Japan Industrial Partners and Hitachi to each
acquire 20% of Hitachi Kokusai’s Video and Communication Solutions
segment following the division of Hitachi Kokusai’s businesses
Leading global investment firm KKR, Hitachi Ltd., (“Hitachi”)
and Japan Industrial Partners, Inc. (“JIP”) today announced that
HKE Holdings G.K. (the “Offeror”), an entity owned by investment
funds managed by KKR, intends to make a tender offer for the common
shares of Hitachi Kokusai Electric Inc. (“Hitachi Kokusai” or the
“Company”; TSE stock code 6756).
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Hitachi Kokusai operates two business segments: a Video and
Communication Solutions business engaged in video security, IoT
high-reliability wireless, and railroad solutions, and a Thin-Film
Process Solutions business focusing on semiconductor manufacturing
equipment as well as systems maintenance and sales of parts and
used equipment.
In connection with the tender offer, the Offeror has entered
into an agreement (the “Agreement”) with Hitachi, the lead
shareholder in Hitachi Kokusai, and HVJ Holdings Co., Ltd.,
(“HVJ”), an entity backed by funds managed/ serviced by JIP. Under
the terms of the Agreement, following a share consolidation after
the tender offer, Hitachi Kokusai will acquire Hitachi’s 51.67%
holding of Hitachi Kokusai’s common shares in a share repurchase.
Thereafter, Hitachi Kokusai will conduct an absorption-type company
split pursuant to which the Offeror will succeed to 100% of the
Company’s Thin-Film Process Solutions business. Subsequently, the
Offeror will transfer 20% of the shares of Hitachi Kokusai to each
of Hitachi and HVJ, resulting in 60%, 20%, and 20% ownership of
Hitachi Kokusai’s Video and Communication Solutions business for
the Offeror, Hitachi and HVJ, respectively.
Through this joint investment, KKR will collaborate with Hitachi
Group to further expand Hitachi Kokusai’s businesses, promote
overseas growth, and establish a stable business base through
structural reforms. JIP will support the maximization of the latent
growth potential of Hitachi Kokusai’s Video and Communications
Solutions business utilizing the wealth of experience it has
accumulated in conducting multiple strategic carve-outs from
Japanese companies.
The Offeror expects to commence the tender offer in early
August 2017, subject to regulatory approvals in Japan and other
jurisdictions. For details regarding the conditions for the
commencement of the tender offer, please refer to the full text of
the press release issued today by Hitachi Kokusai titled
“Announcement of Opinion regarding the Tender Offer for the Shares
of Hitachi Kokusai Electric Inc. by HKE Holdings G.K.” and its
attachment titled “Announcement Regarding the Tender Offer for the
Shares of Hitachi Kokusai Electric Inc. (Securities Code 6756)”
(the “HKE press release”).
The proposed tender offer price of JPY 2,503 per share and the
share repurchase price of JPY 1,710.34 per share have been
determined based on negotiations among KKR, Hitachi, and JIP. For
further details, please refer to the Hitachi Kokusai Press
Release.
The proposed tender offer price represents:1
- A premium of 62.46% to Hitachi
Kokusai’s 12-month average closing price to October 3, 2016
- A premium of 59.12% to Hitachi
Kokusai’s 6-month average closing price to October 3, 2016.
Since the total number of Hitachi Kokusai’s outstanding shares
(excluding treasury shares) is equal to 102,703,392 (as of March
31, 2017), the proposed tender offer price values Hitachi Kokusai
at approximately JPY 257.1 billion (approx. US$2.3 billion at the
exchange rate of US$1=JPY111).
Mr. Hiro Hirano, Member of KKR and CEO of KKR Japan, said:
“Hitachi Kokusai is a world-class provider of video and
communications equipment and semiconductor manufacturing solutions
and is part of an industry that is set to benefit from the
proliferation of three-dimensional NAND flash memory. We look
forward to leveraging KKR’s global network, experience and
resources, in partnership with Hitachi and JIP, to strengthen
Hitachi Kokusai’s business and support its growth as an industry
leader on the global stage.”
Mr. Hidemi Moue, CEO of JIP, said: “Hitachi Kokusai’s Video and
Communication Solutions business has a strong track record of sales
of communications and wireless equipment to local municipalities
and government agencies in Japan. In partnership with Hitachi and
KKR, JIP is fully committed to supporting the further enhancement
of the business’ products and services, and realizing a significant
uplift in growth as a fulfilling workplace for executives and
employees, by leveraging our expertise, network, and extensive
investment experience in carve-outs from major corporations in
Japan.”
