KKR completes tender offer for Japan's Hitachi Kokusai

Approximately 26.2 million shares – or 25.55% of the total – were voted in favor of the transaction. Hitachi Kokusai will now repurchase a 51.67% stake in the business held by Hitachi at a price of JPY1,870. The company will then be split in two, with KKR owning 100% of the thin-film division and 60% of the video and communication division. Hitachi and Japan Industrial Partners (JIP) will each hold 20% of the latter business.

The proposal was submitted in April, with KKR offering JPY2,503 in the tender offer. It did not proceed as planned in August after a third-party committee warned that the terms could be disadvantageous to minority shareholders. KKR then upped the price to JPY2,900 in October and to JPY3,290 on November 24 – a 30% premium to the April 25 closing price but still lower than the November 23 closing price.

Appreciation in the stock reflects strong financial performance as well as expectations that KKR would improve its offer. Elliott Management, a US hedge fund known for investing in companies that are in the middle of takeover processes and forcing a better deal for shareholders, also began buying shares in Hitachi Kokusai, accumulating an 8.6% position.

"We are pleased with this result and are excited to begin our partnership with Hitachi and JIP to strengthen Hitachi Kokusai's business. We are confident that by leveraging KKR's global network, experience and resources, we will help Hitachi Kokusai achieve its growth goals and strengthen its position as a worldwide industry leader," Hiro Hirano, CEO of KKR Japan, said in a statement.

Hitachi Kokusai generated JPY171.8 billion in revenue for the 12 months ended March 2017, down from JPY180.7 billion the previous year. Net profit dropped to JPY7.45 billion from JPY12.9 billion over the same period. The video and communications division, which supplies equipment to Japanese government agencies among other customers, delivered JPY79.3 billion in revenue, with JPY91.5 billion coming from the semiconductor-focused thin-film division.

For the six months ended September 2017, revenue came to JPY99.6 billion, up 38.1% year-on-year, while net income rose 359.1% to JPY10.5 billion. Hitachi Kokusai’s forecast revenue and net income for the current financial year are JPY214 billion and JPY19.9 billion, respectively.

KKR has already completed two tender offers for Japanese companies this year: automotive components manufacturer Calsonic Kansei Corporation and power tools manufacturer Hitachi Koki.

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• Topics
• North Asia
• Buyouts
• Technology
• Japan
• KKR
• Japan Industrial Partners
• manufacturing