Carlyle Group names IBM's Gerstner as chairman

WASHINGTON: The Carlyle Group has announced that Louis Gerstner, the outgoing chairman of IBM Corp., will become chairman of the top private equity firm in January. Gerstner, widely credited with turning around IBM during the nine years he led the computer giant, will replace former U.S. Deputy Defense Secretary Frank Carlucci, who will become chairman emeritus.

Carlyle, a $13.9 billion fund that mostly invests in private companies globally, has a history of employing former senior government officials. Former U.S. Secretary of State James Baker is a senior adviser to the firm and former British Prime Minister John Major is its European chairman.

Gerstner, who stepped down as IBM chief executive in March, said he will resign as IBM chairman at year's end. Carlyle said Gerstner will commit 20 percent of his time to Carlyle, giving management input and advice on global investments. The appointment comes amid a spate of similar moves by other private equity firms, which use high-profile appointments to open doors to new investment opportunities and give advice on existing portfolio companies.

For instance, Clayton, Dubilier & Rice, another leading buyout firm, employs former General Electric boss Jack Welch, while Hicks Muse Tate & Furst recently hired Henry Kissinger, the former secretary of state.

The Carlyle Group is among a dozen or so private equity firms that have been active in the large buyout arena. For instance, Carlyle and another firm, Welsh, Carson, Anderson & Stowe, agreed in August to buy Qwest Communications' phone directory unit for $7.05 billion. It recently dropped out of a deal to buy TRW Inc.'s auto parts division with Blackstone Group in a deal valued at $4.73 billion.

Gerstner joined IBM in April 1993, boosting its share price by some 800 percent and its market value by more than $180 million through 2001, Carlyle said. Prior to that, Gerstner was chairman and chief executive of RJR Nabisco for four years, after an 11-year career at American Express Co. The native of Mineola, N.Y., was knighted by Queen Elizabeth II in June 2001.

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