KKR expects to make its investment from its Asian private equity
fund. KKR has been investing in Japan through its pan-regional
private equity funds since 2010. Japan has been and continues to be
a key focus for KKR in the region. To date, KKR has completed five
acquisitions in the market: Intelligence Ltd., a leading human
resources services company; Panasonic Healthcare, the carve-out
health care business of Panasonic Corporation; and Pioneer DJ, the
carve-out DJ equipment business of Pioneer Corporation. More
recently, KKR announced the closing of its tender offers for
Hitachi Koki Co., Ltd. and Calsonic Kansei Corporation.
JIP supports the revitalization of Japanese companies by
providing funds and management support, mainly associated with
business carve-outs and restructuring of major corporations. JIP
has made a total of 20 investments within Japan across investment
targets primarily within the manufacturing industry in diverse
areas including food, distribution and services, and with
investment experience across various investment methods including
business carve-outs and MBOs.
This press release should be read in conjunction with the full
text of the Hitachi Kokusai Press Release, a copy of which is
available on www.jpx.co.jp
This press release has been prepared for the purpose of
informing the public of the tender offer and has not been prepared
for the purpose of soliciting an offer to sell, or making an offer
to purchase, any securities. If shareholders wish to make an offer
to sell their shares in the tender offer, they should first read
the Tender Offer Explanation Statement for the tender offer and
offer their shares or stock options for sale at their own
discretion. This press release shall neither be, nor constitute a
part of, an offer to sell or purchase, or a solicitation of an
offer to sell or purchase, any securities, and neither this press
release (or a part thereof) nor its distribution shall be
interpreted to be the basis of any agreement in relation to the
tender offer, and this press release may not be relied on at the
time of entering into any such agreement.
The tender offer will be conducted in accordance with the
procedures and information disclosure standards prescribed by
Japanese law, which may differ from the procedures and information
disclosure standards in the United States. In particular, Section
13(e) and Section 14(d) of the U.S. Securities Exchange Act of 1934
and the rules prescribed thereunder do not apply to the tender
offer, and the tender offer does not conform to those procedures
and standards.
Unless otherwise specified, all procedures relating to the
tender offer are to be conducted entirely in Japanese. If all or
any part of a document relating to the tender offer is prepared in
the English language and there is any inconsistency between the
English-language documentation and the Japanese-language
documentation, the Japanese-language documentation will
prevail.
The financial advisors to the Offeror, the Company, JIP and
Hitachi as well as the tender offer agent (including their
respective affiliates) may engage prior to the commencement of, or
during, the tender offer period in the purchase or arrangement to
purchase shares of the Company for their own account or for their
customers’ accounts to the extent permitted under the Japanese
Financial Instruments and Exchange Act, Rule 14e-5(b) of the U.S.
Securities Exchange Act of 1934, as amended, and other applicable
laws and regulations. Such purchases may be made at the market
price through market transactions, or at a price determined by
negotiation outside of the market. In the event information
regarding such purchases is disclosed in Japan, such information
will also be disclosed on the English homepage of the financial
advisor or tender offer agent conducting such purchases or will
otherwise be made publicly available.
About KKR
KKR is a leading global investment firm that manages investments
across multiple asset classes including private equity, energy,
infrastructure, real estate, credit and hedge funds. KKR aims to
generate attractive investment returns by following a patient and
disciplined investment approach, employing world‐class people, and
driving growth and value creation at the asset level. KKR invests
its own capital alongside its partners’ capital and brings
opportunities to others through its capital markets business.
References to KKR’s investments may include the activities of its
sponsored funds. For additional information about KKR & Co.
L.P. (NYSE:KKR), please visit KKR’s website at www.kkr.com and on
Twitter @KKR_Co.
About Japan Industrial Partners, Inc.
JIP was established in November 2002, as a Japanese fund
specializing in carve-outs to develop the private equity business
and contribute to corporate reorganization and restructuring of
Japanese companies. JIP has specific expertise in companies working
towards selecting and focusing their businesses and with carve-outs
of business divisions and subsidiaries. In addition to helping
companies provide high quality products and services, JIP’s
objective is to create a fulfilling workplace for employees and
support the acceleration of business growth.
1 The figures set out above are based on the Hitachi Kokusai
closing share prices extracted from Bloomberg as at and prior to
the last full trading day (October 3, 2016) immediately prior to
the day of speculative publication of media reports regarding the
tender offer (the ‘unaffected price’).
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version on businesswire.com: http://www.businesswire.com/news/home/20170426005600/en/
For KKRAnita Davis (Asia)+852 3602
7335anita.davis@kkr.comorKristi Huller (New York)+1 212 230
9722kristi.huller@kkr.comorAshton Consulting (For KKR
Japan)+81-3-5425-7220KKRJapanPR@ashton.jporFor JIPToshikazu
Ugawa+81-3-6266-5781jipinc@jipinc.com
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