Report: Kohlberg Kravis plans Dollar General IPO

Private equity firm Kohlberg Kravis Roberts, which operates KKR Financial Holdings, is preparing for an initial public offering of discount retailer Dollar General, according to the Wall Street Journal, which cited people familiar with the matter.

Representatives from KKR and Dollar General could not immediately be reached for comment.

The Goodlettsville, Tenn.-based chain, with more than 8,400 stores in 35 states,sells discounted housewares and has benefited as consumers trade down to cheaper products during the recession.

KKR is expected to serve as a lead underwriter on the deal, along with Goldman Sachs and Citigroup, according to the paper. It would be the first time KKR underwrote one of its IPOs.

KKR, by teaming up with Fidelity Investments, will sell shares to institutions, as well as the public.

Dollar General's board will soon meet to complete the underwriter selection.

Dollar General was bought in July 2007 for $6.9 billion by an investment group that included affiliates of KKR and Goldman Sachs, among others.

In the quarter that ended May 1, it earned $83 million, more than 10 times its profit of $5.9 million a year earlier, while sales rose 16% to $2.78 billion from $2.4 billion. The company's same-store sales — sales at stores open at least a year, considered a key metric of a retailer's fiscal health — rose 13%.

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