KKR to make $4.5b tender offer for Japanese auto parts manufacturer

The PE firm will purchase Nissan's 111.2 million shares in Calsonic for JPY1,860 apiece, inclusive of an expected special dividend, according to a filing. This represents a 40% premium to the November 21 closing price. Calsonic shares closed at JPY1,450 on November 22. The minimum target for the tender offer is 178.6 million shares, or a 66% stake. Should this acceptance threshold fail to be reached, the deal would be cancelled. The tender offer is expected to begin in February 2017.

Calsonic is supplies components including vehicle interiors, climate control systems, compressors, exhaust systems and electronic products. Nissan is by some distance its main customer, accounting for 80% of transactions. However, the company also works with Renault - which owns 44% of Nissan and has a strategic alliance with the automaker - Isuzu, Daimler and General Motors.

Nissan launched an auction to sell its stake in April, with other private equity firms said to have been among the bidders in addition to KKR. The carmaker said the deal would help make Calsonic more competitive. Calsonic reported net sales of JPY1.01 trillion for the 2015 financial year, up from JPY965.6 billion for the 12 months prior to that. Net income rose to JPY34.4 billion from JPY28.3 billion over the same period.

"Calsonic Kansei is a best-in-class auto-parts manufacturer that supplies high-quality products to the world's largest automotive brands. As a partner to Calsonic Kansei's management team, we aim to assist the company in achieving its growth ambitions and make available our international network and industry expertise to continue Calsonic Kansei's success globally," Hiro Hirano, CEO of KKR Japan, said in a statement.

KKR will make the proposed investment from its second Asian fund, which closed at $6 billion in mid-2013. That fund includes two other Japan deals, both corporate carve-outs: Panasonic Healthcare, for which the private equity firm paid JPY165 billion in 2014; and the DJ equipment business of Pioneer Corporation, said to have been acquired for JPY59 billion in 2015. In each case, the seller retained a minority stake in the business.

Earlier this week, KKR announced it had sold a 22% interest in medical equipment manufacturer Panasonic Healthcare to Mitsui & Co. for JPY54.1 billion, leaving the GP with a 58% holding in the company. Mitsui, which previously bid against KKR for the asset, will leverage its existing investments in the healthcare space to help drive sales of Panasonic Healthcare's devices.

KKR launched its third Asian fund, which has a target of up to $7 billion, earlier this month.

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• Topics
• North Asia
• Industrials
• Buyouts
• KKR
• manufacturing
• Japan
• automobiles