Private Equity Giants Engage in Rare Hostile Takeover Battle
Fuji Soft at the Center of a Bidding War
In a rare display of hostility, two global private equity giants, Bain Capital and KKR, are locked in a bitter battle for control of Japanese IT firm Fuji Soft. The estimated $2 billion bid for nearly half of Fuji Soft’s shares has sparked a heated takeover struggle, with both parties refusing to back down.
Bain Capital Takes a Stand
Despite lacking the backing of Fuji Soft’s board, Bain Capital has announced plans to launch a tender offer for the company’s shares. This move comes after KKR’s second-round bid failed to impress, with Bain offering 9,600 yen per share, a 1.6% increase over KKR’s offer. Bain has secured the support of Fuji Soft founder and major shareholder Hiroshi Nozawa, who, along with his family members, holds an 18.6% stake in the company.
A White Knight in Disguise?
Industry experts believe Bain’s move is a strategic attempt to position itself as a white knight, rescuing Fuji Soft from KKR’s clutches. “Bain doesn’t have management’s approval, so it’s a hostile offer, but they see themselves as a white knight,” said Travis Lundy of Quiddity Advisors. Nozawa himself has publicly endorsed Bain as a white knight in a letter of support.
Fuji Soft’s Board Remains Loyal to KKR
Despite Bain’s higher offer, Fuji Soft’s board has reaffirmed its support for KKR’s second-stage bid, citing concerns over governance and decision-making ability. The board believes that having two major shareholders would hinder management’s ability to make swift decisions.
Governance Concerns Take Center Stage
Bain has expressed “strong concerns and distrust” over Fuji Soft’s response to its proposal, arguing that the rejection of its higher offer harms minority shareholders. The company has also questioned the independence of the special committee set up to examine the merits of a Fuji Soft deal, citing potential conflicts of interest.
A Rare Bright Spot in Japan’s Shrinking Market
IT services are a rare bright spot in Japan’s shrinking domestic market, driven by growing demand for software and systems engineering. Fuji Soft’s hefty real estate assets also present an attractive opportunity for investors.
The Battle Ahead
As the bidding war intensifies, investors are speculating about the prospects of a more heated battle. Fuji Soft’s share price has risen 1.3% to 9,771 yen, indicating a growing sense of uncertainty. With Bain set to launch its tender offer in late January or February, the fate of Fuji Soft hangs in the balance.
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