INCJ-led consortium may thwart KKR’s Renesas pledge
Japanese state-sponsored fund Innovation Network Corp of Japan (INCJ) has formed a consortium with several local companies, which is said to be mulling making an offer of more than JPY100 billion ($1.3 billion) for the unprofitable Tokyo-listed chipmaker, Renesas.
If the deal goes ahead, it would block plans announced last month by KKR to invest the same amount in the company.
According to the Nikkei business daily, the Japanese firms participating in the INCJ bid for a majority stake are Renesas customers Toyota, Nissan and Honda, electronics group Panasonic, Canon, Fanuc Corp and auto parts makers Denso Corp and Keihin Corp. Several of the bidders appear to be trying to guarantee themselves a stable supply of the vehicle microcontrollers that Renesas supplies.
Investors were making offers to buy shares at the upper daily limit of JPY336 on the Tokyo Stock Exchange on Friday, when the shares closed at JPY256. The stock hit a four-month high of JPY308 after news of KKR's interest broke in late August.
An investment by either the INCJ-led consortium or KKR 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.
In July, 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.
Japanese chipmakers have struggled in recent years against the competition posed by market leader Samsung Electronics. This summer, 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.
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