Double-edged katana

3 Jul 2019 By Alec Macfarlane

Just two years after buying Hitachi Kokusai for $2.2 bln, the LBO shop is selling one of its two units for the same sum. Japan Inc has been slow to offload unloved businesses, but deals like this reveal some of the missing value. It could also make it harder for bargain hunters.

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Applied Materials, which makes semiconductor-manufacturing equipment, said on July 1 it had agreed to buy rival Kokusai Electric from private equity firm KKR for $2.2 billion in cash.

KKR took Hitachi Kokusai Electric private in 2017 in a $2.2 billion deal, when it was a listed subsidiary of Hitachi that housed both a semiconductor manufacturing equipment business and a video-equipment division. The latter remains jointly owned by KKR, Hitachi and Japan Industrial Partners. The original acquisition involved multiple steps, including buying a stake back from the parent company and a tender offer to public shareholders.

Goldman Sachs advised Applied Materials on the deal.

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