KKR buys Hitachi Koki for $1.3bn

March 2017 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Leading global investment firm KKR has announced that HK Holdings Co., Ltd, an entity owned by investment funds controlled by KKR, has made a tender offer of approximately $1.3bn for all the existing common shares and stock acquisition rights of Hitachi Koki Co., Ltd, a leading power tool and life science equipment manufacturer.

The offer involves HK Holdings’ entering into a tender agreement with Hitachi Ltd, the lead shareholder in Hitachi Koki, to acquire in the tender offer Hitachi’s approximate 40.25 percent holding of Hitachi Koki’s common shares, and also with Hitachi Urban Investment, Ltd to acquire its approximate 10.90 percent holding. Furthermore, the tender offer, which was subject to the fulfilment of certain conditions in the tender agreement, commenced on 30 January 2017.

Under the terms of the announced offer, under Japan’s Financial Instruments and Exchange Act, Hitachi Koki’s common shares have been valued at 1450 yen per common share. HK Holdings has also set a tender offer price per common share of 870 yen. The tender offer price per Hitachi Koki stock acquisition right will be 144,900 yen. In addition, Hitachi Koki plans to pay a special dividend conditional upon the success of the tender offer.

A leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds, KKR’s aim is 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.

Having invested in Japan through its pan-regional private equity funds since 2010, the country has been and continues to be a key focus for KKR. To date, KKR has completed three acquisitions in the market: (i) Intelligence Ltd., a leading human resources services company; (ii) Panasonic Healthcare, the carve-out health care business of Panasonic Corporation; and (iii) Pioneer DJ, the carve-out DJ equipment business of Pioneer Corporation. In addition, on 22 November 2016, KKR announced the launch of a tender offer for Calsonic Kansei. KKR has said that it is buying Hitach Koki predominantly from its Asian Fund II, which the firm completed in 2013.

“Hitachi Koki is a world-class manufacturer of power tools and a developer of innovative tool technologies,” said Hiro Hirano, a member of KKR and chief executive of KKR Japan. “The company is well-positioned for further organic and inorganic growth given the high quality of its products, its high-calibre team and the attractive environment for power tools through cordless and digital trends.”

Pending a successful outcome in the tender offer, KKR intends to work closely with Hitachi Koki’s management and employees, leveraging its excellent technology development capabilities and KKR’s global resources and the experience of its worldwide team to identify opportunities to strengthen the company’s business platform. These opportunities may include implementing operational improvement initiatives and identifying and executing acquisitions globally with the aim of growing Hitachi Koki’s corporate value.

A leading supplier of high performance, high quality power tools and life science equipment, Hitachi Koki competes in the global marketplace to introduce cordless technology to a wider range of power tool products and applications. The company, which is actively pursuing expansion in global markets, previously acquired German power tool company metabo Aktiengesellschaft in March 2016. Hitachi Koki has also formed a strategic alliance with major North American hardware chain Lowe’s Companies, Inc. in 2015.

Mr Hirano concluded: “Looking ahead, we are fully committed to leveraging our global network and resources to provide full support to Hitachi Koki in pursuing its growth strategy.”

Fraser Tennant