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KKR's tender offer for Hitachi Kokusai ends in success

US fund amasses enough shares after twice sweetening its offer

A plant operated by Hitachi Kokusai in Toyama Prefecture. After moving under Kohlberg Kravis Roberts' umbrella, the Japanese manufacturer of chipmaking equipment is expected to focus on its video and communications solutions business.

TOKYO -- Kohlberg Kravis Roberts has brought its tender offer for shares of Hitachi Kokusai Electric to a fruitful close, ending months of takeover drama that drew notice for its twists and turns.

The offer would have fallen through had KKR failed to acquire at least 23.58% of outstanding Hitachi Kokusai shares by the Friday deadline. But the U.S. fund reached 26%, according to sources close to the matter. It solicited shares from minority holders of Hitachi Kokusai rather than from parent Hitachi, which has a 51.67% stake.

Hitachi plans to unload Hitachi Kokusai shares. KKR is seen spending roughly 250 billion yen ($2.2 billion) in total on the deal.

Hitachi Kokusai, a manufacturer of chipmaking equipment, is expected to leave the first section of the Tokyo Stock Exchange following an extraordinary shareholders meeting.

In a tender offer, the buyer usually sets a price with a premium over the prevailing share price. But since KKR announced a tender offer in April -- later shelved but carried out in the end -- Hitachi Kokusai's stock price has mostly stayed above KKR's offer price. In an unusual development, the U.S. fund has twice sweetened its offer and even extended the deadline.

Hitachi Kokusai has been posting healthy earnings amid strong semiconductor demand. On top of this, Elliott Management was revealed to be grabbing extra shares in the company, prompting speculation of the American activist investor buying leverage to push KKR to raise its offer.

Hitachi Kokusai closed Friday at 3,155 yen, above KKR's latest offer price of 3,132 yen per share.

Under KKR's umbrella, Hitachi Kokusai is expected to reorganize operations. The core chipmaking equipment segment will likely be spun off and absorbed by KKR affiliate fund HKE Holdings.

Hitachi Kokusai will focus on its video and communications solutions business. KKR will own 60% of Hitachi Kokusai, while Hitachi and a company affiliated with investment fund Japan Industrial Partners will each hold 20%.

(Nikkei)

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