KKR Announces Tender Offer to Acquire FUJI SOFT

Rhea-AI Summary

KKR, a leading global investment firm, has announced plans for a tender offer to acquire all outstanding shares of FUJI SOFT INCORPORATED, a prominent Japanese system integrator. The offer, made through KKR's entity FK Co., , proposes a price of JPY 8,800 per share, representing a significant premium over recent stock prices. The transaction, primarily financed by KKR's Asian Fund IV, is expected to commence in the second half of 2024, subject to regulatory approvals.

FUJI SOFT, with a team of over 10,000 system engineers, specializes in embedded, control, and operational software and systems. The acquisition aligns with FUJI SOFT's five-year plan to become a leading provider in IT and operational technology fields. KKR aims to leverage its global platform and industry expertise to accelerate FUJI SOFT's growth and enhance value for Japanese businesses.

Positive

• Significant premium offered: 110.3% over 12-month average stock price
• Potential for accelerated growth through KKR's global platform and expertise
• Alignment with FUJI SOFT's five-year plan for market leadership
• KKR's strong track record of investments in Japan's digital space

Negative

• Regulatory approvals required before tender offer commencement
• Potential integration challenges following acquisition
• Execution risks associated with FUJI SOFT's five-year plan

Insights

Financial Analyst

KKR's tender offer for FUJI SOFT is a significant move in Japan's IT services sector. The JPY 8,800 per share offer represents a 110.3% premium over the 12-month average, signaling KKR's strong belief in FUJI SOFT's potential. This deal, valued at approximately $3.8 billion, highlights the growing interest in Japan's digital transformation.

The transaction's financing through KKR's Asian Fund IV demonstrates the firm's commitment to the region. For FUJI SOFT shareholders, this offer presents an attractive exit opportunity, especially considering the substantial premium. However, the delayed commencement until H2 2024 introduces uncertainty and potential market risks.

Investors should note KKR's track record in Japan, with $8 billion deployed since 2006 and $18 billion in assets under management. This expertise could accelerate FUJI SOFT's growth in emerging technologies like cloud, IoT and AI, potentially enhancing its market position and profitability.

Tech Industry Expert

FUJI SOFT's acquisition by KKR marks a pivotal moment in Japan's IT services landscape. With over 10,000 system engineers, FUJI SOFT's expertise in embedded, control and operational software positions it well for the ongoing digital transformation wave. The deal aligns with FUJI SOFT's ambitious "Mid-Term Business Plan 2028," aiming to dominate both IT and operational technology fields.

KKR's global resources and industry connections could significantly accelerate FUJI SOFT's innovation in cloud computing, IoT and generative AI. This synergy may lead to more competitive offerings and expanded market reach. However, integrating KKR's global practices with FUJI SOFT's local expertise will be important for success.

The transaction reflects the growing importance of IT services in driving business efficiency and innovation across industries. It may trigger further consolidation in Japan's tech sector as companies seek to build scale and capabilities to compete in the rapidly evolving digital landscape.

Market Research Analyst

KKR's acquisition of FUJI SOFT is a strategic move that could reshape Japan's IT services market. The deal capitalizes on the increasing demand for digital transformation services, particularly in cloud, IoT and AI technologies. This aligns with Japan's push for digitalization across industries, presenting significant growth opportunities.

The transaction's premium valuation reflects the scarcity of large-scale, quality IT service providers in Japan. It may set a new benchmark for valuations in the sector, potentially triggering a wave of M&A activity as other players seek to consolidate or attract foreign investment.

FUJI SOFT's diverse client base across industries provides a solid foundation for expansion. KKR's global network and expertise in scaling tech companies could help FUJI SOFT capture a larger share of Japan's growing IT services market, estimated to reach $108 billion by 2024. This deal may also attract more foreign investment into Japan's tech sector, fostering increased competition and innovation.

TOKYO--(BUSINESS WIRE)--

KKR, a leading global investment firm, today announced that FK Co., Ltd. (the “Offeror”), an entity owned by investment funds managed by KKR, intends to make a tender offer to acquire all the outstanding shares of FUJI SOFT INCORPORATED (“FUJI SOFT” or the “Company”; TSE stock code 9749).

FUJI SOFT is a leading system integrator in Japan with a focus on embedded, control and operational software and systems. The Company serves clients across various industries based on advanced technologies built on decades of experience with a team of over 10,000 system engineers. Under the Company’s five-year “Mid-Term Business Plan 2028,” FUJI SOFT’s vision is to become a leading provider of system, software, and service both in information technology (“IT”) and operational technology fields. The Company’s five-year plan also outlines its strategy to improve the profitability of its existing businesses, strengthen group synergies, and capture new growth opportunities.

The proposed tender offer price of JPY 8,800 per share has been determined based on negotiations between KKR and FUJI SOFT. The transaction will be financed predominantly from KKR’s Asian Fund IV.

The proposed tender offer price represents¹:

• A 110.3% premium over the simple average closing price of FUJI SOFT’s stock for the 12 months up to October 2, 2023.
• A 97.8% premium over the simple average closing price of FUJI SOFT’s stock for the 6 months up to October 2, 2023.

The Offeror expects to commence the tender offer in the second half of 2024, subject to regulatory approvals. For details regarding the conditions for the commencement of the tender offer, please refer to the full text of the filing notice issued today titled, “Notice Regarding the Planned Commencement of Tender Offer for the Shares of FUJI SOFT INCORPORATED (Code: 9749) by FK Co., Ltd.”

