has fully underwritten the deal, looks as though it will be charging CKX more than 12 percent interest on the loan instead of the expected 9 percent because it is the only way it can re-sell the CKX loan to secondary investors, a source said.
Berkshire Partners and OMERS Private Equity are having similar problems in their May acquisition of plastic molding company Husky International. Goldman, Morgan Stanley, Royal Bank of Canada and Toronto-Dominion have fully underwritten the deal but may have to raise interest rates to syndicate the $1.5 billion loan package, sources said.
A KKR spokeswoman said the firm does not comment on rumors, and a Go Daddy spokeswoman said, “We’ve heard rumors like this before and when there’s something happening we will comment.”