KKR Carve-Out Is a Recipe for Remorse

One of buyout barons’ most sought-after targets is the “corporate carve-out.” This is the purchase of a poorly performing division of a sprawling conglomerate on the assumption that private equity can run it better. KKR & Co.’s grim experience surgically removing a food business from Unilever Plc should end any illusions that such deals always offer a quick buck.

In mid-2018, the US private equity firm paid the UK consumer giant €6.8 billion ($8 billion) for what is today called Flora Food Group, home of the eponymous margarine. Unilever had no problem starting a feeding frenzy among buyout bidders. Interest from Apollo Global Management Inc., Blackstone Inc., CVC Capital Partners Plc and others pushed up the price.