KKR launches tender offer for Japan's Hitachi Transport System

The private equity firm will buy Hitachi’s entire holding of 33.5m shares – an approximately 40% interest – for JPY 6,632 apiece, according to a filing. As part of the deal, Hitachi will be awarded 10% of the acquisition vehicle.

The subsequent tender offer for all remaining shares is priced at JPY 8,913 per share. This represents a 32% premium to the closing price on April 21, the day before Hitachi responded to a media report of the impending KKR transaction by confirming it may divest Hitachi Transport Systems.

The stock closed on JPY 7,760 on April 22 and then continued to climb, reaching JPY 8,540 on April 28. This equated to a market capitalisation of around JPY 692bn.

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 proposed Hitachi Transport Systems deal.

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.

Hitachi Transport System aspires to become a global leader in third-party logistics. This will be achieved through supply chain management optimisation, improving customer experience and efficiency through digital transformation, enhancing global value chains, engaging in investment-first projects, and strategic M&A, the company’s latest medium-term plan states.

“We are pleased to have this opportunity to invest in Hitachi Transport System, a pioneer in the Japanese 3PL market that has provided innovative logistics and supply chain solutions for many years,” Hiro Hirano, co-head of Asia Pacific private equity and CEO of Japan at KKR, said. He added that KKR would leverage its global network and expertise to support the company’s growth.

KKR has completed a string of corporate carve-outs in Japan, most recently acquiring a majority stake in supermarket operator Seiyu from Walmart. An earlier investee, auto components supplier Calsonic Kansei Corporation, which went on to merge with Europe-based Marelli, is currently undergoing a restructuring. The company was hit badly by COVID-19.

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 in 2019, but it ultimately fell through due to regulatory approval issues in China.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

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