Japanese Deal Drives KKR Into Auto Parts

As part of its largest-ever transaction in Japan, the private-equity firm will acquire Nissan's 41% stake in Calsonic Kansei for $1.87 billion.
Matthew HellerNovember 23, 2016
Japanese Deal Drives KKR Into Auto Parts

Nissan is selling its 41% stake in auto parts maker Calsonic Kansei Corp. for 206.9 billion yen ($1.87 billion) to KKR as it continues to focus on developing new technologies, including electric and self-driving vehicles.

KKR will launch a tender offer in February for the rest of Calsonic’s shares, bringing the total value of the deal to up to 498.3 billion yen ($4.5 billion). The private-equity firm is paying 1,860 yen per share, representing a 28.3% premium over the stock’s last closing price.

Calsonic specializes in traditional auto parts, including interiors, electronics, air conditioning units and compressors, with about 80% of its global sales coming from Nissan. The deal is KKR’s largest ever in Japan and ranks as the largest takeover of a Japanese industrial company by private equity.

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“Calsonic Kansei is a best-in-class auto-parts manufacturer that supplies high-quality products to the world’s largest automotive brands,” Hiro Hirano, CEO of KKR Japan, said in a news release. “As a partner to Calsonic Kansei’s management team, we aim to assist the company in achieving its growth ambitions and make available our international network and industry expertise to continue Calsonic Kansei’s success globally.”

Nissan had conducted an auction among private-equity bidders for its stake in Calsonic. As The Financial Times reports, Japan’s leading carmakers “have historically maintained tight keiretsu bonds with their suppliers,” but “those links are coming under pressure as the electrification and automation of vehicles picks up speed.”

“Suppliers established around the internal combustion engine, such as Calsonic, are not necessarily well-placed to supply the technologies that Nissan needs,” the FT added.

Calsonic’s other customers include Renault and Isuzu Motors. “Nissan is hoping to further increase the competitiveness of Calsonic Kansei — one of our most important partners — and KKR recognizes the company’s potential,” said Yasuhiro Yamauchi, chief competitive officer of Nissan.

In other Japanese deals, KKR acquired a majority stake in Panasonic Healthcare for $1.7 billion and bought the turntables-and-mixers division of Pioneer for $550 million.

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