Hiro Hirano, Deputy Executive Chairman of KKR Asia Pacific and CEO of KKR Japan, said, “As Japan's IT services industry enters a transformative period of digitalization marked by the expanded use of cloud, IoT, and generative AI, we are pleased to have the opportunity to invest in a market leader in FUJI SOFT. We look forward to leveraging KKR’s global platform and industry expertise in the IT services sector to accelerate FUJI SOFT’s long-term growth and to unlock greater value for Japanese businesses and their customers.”

Japan continues to be an important market for KKR in the Asia Pacific region and globally. Since entering the Japanese market in 2006, KKR has deployed more than $8 billion in Japan across asset classes and strategies, and currently manages $18 billion in assets under management in the country. In Japan, KKR’s investments into the digital space include: Yayoi, a leading cloud accounting software provider; DataX (fka from scratch), an integrated data-driven marketing SaaS platform in Japan; Netstars, a QR code multi-payment gateway provider; and SmartHR, a human resources Software-as-a-Service provider. Other investments in Japan include LOGISTEED (fka Hitachi Transport System), a leading third-party logistics business; Seiyu, a nationwide supermarket chain; KOKUSAI ELECTRIC (fka Hitachi Kokusai Electric), a leading semiconductor producing equipment company; PHC Holdings (fka Panasonic Healthcare), a leading manufacturer of medical devices; Koki Holdings (fka Hitachi Koki), a power tool manufacturer; and Marelli (fka CALSONIC KANSEI), a global Tier 1 supplier of automotive components.

This press release should be read in conjunction with the filing notice issued today titled, "Notice Regarding the Planned Commencement of Tender Offer for the Shares of FUJI SOFT INCORPORATED (Code: 9749) by FK Co., Ltd.”.

The purpose of this press release is to publicly announce the tender offer and it has not been prepared for the purpose of soliciting an offer to sell or purchase in the tender offer. When making an application to tender, please be sure to read the tender offer explanatory statement for the tender offer and make your own decision as a shareholder or share option holder. This press release does not constitute, either in whole or in part, a solicitation of an offer to sell or purchase any securities, and the existence of this press release (or any part thereof) or its distribution shall not be construed as a basis for any agreement regarding the tender offer, nor shall it be relied upon in concluding an agreement regarding the tender offer.

The tender offer will be conducted in compliance with the procedures and information disclosure standards set forth in Japanese law, and those procedures and standards are not always the same as the procedures and information disclosure standards in the U.S. In particular, neither sections 13(e) or 14(d) of the U.S. Securities Exchange Act of 1934 (as amended; the same shall apply hereinafter) or the rules under these sections apply to the tender offer; and therefore the tender offer will not be conducted in accordance with those procedures and standards.

Unless otherwise specified, all procedures relating to the tender offer are to be conducted entirely in Japanese. All or a part of the documentation relating to the tender offer will be prepared in English; however, if there is any discrepancy between the English-language documents and the Japanese-language documents, the Japanese-language documents shall prevail.

This press release includes statements that fall under “forward-looking statements” as defined in section 27A of the U.S. Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934. Due to known or unknown risks, uncertainties or other factors, actual results may differ materially from the predictions indicated by the statements that are implicitly or explicitly forward-looking statements. Neither the Offeror nor any of its affiliates guarantee that the predictions indicated by the statements that are implicitly or expressly forward-looking statements will materialize. The forward-looking statements in this press release were prepared based on information held by the Offeror as of today, and the Offeror and its affiliates shall not be obliged to amend or revise such statements to reflect future events or circumstances, except as required by laws and regulations.

The Offeror, its financial advisors and the tender offer agent (and their respective affiliates) may purchase the common shares and share options of the Company, by means other than the tender offer, or conduct an act aimed at such purchases, for their own account or for their client’s accounts, in the scope of their ordinary business and to the extent permitted under financial instrument exchange-related laws and regulations, and any other applicable laws and regulations in Japan, in accordance with the requirements of Rule 14e-5(b) of the U.S. Securities Exchange Act of 1934 during the tender offer period. Such purchases may be conducted at the market price through market transactions or at a price determined by negotiations off-market. In the event that information regarding such purchases is disclosed in Japan, such information will also be disclosed on the English website of the person conducting such purchases (or by any other method of public disclosure).

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

¹ Figures represent the unaffected FUJI SOFT share price based on the closing share price on October 2, 2023, the last full trading day immediately prior to the speculative publication of media reports regarding the start of the bidding process for a potential tender offer.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808217610/en/

KKR Asia Pacific

Wei Jun Ong

+65 6922 5813

WeiJun.Ong@kkr.com

Source: KKR

FAQ

What is the proposed tender offer price for FUJI SOFT shares by KKR?

KKR's entity FK Co., proposes a tender offer price of JPY 8,800 per share for FUJI SOFT (TSE: 9749) shares.

When is KKR expected to commence the tender offer for FUJI SOFT?

KKR expects to commence the tender offer for FUJI SOFT in the second half of 2024, subject to regulatory approvals.

What premium does KKR's offer represent over FUJI SOFT's recent stock prices?

The offer represents a 110.3% premium over the 12-month average closing price and a 97.8% premium over the 6-month average closing price up to October 2, 2023.

How does this acquisition align with FUJI SOFT's business strategy?

The acquisition aligns with FUJI SOFT's five-year 'Mid-Term Business Plan 2028' to become a leading provider in IT and operational technology fields, improve profitability, and capture new growth opportunities.