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
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.
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
View source version on businesswire.com: http://www.businesswire.com/news/home/20170426005600/en/
Anita Davis (Asia)
+852 3602 7335
Huller (New York)
+1 212 230 9722
Consulting (For KKR Japan)
Source: KKR & Co. L.P.
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