KKR has no plans to lead Toshiba’s bid, but could join a deal


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By Makiko Yamazaki, Scott Murdoch and Kane Wu

TOKYO/HONG KONG (Reuters) – KKR & Co is not considering conducting an offer for Japanese conglomerate Toshiba Corp at this stage, three people with knowledge of the situation have said, as the race for what could be the world’s biggest takeover of the country this year is accelerating.

KKR could still participate in a deal as a financial partner, however, two of the sources said. A KKR spokesperson declined to comment.

The global buyout firm had informal talks about a potential deal with Toshiba’s special committee, some of the conglomerate’s shareholders and other investors, but stopped submitting an offer due to the complexity of the transaction, said one of the people.

KKR expects more clarity from the government and Toshiba management on whether a deal could realistically materialize, the person said.

A takeover of Toshiba could value the company up to $22 billion, sources have previously told Reuters, adding that KKR was among the companies that had shown initial interest.

KKR is considered to be one of the few global private equity funds capable of leading a takeover deal of this size. It has a $15 billion pan-Asian fund and has deals with other Japanese conglomerates including Hitachi Ltd and Panasonic Holdings Corp.

Toshiba said on Tuesday it had selected several bidders to conduct due diligence, without naming them. It said last month it had received eight initial takeover proposals as well as two offers from capital alliances that would see it remain listed.

Selected proposals include those that would involve taking Toshiba privatized and those for a capital alliance, he said.

The Japanese government did not specify its position on a possible agreement to privatize Toshiba.

The conglomerate owns a number of sensitive technologies such as nuclear power and defense equipment, and separate sources have previously said the government would not want to leave these companies in the hands of foreign owners.

Apollo Global Management, Bain Capital, Blackstone Inc, Baring Private Equity Asia, CVC Capital Partners and MBK Partners have all shown initial interest in Toshiba.

Two sources said Bain was among the shortlisted bidders, while business daily Nikkei reported that CVC Capital, Brookfield Asset Management and Japan Industrial Partners were also selected.

Of these, Bain is likely to emerge as the frontrunner due to his pre-existing relationship with the Japanese conglomerate, separate sources said. Bain declined to comment.

Bain holds majority control of Kioxia Holdings Corp, the flash memory chip maker previously known as Toshiba Memory. Toshiba retains an approximate 40% stake in Kioxia.

Public fund Japan Investment Corp (JIC) is forming a consortium with Japan Industrial Partners to bid on Toshiba, according to two people familiar with the matter. JIC and Japan Industrial Partners declined to comment.

But Industry Minister Koichi Hagiuda warned last month that JIC would not be able to invest in a deal just to privatize a company and ensure stable management. Any investment by the JIC should fulfill political objectives, he said.

(Reporting by Makiko Yamazaki and Junko Fujita in Tokyo, Kane Wu and Scott Murdoch in Hong Kong; Writing by Kane Wu; Editing by Sumeet Chatterjee, Edwina Gibbs, Jan Harvey and David Evans)


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