KKR completes tender for Japan's Hitachi Transport Systems

Investors representing 42.9m shares voted in favour of KKR’s offer of JPY 8,913 per share, comfortably above the minimum acceptance threshold of 22.4m shares, according to a filing.

KKR will now move towards 100% ownership through a squeeze out of shareholders who declined the tender and the acquisition of parent company Hitachi’s approximately 40% stake. The private equity firm plans to rename the business Logisteed – a combination of logistics, exceed, proceed, succeed, and speed – and help expand its international footprint.

On announcing the tender in April, KKR agreed to buy 33.5m shares from Hitachi for JPY 6,632 apiece via a buyback executed by Hitachi Transport Systems. As part of the deal, Hitachi will be awarded 10% of the acquisition vehicle.

The tender is being financed primarily from KKR’s fourth pan-Asian fund, which closed on USD 15bn in 2021. Debt funding for the transaction is said to be in the form of a loan at the holding company level.

This is the second private equity tender offer for a Hitachi subsidiary to close in the past few weeks. At the end of October, a Bain Capital-led consortium won shareholder support for a JPY 816.8bn acquisition of Hitachi Metals, with Hitachi offloading its 53.4% stake following an 18-month pursuit.

It is also on course to become KKR’s third carve-out from Hitachi in the space of five years, following deals involving power tools supplier Hitachi Koki and high-tech manufacturer Hitachi Kokusai Electric.

Hitachi is unusual among Japanese conglomerates in its commitment to a systematic divestment programme, having previously pledged to reduce its number of group companies from 800 to 500 by 2022. AVCJ Research’s records show that financial investors have carved out 10 assets from the company in the past 10 years. In eight other deals, the vendor was a Hitachi subsidiary.

Established in 1950, Hitachi Transport System has operations covering contract logistics, heavy transport and relocation, freight forwarding, and packaging solutions. As of March 2022, the company employed nearly 46,000 people across 763 sites, of which 435 were outside of Japan. It had 7.55m square metres of warehousing space and nearly 18,000 vehicles.

Revenue came to JPY 743.6bn for the 12 months ended March 2022, up from JPY 652.4bn the previous year. Over the same period, net income fell from JPY 23.9bn to JPY 14.6bn.

“We look forward to utilising KKR’s global network and expertise to help Hitachi Transport System become the leading 3PL company in Asia. Now more than ever, 3PL is vital to the trade flows and the global economy,” said Hiro Hirano, KKR’s Asia private equity co-head and Japan CEO, in a statement.

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