KKR has no plans to lead a Toshiba bid, could become an investor
17:41 JST, July 19, 2022
TOKYO/HONG KONG (Reuters) – KKR & Co KKR.N does not plan to lead a bid for Japanese conglomerate Toshiba Corp 6502.T at this point in time, three people with knowledge of the situation said, as the race for what could be the country’s biggest buyout deal this year gathers pace.
KKR could, however, still take part in a deal as an equity partner, said two of the sources.
The global buyout firm held informal discussions about a potential deal with Toshiba’s special committee, some of the conglomerate’s shareholders and other investors but stopped short at submitting a bid due to the complexity of the transaction, said one of the people.
It is awaiting more clarity from the government and Toshiba’s management on whether a deal could realistically materialize, said the person.
A buyout of Toshiba could value the firm as high as $22 billion, sources have previously told Reuters, adding that KKR was among firms that had expressed initial interest.
KKR is seen as one of a few global private equity funds able to lead a buyout deal of that size. It has a $15 billion pan-Asia fund and has cut deals with other Japanese conglomerates including Hitachi Ltd 6501.T and Panasonic Holdings Corp 6752.T.
The sources declined to be named due to confidentiality constraints. A spokeswoman for KKR declined to comment.
Toshiba is expected to shortlist bidders and allow them to proceed to due diligence this month. It said last month it had received eight initial buyout proposals as well as two offers for capital alliances that would see it remain listed. Read full story
Toshiba said it would not comment on details of the bidders and their proposals.
Japan’s government has not made clear its stance on a potential take-private deal for Toshiba.
The conglomerate has 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 those businesses in the hands of foreign owners.
Apollo Global Management APO.N, Bain Capital, Blackstone Inc BX.N, Baring Private Equity Asia, CVC Capital Partners and MBK Partners have also expressed initial interest in Toshiba, Reuters has reported.
Of these, Bain is likely to emerge as the frontrunner due to its pre-existing relationship with the Japanese conglomerate, separate sources said.
Bain holds majority control of Kioxia Holdings Corp, the flash memory chipmaker previously known as Toshiba Memory. Toshiba continues to have a stake of roughly 40% in Kioxia.
Bain declined to comment.
State-backed fund Japan Investment Corp (JIC) is forming a consortium with domestic private equity firm Japan Industrial Partners to bid for Toshiba, according to two sources with knowledge of the matter.
But industry minister Koichi Hagiuda cautioned last month, that generally speaking, JIC would not be able to invest in a deal just to take a company private and ensure stable management. Any JIC investment would have to fulfill policy objectives, he added.
JIC and Japan Industrial Partners declined to comment.
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