KKR wins control of US$4.4 billion Fuji Soft after clash with Bain

The scramble to take Fuji Soft private is rooted in the value of the software company’s trove of human resources and real estate

KKR has secured enough shares of Fuji Soft in a tender offer to take the company private, according to sources familiar with the matter, formally ending a months-long bidding war against Bain Capital.

KKR is set to release the results later Thursday (Feb 20), the sources said, asking not to be identified ahead of the announcement. That would give the New York-based firm control of the Japanese software company after it raised its offer to 9,850 yen per share earlier this month.

The news comes after Bain Capital said earlier this week that it decided not to increase its offer price and proceed with a previously announced hostile bid for Yokohama-based Fuji Soft. The two investment firms had both raised their offers for the software company multiple times in recent months.

KKR representatives did not immediately respond to a request for comment. A Fuji Soft spokesperson declined to comment.

KKR had initially announced a tender offer in August to take Fuji Soft private. Bain’s subsequent overtures put the deal in limbo, especially as KKR had managed to buy up one-third of shares in Fuji Soft, allowing it to block any rival takeovers. KKR’s most recent bid, announced in early February, values Fuji Soft at around US$4.4 billion.

The public battle had raised eyebrows in Japan as most global private equity firms have preferred a low-key approach to dealmaking in Japan, mindful of the need to manage reputations built up steadily after years of being seen locally as vultures. That might be slowly changing as competition heats up for assets in the country’s booming buyout market.

The scramble to take Fuji Soft private is rooted in the value of the software company’s trove of human resources and real estate. The company owns a large portfolio of offices around Tokyo, where rising real estate prices provide the potential to unlock value by selling the properties.

Fuji Soft’s human capital – it has more than 10,000 employees in a business segment that offers IT solutions for clients – is also attractive in a country facing a shortage of skilled labour around technology and engineering, according to investors. BLOOMBERG

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