KKR sells stake in Japan's Panasonic Healthcare to Mitsui

The deal values Panasonic Healthcare at JPY245.9 billion, up from KKR's JPY206 billion entry valuation. The private equity firm paid JPY165 billion for the entire business but then allocated a 20% holding back to Panasonic, the vendor, with a view to cooperating on management. Since that transaction, Panasonic Healthcare has completed a $1.15 billion bolt-on acquisition of Bayer's diabetes care business.

Panasonic's 20% stake in the company will not change following Mitsui's arrival, with KKR's holding falling to approximately 58%. Mitsui has made separate investments in hospital and ancillary businesses in Asia - earlier this year it committed $101 million to Columbia Asia, which operates 27 hospitals in Malaysia, India, Indonesia and Vietnam - and it will leverage these relationships to support the sale of Panasonic Healthcare's devices.

Mitsui's goals for emerging Asia include the creation of a diabetes treatment service network, and Panasonic Healthcare is the leading global manufacturer of blood glucose monitoring meters and sensors used to treat the disease. According to the International Diabetes Federation, the number of people living with diabetes is expected to increase from 420 million in 2015 to 640 million in 2040, and an estimated 60% of these people will live in emerging Asian countries.

Diabetes care accounted for roughly half of Panasonic Healthcare's EBITDA - biomedical laboratory equipment and medical information systems each contributed about 25% - prior to the acquisition of the Bayer unit, intended to consolidate the company's global footprint. Bayer Diabetes Care, now known as Ascensia Diabetes Care, also produces blood glucose monitoring systems and had sold Panasonic Healthcare products for more than 20 years.

"Since 2014, we have worked closely with Panasonic Healthcare's strong management team to grow the company and capture new opportunities at home and across borders. There is still much that can be done, and we will continue to support the company's long-term growth. The partnership with Mitsui will greatly enhance the global opportunities for Panasonic Healthcare," Hiro Hirano, CEO of KKR Japan, said in a statement.

KKR's acquisition of Panasonic Healthcare represented the firm's largest-ever investment in Japan, the largest deal from its second pan-Asian fund, and one of the most significant Japanese corporate carve-outs completed by a private equity firm. The GP launched its third Asian fund, which has a target of up to $7 billion, earlier this month. Fund II closed at $6 billion in mid-2013.

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• Topics
• North Asia
• Healthcare
• Trade sale
• Japan
• KKR
• Exit