KKR sells minority stake in Japan's Kokusai to QIA
KKR has made a partial exit from Kokusai Electric, a Japan-based semiconductor industry supplier, through the sale of a minority stake to Qatar Investment Authority (QIA).
No financial details were disclosed. QIA said the deal – transacted through its subsidiary, Qatar Holding – comes amid a period of rapid growth for semiconductor-enabled devices driven by demand from the likes of data centres and artificial intelligence (AI).
“Semiconductor devices are changing into more complex 3D structures which require semiconductor production equipment of higher quality, performance, and productivity,” the sovereign wealth fund said in a statement. It noted that Kokusai is well placed to meet this demand as a leader in the production of deposition and treatment equipment across memory and logic chip product ranges.
KKR completed its JPY 322bn (then USD 2.9bn) 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.
The thin-film division – now called Kokusai Electric – specialises 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.
KKR agreed to sell the business to US-listed Applied Materials for USD 2.2bn in mid-2019. The deal was slated to close by the end of 2020 but was extended to allow more time to secure clearance from China. Meanwhile, Applied increased its offer to USD 3.5bn, reflecting an improved long-term outlook for the semiconductor equipment market, especially in the memory segment.
However, in March 2021, the transaction collapsed, with Applied citing an inability to obtain approval from Chinese authorities within an acceptable timeframe. It paid a USD 154m termination fee to KKR.
Kokusai employs about 2,200 people, primarily at manufacturing facilities in Japan and Korea. Revenue for the 12 months ended March 2022 came to JPY 245.4bn, up from JPY 178bn a year earlier. This compares to just JPY 91.5bn in 2017.
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