Mr Viral
Fuji Soft president Satoyasu Sakashita
KKR on Tuesday hiked its tender offer price for Fuji Soft by 4.2 percent, trumping an announced bid by rival Bain Capital and furthering a months-long tussle between the US private equity majors for control of the Tokyo-listed systems developer.
KKR’s latest offer of JPY 9,850 per share supersedes the Manhattan-based firm’s November bid of JPY 9,451 and eclipses Bain’s most recent offer of JPY 9,600. The second-stage tender offer period has also been extended by seven business days to 19 February, KKR said in a release.
KKR in December had said no change to its price was being considered, but the buyout giant said Tuesday that it decided to revise the offer in light of Fuji Soft’s elevated share price, which stood at JPY 9,990 at the close of Tuesday trading and remained at that level on Wednesday.
“It also considers the fact that Fuji Soft’s share price has not declined as expected despite there being no competing tender offer for an extended period,” KKR said, noting that Boston-based Bain has yet to launch its own tender offer.
Premium on the Table
KKR’s new offer represents a 33.3 percent premium to Fuji Soft’s closing price on 7 August 2024, the business day immediately preceding the announcement of the first-stage tender offer, and a 0.51 percent premium to the closing price of the Tokyo-listed shares on Monday, the business day just before the announcement of the amended price.
KKR Japan CEO Hiro Hirano
“Given that any further prolonged uncertainty around Fuji Soft’s privatisation will hurt the company and its stakeholders, including employees and customers, KKR has decided to raise the second tender offer price to minimise the uncertainty and accelerate Fuji Soft’s privatisation, and turn its focus to value creation efforts alongside the company,” the firm said.
KKR has highlighted the Fuji Soft board’s continued backing for the second-stage offer, while Bain has pointed to support for its bid from Fuji Soft’s founding family members, who have questioned the judgement of the special committee advising the board.
KKR contends that changes in Bain’s terms, such as waiving the support of the board as a condition for launching the tender offer, have transformed the competing bid into a “hostile partial tender offer with the aim of seizing control of the company”.
Bain and the founding family maintain that the special committee consists of outside directors elected at an extraordinary shareholder meeting convened by 3D Investment Partners, raising questions about their independence. Singapore-based 3D and US hedge fund Farallon together hold a combined 32.68 percent of Fuji Soft and have supported KKR’s tender offer.
The founding family, which holds 18.6 percent of Fuji Soft’s shares, and Bain intend to jointly acquire over 50.1 percent of the company’s shares. KKR secured 33.9 percent of the shares in its first-stage tender offer.
Mounting Mega-Deals
The bidding war between the two fund managers is part of a rush of foreign investment into Japan fuelled by the soft yen, low borrowing costs and undervalued assets.
Reuters reported in December that KKR and Bain each made first-round bids for the non-core assets of Seven & i Holdings, the Tokyo-listed owner of 7-Eleven. KKR offered JPY 800 billion ($5.1 billion) for York Holdings, an entity set to be spun out of the retailer, while Bain offered JPY 1.2 trillion, according to the news agency’s sources.
Also in December, US private equity titan Blackstone announced plans to buy the Tokyo Garden Terrace Kioicho commercial complex from Seibu Holdings for $2.6 billion, a sum that would mark the largest-ever real estate acquisition by a foreign investor in Japan.
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