Bain nears $ 8 billion deal to buy Hitachi Metals

Bain Capital Reaches $ 8 Billion Deal To Acquire Hitachi Metals After A Consortium Led By The U.S. Private Equity Group Secured Exclusive Trading Rights For The Tokyo-listed Materials Group, According To People With Knowledge direct discussions.

The expected deal, which has been under discussion since last August, will involve Hitachi selling its roughly 53% stake in Hitachi Metals, which has historically been one of the Japanese conglomerate’s largest subsidiaries.

The sale of its majority stake in Hitachi Metals would bring the parent company closer to the liquidation of its holdings in its listed subsidiaries. Investors identified this target as a measure of progress in corporate governance.

The sale also comes in the wake of Hitachi’s $ 9.5 billion bid to buy US software engineering group GlobalLogic, which is expected to be the largest acquisition ever by the Japanese company and which will raise its interest-bearing debt to $ 28 billion.

“If the company monetizes some of the stakes in its remaining listed subsidiaries, Hitachi Construction Machinery and Hitachi Metals. . . it would have additional liquidity to manage its total debt and its indebtedness, said Monday Motoki Yanase, credit manager at the rating agency Moody’s.

The Bain-led consortium includes Japan Industrial Partners (JIP) and Japan Industrial Solutions (JIS). JIP was created almost 20 years ago with investments from lender Mizuho and Bain. He was involved in the acquisition of a range of Japanese industrial gems, including the Vaio laptop business of Sony and the defense equipment subsidiary of NEC. JIS is a private equity asset manager established in 2010 with capital from the largest mega-banks in Japan.

Bain’s exclusive trading rights for Hitachi Metals come as global private equity firms, including KKR, Carlyle, Blackstone and Apollo, strengthen their presence in Japan, as large conglomerates abandon their non-core businesses and properties.

As a sign of rising private equity ambitions in Japan, Toshiba said on Wednesday it had received a formal approach from the European CVC fund. People familiar with the situation have said that the envisaged $ 20 billion deal could become the largest leveraged buyout in Japanese history.

Bain has implemented a series of transactions in recent years. The most significant was the 2018 acquisition of Toshiba Memory, which it bought for $ 18 billion as part of a consortium including SK Hynix of South Korea. Last May, Bain also bought Aviation industry Showa in a deal that gave the Boston-based fund a bank of 1.25 square meters of land outside Tokyo.

Hitachi said no official decision on the sale has been made. Hitachi Metals declined to comment.

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