KKR to Buy KinderCare for $600 Million

KinderCare Learning Centers Inc., the nation’s biggest day-care chain, is being purchased by the investment firm Kohlberg Kravis Roberts & Co. in a $600-million deal, the companies said Thursday.

The planned takeover calls for KinderCare stockholders to receive $20.25 a share in cash but allows some investors to retain their shares. After the deal is complete, KKR will own 85% of the company.

“During the past few years the company’s focus has been on developing new kinds of facilities and refining the curriculum,” KinderCare Chairman and Chief Executive Sandra Scarr said in a statement. “As a result of these efforts and our partnership with KKR, we will be well-positioned to embark on a new phase of prudent growth.”

At $20.25 a share, the deal values KinderCare stock at about $390 million, and also includes debt. KinderCare shares rose 12.5 cents to $16.25 on Nasdaq. The deal was announced after the close of trading.

Oaktree Capital Management and other shareholders owning 52% of Montgomery, Ala.-based KinderCare have agreed to vote in favor of the deal, which is expected to be completed in January.

KinderCare was founded in 1969 to serve a then-growing number of women entering the work force. It now operates 1,148 child centers in 38 states, including California, and in Britain under the names KinderCare Learning Centers, KinderCare at Work and Kid’s Choice. The centers employ more than 23,000 people.

“We believe the child-care industry is an important and growing sector of the economy fueled by strong demographic trends,” said Clifton S. Robbins, a KKR general partner. “KKR intends to support the expansion of KinderCare through internal growth and acquisitions while continuing to promote industry-leading education and quality standards.”

New York-based KKR is perhaps best known for emerging victorious in the 1980s fight for RJR Nabisco Inc., completed in 1989 and ranking as the biggest U.S. merger of all time at $25 billion.