Applied terminates acquisition of Japan's Kokusai Electric

Applied said in a statement that Chinese authorities did not confirm the deal within an acceptable timeframe. It will pay KKR a $154 million termination fee.

The transaction was agreed in mid-2019 and expected to close by the end of 2020. In January, the deadline was extended to March, allowing more time to secure clearance from China. At the same time, Applied increased its offer from $2.2 billion to $3.5 billion, reflecting an improved long-term outlook for the semiconductor equipment market, especially in the memory segment.

Kokusai specializes in high-productivity batch processing systems and services for memory, foundry and logic customers. 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.

The company employs about 1,900 people 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.

KKR completed its JPY322 billion ($2.9 billion) purchase of Kokusai from controlling shareholder Hitachi in December 2017 through a tender offer. The initial proposal was submitted eight months earlier, but the deal had to be sweetened following strong financial performance by the underlying business and activist investor pressure.

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.

Separately, KKR recently closed its acquisition of a majority stake in Seiyu, a Japanese supermarket operator controlled by Walmart, at a valuation of JPY172.5 billion. The objective is to reposition the company, which has more than 300 stores nationwide, as an omnichannel retailer with a stronger online presence.

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• Topics
• North Asia
• Trade sale
• Industrials
• Regulation
• Greater China
• Japan
• KKR
• semiconductor
• manufacturing