KKR to launch tender offer for Hitachi Transport in $5.2 billion deal

TOKYO/HONG KONG (Reuters) – KKR & Co Inc will launch a tender offer for Hitachi Ltd’s logistics arm, the companies said on Thursday, a $5.2 billion deal that marks the private equity firm’s latest acquisition from the Japanese conglomerate.

Private equity has been targeting Japan, the world’s third-largest economy, where conglomerates have been hiving off non-core assets. Hitachi has been among the most aggressive, shedding lower-growth group companies over the last decade to focus on digital technology and services.

KKR will launch a tender offer for Hitachi Transport System Ltd, the companies said. Parent Hitachi will sell its almost 40% stake and then take 10% of the acquiring fund. The value of the deal is 670 billion yen ($5.2 billion), based on Reuters calculations.

In recent years Hitachi has sold both semiconductor equipment maker Hitachi Kokusai Electric and power tool unit Hitachi Koki to KKR. It has been held up by an investors as a rare example of how a traditional Japanese hardware firm has repositioned itself for the future and worked with private equity to deliver better returns for shareholders.

Hitachi Transport’s third-largest shareholder, Hong Kong-based Oasis Management, will tender its shares in the offer, Oasis CEO Seth Fischer told Reuters.

“Hitachi has again proven itself to be an example of the best of governance in Japan,” Fischer said. “They have run a truly robust process to find the best buyer for Hitachi Transport.”

KKR will launch the tender offer at 8,913 yen a share, while Hitachi Transport will buy back its shares from Hitachi at 6,632 yen, the companies said.

Shares of Hitachi Transport closed at 8,540 yen on Thursday before the announcement, having surged since the Nikkei newspaper first reported the sale was in the works last week.

BIG IN JAPAN

KKR last year raised $15 billion for its fourth Asia-Pacific focused fund, marking the region’s biggest private equity fund at a time when buyout-backed deals are on the rise.

Last month, it announced the acquisition of Japanese real estate asset manager Mitsubishi Corp-UBS Realty Inc (MC-UBSR) for nearly $2 billion, further deepening its presence in the country.

It is also planning to spend $14.8 billion buying Ramsay Health Care, Australia’s largest private hospital operator, and is carrying out due diligence on the listed company.

If successful, the bid will be the largest private equity buyout in Australian history and the largest deal down under this year.

KKR said that Hitachi Transport would aim to become a leading logistics player in Asia and eventually, globally, including through mergers and acquisitions.

Separately, Hitachi on Thursday reported a 49% jump in full-year operating profit and said it would buy back 200 billion yen worth of its own shares.

($1 = 130.6500 yen)

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