As reported recently, the well-known Private Equity Company, KKR, is now in negotiations to invest nearly 100 billion yen or equivalent $1.3 billion in order to gain complete control over the Japanese Renesas Electronics Corporation, providing a much needed support to the tussling chipmaker, and helping its shares to increase up to 35-percent.
The deal would offer KKR almost in excess of fifty percent of money-strapped Renesas, and could hurry the rate of its present streamlining as it struggles for continued existence in the current face of drastically reducing prices, and very forceful foreign competitors.
The recent revelation of the KKR’s plans, actually promoted the completely battered market shares of the Japan based Renesas to reach its almost 7 well high level; however no improvement has been witnessed in its overall stock trading, and it continued to remain at the same level as before.
As of August 28th 2012, the Japanese company has had a market worth of nearly $1.2 billion. A new contract with KKR equity firm will become the company’s biggest investment undertaking in the nation, and will stand out one among the top 10 largest investments concerning private equities into the 3rd biggest economy in the world.
As a response to all these recent developments, the Credit Division Professional at Citigroup, Katushide Takahashi said that if KKR firm grasps complete management control of the Japanese company, it will certainly speed up the administrative process as compared to the present management, and it will also quicken the restructuring plans of Renesas.
Some leading sources that are very much familiar with the new deal reported that under the new tender, KKR would purchase all the new market shares of the Japanese Renesas, the 5th biggest chipmaker in the world, with the help of a private placement. Another leading source mentioned that the chief executives from the New York’s KKR have travelled all the way to Tokyo to portray the proposal to Renesas major banks, and also to its 3 main shareholders namely Hitachi Limited, NEC Corp, and Mitsubishi Electric Corporation.
The world’s prominent producer of microcontroller chips that are extensively utilized in vehicles, Renesas is presently executing a reformation plan that would actually dismiss nearly twelve percent of its present labour force, and trade or merge almost half of its local production facilities. The Japan Company has been extremely sluggish to close many of its loss-making trades, and is fighting to finance the huge investments to most of its other business parts that are in need.