KKR agrees $2.2b sale of Japan's Kokusai Electric

Applied, which supplies equipment and software used to produce semiconductor chips that feature in a range of electronics devices, said that Kokusai Electric would become a unit of its semiconductor products group. The Japanese company specializes in high-productivity batch processing systems and services for memory, foundry and logic customers. This is expected to complement Applied’s existing capabilities in single-wafer processing systems.

KKR completed its purchase of Hitachi Kokusai Electric in December 2017 through a tender offer that valued the business at JPY322 billion ($2.9 billion). The initial proposal was submitted eight months earlier, but the deal had to be sweetened in response to strong financial performance by the underlying business and pressure from activist fund Elliott Management.

Hitachi Kokusai repurchased a 51.67% stake held by Hitachi and the company was then 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) each hold 20% of the latter business.

Batch processing systems feature in the coating and thermal part of the semiconductor manufacturing process. The thinner the film, the greater the functionality of the semiconductor. Kokusai Electric employs approximately 1,900 people across manufacturing locations in Japan and Korea. Key customers include Samsung, TSMC, and Intel. Revenue came to $1.48 billion in 2018, up from $1.18 billion in 2017 and $733 million the year before that.

“Kokusai Electric has a strong culture of innovation along with excellent customer relationships and serves fast-growing areas of the wafer fab equipment market,” said Gary Dickerson, president and CEO of Applied, in a statement. “By bringing Kokusai Electric’s talented team into Applied, we believe we will accelerate innovation for customers and create significant value for our shareholders.”

This will be the second exit from KKR's third pan-regional fund, which closed at $9.3 billion in mid-2017. The first was announced a couple of weeks ago, with KKR agreeing to sell Korean copper foils manufacturer KCF Technologies to SK Group for KRW1.2 trillion ($1 billion).

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• Topics
• North Asia
• Trade sale
• Industrials
• Japan
• KKR
• manufacturing