EU Law To Stop KKR

With the Yanks preparing retrospective legislation that would bar BP from drilling in US waters for seven years, now is the time for the EU to pass a retrospective law.

The EU law would say that any company which has bought a European company and loaded it up with debt amounting to more than 50% of the value of the acquisition should be banned from M&A activity in Europe for seven years.

Kohlberg Kravis and Roberts of New York, which bought NXP at a valuation of $11 billion and loaded it up with $6 billion of debt, would then be banned from operating in Europe for seven years – to the benefit of us all.

Tags: acquisition, europe, kohlberg kravis and roberts, retrospective legislation, yanks

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7 Comments

  1. Stooriefit
    July 23, 2010 12:14

    Official figures on immediate deaths due to the Union Carbide disaster at Bhopal in 1984 were 2259, with confirmed later official total of 3787, and other official estimates in the region of 15,000 to 16,000. Half a million people injured. Even now the abandoned site continues to degrade the environment with toxic chemicals. I can’t find any pithy data to describe the effect on the region’s economy, although with 1/3 of the population either killed or injured it can’t have been exactly stimulating. The families of the dead received average compensation of $2,200, from a fund of approximately $470M. It took 5 years to agree on the fund, and payment of the compensation was only complete in 2003 – 19 years later. The chairman and CEO of UC at the time is currently a fugitive for failing to appear in an Indian court to answer charges of manslaughter. The US has refused extradition citing lack of evidence.
    Deaths due to the deep water horizon events so far total 13. 11 due to the explosion and 2 oil related deaths. BP have been set up as the principle villain by the US media, but litigation (a surer sign of where lawyers believe the money and blame lies) has been started against BP, Transocean, Cameron International Corporation and Haliburton Energy Services. BP have already settled 9,000 of the 23,000 claims so far received – less than four months after the events commenced.
    Interesting to contrast the difference in the way US authorities conduct themselves when poor disenfranchised people on the other side of the world are involved, and when comparatively rich electors are involved.
    Still think the comparison between BP & UC is fair FTM?

  2. David Manners
    July 22, 2010 09:08

    You’re absolutely right FTM, what BP did is much worse than what KKR did to NXP (though if you add the totality of KKR’s job-destruction over 30 years of operation they might come close). The real point was to highlight the unfairness of retrospective legislation.

  3. FTM
    July 22, 2010 07:51

    Comparing BP with KKR is grossly unfair. BP is responsible for one of the world’s worst environmental disasters + a staggering $1B+ commercial loss of a precious commodity. There is no undo button for the calamity that BP has caused. The environment is affected, tonnes of marine life is no more. The bottom line is negative, any which way you look at it.
    On the other hand, KKR paid a greedy European MNC $11B for a company that is honestly not worth a third of that. Yes, many people lost their jobs in the bargain, but look at the bottom lines – more money moved into Europe than moved out. If the EU is smart, it should find a way to convert that inflow into jobs and what ever else it needs.
    Also, there is some truth in Darwin’s law applied to businesses. If Philips semi was fit, it would have survived. If NXP was fit, it would have survived (in the form in which it was born). The trimming of portfolios, the fire-sale of business units, the eagerness to get out of “cyclic businesses” etc simply points to a deficiency – and that is (fiscal, technical, commercial) “fitness” in a globalized market. Let’s not sympathize with a loser, especially when the owners of the loosing companies have made good with billions.
    I’d rather compare BP with Union Carbide, the American company that got away with the Bhopal gas tragedy in India in the mid 80s.

  4. xalmain
    July 21, 2010 22:12

    Well, instead they would load them with a debt of $5.5 billion to the same effect.

  5. Mike Bryant
    July 21, 2010 20:30

    Had they bought Qimondo as a going entity they would now be both running a huge profit AND being lauded for saving a much needed company.
    But they didn’t so I agree – stuff them :-)

  6. David Manners
    July 21, 2010 16:46

    OmiGod, dtalbot, they could buy and ruin a dozen companies in that time

  7. dtalbot
    July 21, 2010 16:20

    With an average of 43.7 months to get an EU law passed via codecision – see statistics for process, I think those responsible at KKR will have long moved on!

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