KKR Releases Tender Offer to Acquire Hitachi Koki
- M&A Deals
- 13.01.2017 10:30 am
Leading global investment firm KKR today announced that HK Holdings Co., Ltd. (the “Bidder”), an entity owned by investment funds controlled by KKR, intends to make a tender offer for all the existing common shares and stock acquisition rights of leading power tool and life science equipment manufacturer Hitachi Koki Co., Ltd. (“Hitachi Koki” or the “Company”) (Code number: 6581, First Section of the Tokyo Stock Exchange).
In connection with the tender offer, the Bidder has entered into a tender agreement (the “Tender Agreement”) with Hitachi Ltd. (“Hitachi”), the lead shareholder in Hitachi Koki, to acquire in the tender offer Hitachi’s approximate 40.25% holding of Hitachi Koki’s common shares, and also with Hitachi Urban Investment, Ltd. (“HUI”) to acquire in the tender offer HUI’s approximate 10.90% holding of Hitachi Koki’s common shares. The tender offer will launch subject to the fulfillment of certain conditions in the Tender Agreement, and is expected to commence on January 30, 2017 (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 Koki titled “Announcement Concerning Opinion Regarding the Tender Offer for the Shares of Hitachi Koki Co., Ltd. by HK Holdings Co., Ltd.” and its attachment titled “Announcement Regarding the Tender Offer for the Shares of Hitachi Koki Co., Ltd. (Securities Code 6581)” (the “HK press release”).
Hitachi Koki is a leading supplier of high performance, high quality power tools and life science equipment, competing in the global marketplace to introduce cordless technology to a wider range of power tool products and applications. The Company is actively pursuing expansion in global markets, and has acquired German power tool company metabo Aktiengesellschaft in March 2016. It has also formed a strategic alliance with major North American hardware chain Lowe’s Companies, Inc. in 2015.
Pending a successful outcome in the Bidder’s tender offer, KKR intends to work closely with Hitachi Koki’s management and employees, leveraging Hitachi Koki’s 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.
Under the terms of the announced offer under Japan’s Financial Instruments and Exchange Act, among other terms, the Bidder will commence the tender offer to acquire the issued common stock and stock acquisition rights of Hitachi Koki. In addition, based on the Bidder’s proposal, Hitachi Koki plans to pay a special dividend (the “Special Dividend”) conditional upon the success of the tender offer, with a record date of January 29, 2017. The Bidder has set a value of Hitachi Koki common shares of JPY 1,450 per common share. Assuming the payment of the Special Dividend of JPY 580 per common share upon the success of the Tender Offer, the Bidder has set a tender offer price per common share of JPY 870. The tender offer price per Hitachi Koki stock acquisition right will be JPY 144,900. (For further details please see the HK press release issued by Hitachi Koki today)
The value per share represents:1
- A premium of 89.8% to Hitachi Koki’s 12-month average closing price to October 4, 2016
- A premium of 108.0% to Hitachi Koki’s 6-month average closing price to October 4, 2016.
Since the total number of Hitachi Koki’s common shares is equal to 101,429,921 (number of issued shares excluding treasury shares; including the number of shares subject to stock acquisition rights), this transaction values Hitachi Koki at JPY 147.1 billion (approx. US$1.28 billion at the exchange rate of US$1=JPY115).
Mr. Hiro Hirano, Member of KKR and CEO of KKR Japan, said, “Hitachi Koki is a world-class manufacturer of power tools and a developer of innovative tool technologies. The Company is well-positioned for further organic and inorganic growth given the high quality of its products, its high-caliber team and the attractive environment for power tools through cordless and digital trends. 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.”
KKR makes its proposed investment predominantly from its Asian Fund II. 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 three 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. In addition, on November 22, 2016 KKR announced the launch of a tender offer for Calsonic Kansei.
This press release should be read in conjunction with the full text of the HK press release, 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 for common shares and stock acquisition rights of Hitachi Koki, a company established in Japan. 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 Bidder and the Company as well as the tender offer agent may engage in the purchase of 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, and the Bidder acknowledges such purchases. In the event information regarding such purchases is disclosed in Japan, such information will also be disclosed in English on the website of Hitachi Koki or the financial advisor conducting such purchases or the website of the tender offer agent, or will otherwise be made publicly available.