By Greg Roumeliotis, Soyoung Kim and Nadia Damouni
Sept 13 Private equity firm KKR & Co LP has teamed up with New Mountain Capital LLC to bid for IMG Worldwide, joining a handful of companies interested in buying the sports, fashion and marketing agency from Forstmann Little & Co, three people familiar with the matter said.
KKR and New Mountain would be competing for IMG against other buyout firms, as well as sports and entertainment companies, Creative Artists Agency (CAA) and William Morris Endeavor Entertainment, said the people, who spoke to Reuters this week.
While KKR may not have the industry expertise of CAA or William Morris, its partner New Mountain has deep ties to private equity firm Forstmann Little.
Steven Klinsky founded New Mountain in 2000 shortly after leaving Forstmann Little. He was the most senior partner at the firm, outside of the Forstmann family, and worked closely with Teddy Forstmann, IMG's former chairman and chief executive. Forstmann died in 2011.
The sale of IMG, whose clients include top tennis player Novak Djokovic and supermodel Gisele Bundchen and which owns the rights to numerous sports leagues, is being driven by the trustee that runs the estate of Teddy Forstmann.
CVC Capital Partners, another private equity firm that has significant expertise in sports rights management with its controlling investment in Formula One, is also involved in IMG's sale process, the sources said.
Buyout firm Bain Capital also plans to bid, one of the people said.
Initial offers are due in the next few weeks, according to the people familiar with the matter.
The sources asked not to be named because the matter is not public. KKR declined to comment, while New Mountain did not immediately respond to requests for comment. A spokesman for IMG was not immediately available for comment.
IMG, which Forstmann bought for $750 million in 2004, could now fetch more than $2 billion in a sale, the sources said.
Forstmann Little has held onto IMG for longer than a typical investment period for private equity, and for years it has rebuffed overtures from prospective buyers. Buyout interest increased following Teddy Forstmann's departure in April 2011 as IMG chairman and CEO, and his death later that year.
Buyers that had approached Teddy Forstmann included former Yahoo CEO Terry Semel, who was willing to pay $1.5 billion in 2008. Sources told Reuters at the time that Teddy Forstmann wanted at least twice the amount.
Akin Gump Strauss Hauer & Feld litigation partner Mark MacDougall and corporate practice co-chair J. Kenneth Menges, Jr., are managing the wind down of Teddy Forstmann's private equity empire. Forstmann Little tried to sell 24 Hour Fitness last year but the process has since stalled.