Japan's Hitachi mulls divestment of logistics unit

Nikkei reported that Hitachi, which owns 40% of Hitachi Transport System, had agreed to sell 30% to KKR, paving the way for the private equity firm to launch a tender offer for the remaining shares. Hitachi distanced itself from the report, but the company admitted in a statement that it is "considering this matter to enhance its corporate value."

Hitachi Transport System's closed at JPY 7,760 on April 22, up 14.8% for the day and boosting the company's market capitalisation to JPY 652bn. It was at an all-time high of JPY 7,930 as of early trading on April 25.

KKR previously carved out two assets from Hitachi in 2017 – power tools manufacturer Hitachi Koki and high-tech manufacturer Hitachi Kokusai Electric. Both transactions were similar in structure to the reported one involving Hitachi Transport Systems: Hitachi agreed to sell its controlling stake to facilitate a tender offer for the listed business.

Hitachi is currently running another divestment process for Hitachi Metals worth JPY 816.8bn. A Bain Capital-led consortium agreed to buy the parent's 53.4% stake and launch a tender offer for the rest. Should that deal proceed, it would be Japan's second-largest private equity buyout.

Established in 1950 and initially known as Hitachi Express, Hitachi Transport System has operations covering contract logistics, heavy transport and relocation, freight forwarding, and packaging solutions. As of March 2021, the company employed nearly 44,000 people across 752 sites under 98 subsidiaries. It had 7.53m square meters of warehousing space and approximately 17,000 vehicles.

Revenue came to JPY 652.4bn for the 12 months ended March 2021, down from JPY 672.3bn the previous year. Over the same period, net income increased from JPY 21.6bn to JPY 22.9bn.

KKR has completed a string of corporate carve-outs in Japan, most recently acquiring a majority stake in supermarket operator Seiyu from Walmart. On purchasing Hitachi Kokusai, the business was split in two, with KKR taking full ownership of the thin-film division and sharing the video and communication division 60-20-20 with Hitachi and Japan Industrial Partners.

A USD 3.5bn sale of the thin-film business was agreed with US-based Applied Materials was agreed in 2019 but it ultimately fell through due to regulatory approval issues in China.

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• Topics
• North Asia
• Buyouts
• Support services
• Japan
• KKR
• Logistics