Renesas shares spike on report of KKR investment
Shares in Japan’s Renesas Electronics Corp. have soared to their highest level in almost three months after it was reported that KKR will invest JPY100 billion ($1.3 billion) in the company.
The private equity firm is mooted to be buying enough new shares in the unprofitable Tokyo-listed chipmaker to become a majority stakeholder through a private placement by the end of 2012. The company's shares rose by up to 35% after Nikkei's broke the news, to JPY308, their highest price since May 30. They were trading at JPY299 apiece on Tuesday morning.
The transaction could allow Renesas to turn the business around, after falling demand for its system LSI chips - used for everything from processing images for TV screens to crunching data - led to losses at the company.
Last month, the firm's shareholders, which include NEC Corp., Hitachi and Mitsubishi Electric Corp, agreed to provide JPY49.5 billion in loans to cover expenses such as worker buyouts and factory reorganizations.
The shareholders are expected to agree new terms with the company's main creditors next month. Currently, an agreement exists for Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Trust Holdings to supply the chipmaker with around JPY50 billion in credit.
Japanese chipmakers have struggled in recent years against the competition posed by market leader Samsung Electronics. Last month, Micron Technology beat TPG Capital and Hony Capital to acquire Elpida Memory for about $2.5 billion, in a move to compete against rivals in South Korea and Taiwan.
The deal makes Micron the second largest in the market for memory chips, after Samsung.
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