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IBM Chairman to Head Carlyle Group

Gerstner will commit 20% of his time to the buyout firm, a haven for ex-government officials.

November 22, 2002|Randy Whitestone | Bloomberg News

WASHINGTON — Louis V. Gerstner, who as head of IBM Corp. increased its market value twentyfold, was named chairman of Carlyle Group Inc., an investor in defense, technology and telecommunications whose returns have declined in recent years.

Gerstner, 60, succeeds former Defense Secretary Frank Carlucci, who becomes chairman emeritus of the Washington buyout firm that is a haven for former government officials. Carlyle said Gerstner will commit 20% of his time to the firm, whose advisors include ex-President George Bush; his secretary of state, James A. Baker III; and former British Prime Minister John Major.

"They have been tilted to political types, and you couldn't add more weight on the business operating side than Lou Gerstner," said Rick Rickertsen, chief operating officer of Thayer Capital, another Washington buyout firm. Gerstner's business connections may give Carlyle access to transactions it wouldn't otherwise get, Rickertsen said.

"It's too early to tell whether this will result in an increase in technology investments, but certainly he will have input on any investments we make in that area," said Chris Ullman, a Carlyle spokesman.

Carlyle is the sixth-largest leveraged buyout firm, with assets of $13 billion and more than 140 real estate, buyout and venture investments, including arms maker United Defense Industries Inc. and soft-drink bottler Dr Pepper/Seven-Up Cos.

Gerstner, who earned $10 million a year in salary and bonuses in 2000 and 2001, will serve on the committee that reviews and approves Carlyle's global investments. The appointment takes effect Jan. 7. His tenure as IBM chairman is over at the end of the year.

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