Kohlberg Kravis Gains on Internet Brands Deal - Analyst Blog

Shares of Kohlberg Kravis Roberts & Co. KKR rose nearly 2% following its announcement of the deal to acquire Internet Brands from Hellman & Friedman and JMI Equity on Tuesday. Headquartered in El Segundo, CA, Internet Brands offers vertically-focused online media and software services.

The investment will be carried out through Kohlberg Kravis' North America XI private equity fund. The transaction is subject to customary closing conditions.

Though no financial details were disclosed, as per a New York Times report the deal is worth $1.1 billion. Notably, Hellman & Friedman and JMI Equity had acquired it for $640 million in 2010.

Following the completion of the deal, Internet Brands' chief executive officer Bob Brisco and its management team will hold a minority stake in the company. Moreover, Bob Brisco will continue to head the company, which employs nearly 1,600 people. The major part of the company revenues comes from online advertising.

Founded in 1998, Internet Brands focuses on auto, health, legal and home / travel sectors and operates sites such as DoItYourself.com, Lawyers.com and ApartmentRatings.com, among others. Further, it provides automobile-related software and services to Toyota Motor Corporation TM, Ford Motor Co. F and Chrysler Group LLC.

For Kohlberg Kravis, the deal seems a right move. The company has a previous track record of successfully investing in technology businesses like Go Daddy, Mitchell, Aceco TI, Visma, Fotolia and Ipreo.

Kohlberg Kravis is always on the lookout for lucrative deals with growth potential. Some of the company's recent acquisitions define its expansion strategy as well as portfolio diversification plans. Last week, the company had announced its acquisition of Singapore-based Goodpack Ltd, the world's largest maker of intermediate bulk containers, for S$1.4 billion ($1.11 billion).

Kohlberg Kravis currently carries a Zacks Rank #3 (Hold). A better-ranked investment manager is Cohen & Steers Inc. CNS, sporting a Zacks Rank #1 (Strong Buy).