KKR and state-backed JIC join forces to take Japan's Topcon private for $2.31 billion

By Anton Bridge and Makiko Yamazaki

TOKYO (Reuters) -U.S.-based private equity firm KKR and a unit of Japanese state-backed fund Japan Investment Corp (JIC) will acquire medical gear maker Topcon in a tender offer buyout worth 348 billion yen ($2.3 billion), KKR said on Friday.

Private equity deals in Japan have been booming as corporate governance reforms and increasingly vocal activist shareholders push more companies to go private.

KKR will invest around 256 billion yen to take a majority stake and JIC's private equity arm will invest around 95 billion yen for a minority interest.

Topcon president and chief executive Takashi Eto will sell his shares in the tender offer and then reinvest in the buyout. Currently he holds 0.07% of Topcon's shares, filings showed.

The announcement confirms a Reuters report on Thursday that KKR and Topcon were nearing a deal.

It is the first time that JIC, which is overseen by Japan's trade ministry, has teamed up with a global private equity firm, a JIC spokesperson said.

The transaction is the latest in a wave of take-private deals among Japanese firms that follow in the wake of activist investor pressure.

Topcon's two largest investors are both activists - ValueAct Capital and Oasis Management - holding stakes of 13.69% and 10.58%, respectively, based on LSEG data.

"We want to pursue our long-term strategies for eye-care products and positioning businesses by going private as it's difficult to do so when shareholders, including activist investors, are asking us to achieve profits and higher share prices in the relatively short term," Topcon's managing executive officer, Yoshikuni Ito said.

The tender offer price of 3,300 yen per share marks a 5.4% premium on Topcon's closing price of 3,130 yen on Friday and a 99.5% premium over the simple average closing price of Topcon's stock for the 12 months up to December 9, 2024, KKR said.

A future relisting is in the offing but not for at least four years, in order to allow management time to execute its strategy, Ito said.

Other privatisations following activist involvement include chemicals company JSR and software developer Fuji Soft, which was acquired in January by KKR after a protracted bidding war with rival private equity group Bain Capital.

"KKR and JIC are great partners to help Topcon strengthen its competitiveness and achieve its potential," Rob Hale, co-CEO of ValueAct Capital, said in a statement.

($1 = 150.5200 yen)

(Reporting by Anton Bridge and Makiko Yamazaki; Editing by David Evans, Jane Merriman and Hugh Lawson)