KKR Acquires 35% Stake in Japan’s Fuji Soft

Kohlberg Kravis Roberts & Co. (KKR), a global private equity firm based in the US, on Wednesday said that it has acquired a 35% stake in Japanese software developer Fuji Soft through FK Co., Ltd, an entity owned by investment funds managed by KKR, after the first part of its two-stage buyout tender offer.

Quoting a statement from the company, a Reuters report said that although rival private equity firm Bain Capital had proposed a higher offer in October to take the Japanese company private, KKR now owns enough Fuji Soft shares to be able to block Bain’s bid.

Investors 3D Investment Partners and Farallon Capital, who own a stake of 21.45% and 12.25% in Fuji Soft respectively, had previously agreed to tender their shares to KKR at a price of $57.23 per share. However, Bain, which offered $61.46 per share, said it would only launch its share bid with approval from Fuji Soft’s management, which it has yet to receive, the report said.

KKR said it will launch the second stage of its tender offer – also at $57.23 per share – in the middle of November.

The market value of Fuji Soft Inc. currently stands at $3.4 billion and is likely to reach $4 billion at a price of $58.44 per share, 20% higher than the closing price on 7 August 2024.

KKR has been investing regularly in Japan the past and the country remains an important market for the company in the Asia-Pacific region.

Since entering the Japanese market in 2006, KKR has invested more than $8 billion in Japanese assets in various sectors and currently has assets worth $18 in Japan, including Yayoi, DataX, Netstars, SmartHR, LOGISTEED (fka Hitachi Transport System), Seiyu, KOKUSAI ELECTRIC, etc.

Bid Offered in August

It may be recalled that KKR has offered through FK Co., Ltd. an outstanding shares of Fuji Soft, a leading system integrator in Japan with a focus on embedded, control and operational software and systems in August this year.

Fuji Soft 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 offer price per share was determined based on negotiations between KKR and Fuji Soft and that the transaction will be financed predominantly from KKR’s Asian Fund IV, KKR said at that time.

The proposed tender offer price represents a 110.3% premium over the simple average closing price of FUJI SOFT’s stock for the 12 months up to 2 October 2023, and a 97.8% premium over the simple average closing price of Fuji Soft’s stock for the 6 months up to 2 October 2023.