KKR in the lead to acquire U.S. retailer Mills Fleet Farm

Buyout firm KKR & Co is in the lead to acquire U.S. outdoor retailer Mills Fleet Farm for more than $1.2 billion, including debt, according to people familiar with the matter, defying a slowdown in private equity dealmaking.

KKR has prevailed over other private equity firms in an auction for privately held Mills Fleet, the people said on Wednesday. If negotiations are concluded successfully and KKR can secure the necessary financing, a deal could be announced before the end of the year, the people added, cautioning there was no certainty there will be an agreement.

The sources asked not to be identified because the negotiations are confidential. KKR declined to comment, while Mills Fleet did not immediately respond to a request for comment.

Private equity deals have been on the decline in recent weeks. Credit investors have reduced appetite for junk-rated debt, which has made borrowing for leveraged buyouts more challenging.

Brainerd, Minnesota-based Mills Fleet Farm has been exploring a sale of the company since earlier this year. The third-generation family-owned company is led by Chief Executive Officer Stewart Mills III, who announced in October his second run for Congress.

Mills Fleet sells equipment for outdoor activities including hunting, fishing, farming and lawn and garden. The company operates in 35 locations across Minnesota, Wisconsin, Iowa and North Dakota.

KKR has a lot of experience with companies in the sector, including outdoor retailer Academy Sports + Outdoors, which it has owned since 2011. Like Mills Fleet, Academy Sports sells hunting and fishing equipment, along with other outdoors goods.

Other companies in the sector are also exploring their options. Among them is U.S. hunting and fishing store chain Cabela's Inc, which, under pressure from activist investor Elliott Associates, is exploring strategic alternatives.