U.S. private equity firm KKR KKR-N has sweetened its offer for Japan’s Fuji Soft by 4 per cent, the latest salvo in its protracted and messy bidding war with Bain Capital BCSF-N for the $4-billion IT firm.
The saga underscores an increasingly competitive deal making environment in Japan, as global investment firms target Japanese companies that are seen as having underutilized assets or ineffective corporate governance.
KKR raised its offer price to 9,850 yen ($63.44) per share from 9,451 yen per share, above Bain’s most recent offer of 9,600 yen per share in December.
Even after Fuji Soft’s board rejected its bid, Bain persevered – a rare step in Japan – citing “strong concerns and distrust” over Fuji Soft’s response and arguing the rejection harmed the interests of minority shareholders.
Fuji Soft’s shares ended Tuesday trade nearly 2 per cent higher at 9,990 yen, indicating that investors are betting Bain will not walk away and instead will come back with another offer.
“It’s good for the market and minority investors that this competition works. If Bain were not there the market would not have been trading around 9,800 yen in the past month,” said Travis Lundy of Quiddity Advisors.
KKR currently has a 33.97 per cent stake in Fuji Soft following the first stage of a two-part bid in which two activist investors – 3D Investment Partners and Farallon Capital – agreed to tender their shares to KKR.
As a result, Fuji Soft’s board rejected Bain’s offer saying that having two major shareholders would hinder management’s decision-making ability. It also said that Bain’s bid would take an additional three months to conclude.
Nevertheless, KKR has so far failed to secure a majority because of Bain’s higher offer, which has also helped lift Fuji Soft’s share price.
KKR has repeatedly extended its tender offer period, with the latest due to end on Feb. 19.
Bain, which is supported by Fuji Soft’s founding family, has yet to launch a tender offer. It said previously that it would wait for KKR’s bid to fail or be withdrawn.
Bain was not immediately available for comment on KKR’s higher bid. Fuji Soft declined to comment.
KKR initially offered 8,800 yen a share for Fuji Soft in August. Bain announced its bid, at 9,450 yen per share, in October, prompting KKR to sweeten its offer to 9,451 yen a share. It maintained that level until Tuesday despite Bain then increasing its offer to 9,600 yen.