The unusually contentious bidding war between US private equity firms Bain Capital and KKR for Tokyo-listed Fuji Soft looks as though it might have been resolved at the time of writing, with a statement from Bain on February 10 saying it was "carefully considering its future policy, including the option of withdrawing".
According to news reports, KKR raised its bid to over Bain’s offer at U$63.44 a share or a total of around $2 billion, for a final value of at least $4 billion for the Japanese IT firm.
KKR already had a 33.97% stake in Fuji Soft after activist investors 3D Investment Partners and Farallon Capital agreed to tender their stakes to the buyout firm. In December, Fuji’s founding family asserted its support for the Bain bid in the face of rejection from the Fuji Soft board, which favoured the KKR bid.
Last month, KKR urged the board to file an injunction against Bain, alleging violation of a non-disclosure agreement, saying that it “continues to be committed to Fuji Soft’s privatisation” and regarded Bain’s use of information from Fuji Soft as illegal.
KKR also queried the feasibility of Bain’s bid, and asserted that Nomura Securities, the founding family’s financial adviser, had reached out to KKR in December, proposing a three-way split where the family, KKR and Bain would cooperate to privatise Fuji Soft together. KKR maintained that Bain’s decision to launch a hostile bid was in violation of earlier undertakings.
At the time of writing, Fuji Soft’s stock was trading at around $65.50 as market players bet that Bain may still come back to the table. It will be interesting to see if that higher price makes any difference to KKR’s bid or to the Fuji Soft board’s decision.
Perhaps Bain will make another try. Or maybe it has decided there are easier assets to pick up in Japan. On February 7, it announced an agreement to acquire Mitsubishi Tanabe Pharma Corporation in a carve-out transaction from Mitsubishi Chemical Group, valuing the business at $3.3 billion.
Carve-outs and restructurings around Japan’s big-name conglomerates look like a fruitful ongoing business in the current climate, especially since those conglomerates now look ready to sell. It also looks like Japan Inc., proverbially devoted to harmony and consensus, is now ready to accept increasingly robust ownership tussles as part of the revitalisation of the country’s industrial base.