KKR Private Equity Investors (KPE) and Kohlberg Kravis & Roberts (KKR) have entered into a revised purchase and sale agreement to combine their businesses. As per the agreement, KPE would receive interests representing 30% of the outstanding equity in the combined entity, and the balance of the equity would be owned by KKR’s existing owners and employees.

Under the agreement, KKR will acquire all of the assets and all of the liabilities of KPE, and in exchange, KPE will receive equity in the combined business. KPE unitholders’ holdings of KPE units would not change as a result of the business combination. The transaction does not involve the payment of any cash consideration or involve an offering of any newly issued securities to the public; KKR executives are not selling any interests in the transaction. KPE would retain its listing on the Euronext Amsterdam and the KPE units will continue to be subject to existing restrictions on ownership and transfer.

Henry Kravis and George Roberts, co-founders of KKR, said: “Our new unitholders will participate in the financial performance of all of KKR’s businesses and benefit as we grow our asset management efforts around the world. At the same time, we will own an even greater share of our own investments, further aligning our interests with those of our investors. We believe the combined business will be well positioned to take advantage of the dynamic and exciting opportunities in asset management and financial services.”

Citi is acting as sole financial advisor to KPE. Lazard is acting as financial advisor to the independent directors, and Bredin Prat and Cravath Swaine & Moore LLP are acting as lead legal counsels to KPE and the independent directors. Goldman Sachs and Morgan Stanley are acting as financial advisors to KKR and Simpson Thacher & Bartlett LLP is acting as lead legal counsel to KKR.

KPE is a Guernsey limited partnership that seeks to predominantly participate in private equity investments identified by KKR. As of June 30, 2009, KPE’s investment portfolio was comprised of limited partner interests in six KKR private equity funds, co-investments in 13 companies alongside the private equity funds, and three negotiated equity investments.

Established in 1976, New York-based KKR makes investments in private equity, fixed income and other assets in North America, Europe, Asia and the Middle East.