KKR is buying Japanese auto parts maker Calsonic Kansei Corporation from Nissan Motor and other shareholders in one of the biggest private equity deals in Japan in recent years.
KKR has offered to purchase all of Calsonic’s issued and outstanding shares listed on the Tokyo Stock Exchange for ¥1,860 ($16.80; €15.80) per share or a 28.4 percent premium over the stock’s closing price on Tuesday, taking the total deal value to a whopping ¥498.3 billion ($4.5 billion; €4.2 billion), according to a company statement.
KKR’s investment in Calsonic comes from its $6 billion 2013-vintage Asian Fund II, which is about 75 percent deployed, according to a source with knowledge of the matter. KKR’s Asian Fund II posted a net internal rate of return of 24.8 percent through 30 June 2016, the firm said in its quarterly report.
Private equity firms Bain Capital and MBK Partners are reported to have submitted second round bids for the business.
Calsonic Kansei, whose history dates back to 1938, is one of the largest automotive parts manufacturers in Japan. The company currently has operations in the Americas, Europe, China and Asia across 78 production facilities in 16 countries. It counts Nissan, Renault, Isuzu, Daimler and General Motors as its customers.
KKR, which has a track record of more than 50 carve-outs globally, said in its tender document it intends to accelerate the company’s growth plans by expanding its customer base and strengthening its R&D component, a must in today’s ever-changing landscape of electric and self-driving cars. KKR also plans to embark on “inorganic M&A transactions that will transform the company from a component parts supplier into a supplier that offers system solutions that include new technologies”.
“As a partner to Calsonic Kansei’s management team, we aim to assist the company in achieving its growth ambitions and make available our international network and industry expertise to continue Calsonic Kansei’s success globally,” Hiro Hirano, member of KKR and CEO of KKR Japan commented in a statement.
The tender offer for Calsonic Kansei is expected to begin in late February 2017. Following the completion of the transaction the company will become a wholly-owned subsidiary of KKR.
Meanwhile, KKR is also gearing up for its third Asian fund, targeting up to $7 billion, which would be the largest-ever pan-Asian fund raised.