Harman Buyers Balk

KKR and GS Capital Partners want to abandon their $8 billion buyout of Harman International Industries Inc. (NYSE: HAR), because they believe that a material adverse change in Harman's business has occurred. Harman said in a statement that it was informed of KKR and Goldman's position today, and that it disagrees with their assessment.

KKR and Goldman would be allow to bail without penalty if they could prove a material adverse change (MAC), but would owe $225 million if they couldn't.

The buyout is designed to provide Harman stockholders with either $120 per share in cash, or the option to exchange some of their shares for shares in the newly-formed private company. The total number of Harman shares that can elect to participate in the stock swap is approximately 8.3 million, or $1 billion (27% equity position, following the transaction).

Leverage is being provided by Bank of America Securities LLC, Credit Suisse, Goldman Sachs and Lehman Brothers. Bear Stearns is advising Harman on the sale. Harman is a manufacturer of audio products and electronic systems for the automotive, consumer and professional markets. www.harman.com