The ironies are rich. KKR, the private equity buyout giant, has become the largest non-index fund shareholder in Henry Schein, a publicly-traded supplier of dental and medical products. With its $250 million investment, the erstwhile “barbarian at the gate” has secured a 12% stake — along with the mantle of “white knight.”
KKR had been amassing shares in Henry Schein, but partnered with the company after it faced a campaign by the activist investor Ananym Capital Management. “This is a role we can play, being a long-term shareholder to a company truly under attack from activists,” KKR’s Pete Stavros told The Wall Street Journal. “If you’re a public company under attack give us a call,” Stavros added on LinkedIn.
Shareholder activism
Ananym, co-led by Charlie Penner, who ran Engine No. 1’s successful bid to shakeup ExxonMobil’s board, has been pushing the medical supplier to lower costs, optimize capital allocation and replace long-serving board members it says lack industry experience. Stanley Bergman, Henry Schein’s CEO and chairman, has held the roles for more than 35 years.
“This just shows that, when you apply pressure to the right place, a variety of good things become possible,” Penner said. (Penner’s old firm, Engine No. 1, has recently cozied up with Chevron in a joint venture to develop natural gas to power data centers. Chevron’s Mike Wirth touts the move as “bringing to fruition President Trump’s vision for a new American golden age.”)
Worker ownership
Stavros, who has championed shared-ownership strategies at KKR and other private equity investors, said KKR “will pursue a broad-based employee ownership program” as part of a plan to “execute on a host of operational improvement initiatives.”
The latest stake brings KKR’s investment in Henry Shein to $1.2 billion. Stavros has launched Expanding ESOPs to educate executives and policymakers. Henry Schein would be the first publicly listed company in KKR’s shared-ownership portfolio. KKR has an option to up its stake with an additional 2.9% shares via open market purchases.
