Goldman, KKR have second thoughts

Goldman Sachs Group Inc. and Kohlberg Kravis Roberts & Co. have backed out of their $8 billion buyout of audio equipment maker Harman International Industries Inc. of Washington. The decision is the latest in a string of private equity deals that have run into trouble amid the global credit crunch. Both private equity units said they are not under any obligation to complete the merger because "material adverse change in Harman's business has occurred," and that ithas breached the merger agreement. Harman disagreed with the view but did not state what action, if any, it would take. A person familiar with the negotiations, who could not be quoted on the record, told The Associated Press that the private equity firms sought to squash the deal over questions about Harman's financial health, rather than any financing difficulties in a tight credit market. The person cited said that the effort to back out is sincere, and rather than a negotiating tactic.