KKR Receives Support and Recommendation from FUJI SOFT for Second Tender Offer and Expects to Launch Tender Offer Next Week

Rhea-AI Summary

KKR announced plans to conduct a Second Tender Offer for FUJI SOFT at 9,451 yen per share, following its successful first tender offer where it acquired a 33.97% voting rights ratio. The FUJI SOFT Board unanimously supports KKR's offer and opposes Bain Capital's proposal. The new price represents a 125.8% premium over the 12-month average closing price prior to October 2, 2023. Shareholders who participated in the first tender offer will be made whole if KKR achieves a 53.22% stake across both offers. The second tender offer is expected to launch mid-next week.

Positive

• Successfully acquired 33.97% voting rights in first tender offer
• Unanimous board support for KKR's tender offer
• Significant ~90% support from company advisors, directors, and officers
• Offers 125.8% premium over 12-month average share price

Negative

• Competing bid from Bain Capital creating uncertainty
• Higher offer price needed compared to first tender offer

Insights

Financial Analyst

This tender offer represents a significant strategic move in KKR's attempt to privatize FUJI SOFT. The 9,451 yen per share offer price shows a substantial 125.8% premium over the 12-month average, demonstrating KKR's strong commitment to the acquisition. Having already secured a 33.97% stake through the first tender offer, KKR aims to reach 53.22% ownership, which would give them majority control.

The unanimous board recommendation and opposition to Bain Capital's competing proposal significantly increases the likelihood of success. The provision to make early tendering shareholders whole is a strategic move to encourage participation and maintain fairness. This transaction aligns with KKR's broader strategy of acquiring technology-focused companies in Japan, where there are opportunities for operational improvements and value creation through private ownership.

M&A Legal Expert

The two-stage tender offer structure is strategically designed to navigate Japanese M&A regulations while building a controlling position. The unanimous board support and explicit rejection of Bain Capital's proposal significantly strengthens the legal position of KKR's offer. The commitment to equalize payments between first and second tender participants demonstrates compliance with fair treatment principles under Japanese securities law.

The detailed disclosure about procedural compliance and the careful wording regarding U.S. securities laws shows proper legal risk management in cross-border M&A. The high premium and transparent process should help mitigate potential shareholder litigation risks.

• FUJI SOFT Board unanimously resolved to recommend KKR’s tender offer and oppose Bain Capital’s proposal
• Tender offer expected to launch middle of next week with price of 9,451 yen per share; shareholders and share option holders who tendered into first tender offer to be made whole if second tender offer succeeds

TOKYO--(BUSINESS WIRE)-- KKR, a leading global investment firm, today announced that in connection with its two-stage tender offer scheme (the “Tender Offer”) for the common shares and share options of FUJI SOFT INCORPORATED (TSE stock code 9749; “FUJI SOFT”) through FK Co., Ltd. (the “Offeror”), the Offeror, an entity owned by investment funds managed by KKR, will conduct the Second Tender Offer at a price of 9,451 yen per common share. KKR expects to commence the Second Tender Offer as soon as the middle of next week.

The Board of Directors of FUJI SOFT resolved today to support the Second Tender Offer and to recommend that shareholders and share option holders of the Company tender their shares and share options into it. The Board also resolved to oppose the proposal by Bain Capital. Both resolutions were unanimous.

The Second Tender Offer follows the completion of the first tender offer, through which KKR acquired 21,413,302 common shares (voting rights ratio: 33.97%) and share options totaling 718,600 common shares on an as-converted basis to become FUJI SOFT’s largest shareholder. The first tender offer received significant support from advisors (komon), directors and officers of FUJI SOFT, who tendered ~90% of their share options.

The Offeror raised the tender offer price per common share to 9,451 yen (and with respect to the share options, to 1,197,200 yen per 5th Series Share Option, 1,059,800 yen per 6th Series Share Option, and 293,200 yen per 7th Series Share Option) with the aim of accelerating the privatization process as FUJI SOFT’s shares have stayed above the price of the First Tender Offer. The price of 9,451 yen per share represents a premium of 125.8% over the simple average closing price of FUJI SOFT’s stock for the 12 months prior to October 2, 2023.¹

All shareholders and share option holders who tendered into the First Tender Offer will be made whole if the Second Tender Offer succeeds and KKR achieves a 53.22% stake across both tender offers.

Hiro Hirano, Deputy Executive Chairman of KKR Asia Pacific and CEO of KKR Japan, said, "We are grateful to have FUJI SOFT’s continued trust and recommendation for KKR’s Second Tender Offer. We aim to complete the privatization swiftly so that we can turn our focus to working closely with the company and its employees to enhance its corporate value and long-term success.”

***

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

The purpose of this press release is to publicly announce the planned commencement of the Second 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 relevant 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 FUJI SOFT, 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. 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.

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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/20241115165652/en/

Media

KKR Asia Pacific

Wei Jun Ong

+65 6922 5813

WeiJun.Ong@kkr.com

Source: KKR

FAQ

What is the price per share in KKR's second tender offer for FUJI SOFT?

KKR's second tender offer price is 9,451 yen per common share.

How many shares did KKR acquire in the first tender offer for FUJI SOFT?

KKR acquired 21,413,302 common shares, representing a 33.97% voting rights ratio.

What percentage stake is KKR aiming to achieve across both tender offers?

KKR aims to achieve a 53.22% stake across both tender offers.

What premium does KKR's offer represent over FUJI SOFT's average share price?

The offer represents a 125.8% premium over the 12-month average closing price prior to October 2, 2023.