Buy-out of broker steps up market competition

COMPETITION in the UK buy-out market is set to become even more intense, following the £951m leveraged buy-out of insurance broker Willis Corroon by legendary US buy-out specialists Kohlberg Kravis Roberts (KKR).

KKR shot to fame in the 1980s with its audacious $30bn buy-out of RJR Nabisco – at the time the world's largest ever corporate deal and subsequently immortalised by the book and the film, Barbarians at the Gate.

Asked about KKR's reputation, Linklaters' head of corporate Anthony Cann – who advised Willis Corroon on English law – would only say that it was “extremely thorough in its due diligence” and “very professional”.

Willis Corroon is KKR's third significant UK acquisition.

It has already bought Reed Regional Newspapers for £205m and Westminster Press for £300m and has a $6bn war chest for further deals.

Other US private equity funds are also said to be looking for deals in the UK and Europe as the US market for such deals has dried up.

Willis Corroon was listed in both London and New York but had been the subject of constant public speculation about its future.

The deal will give KKR an 81 per cent shareholding in Willis Corroon, with the remaining shares being owned by five insurers, including Guardian Royal Exchange and Royal Sun Alliance.

Bob Mollen and Jerry Smith of the London office of Fried Frank Harris Shriver & Jacobson acted as US counsel to Willis Corroon.

KKR was advised by Clifford Chance in the UK and Simpson Thacher & Bartlett in the US.