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KKR is asking Fujisoft’s board to take legal action against Bain Capital’s rival bid for the $4 billion Japanese software company, in a public battle that threatens the buyout industry’s reputation at home. is intensifying.
The U.S.-based private equity firm said on Monday that it expects Fujisoft to “promptly file suit against Bain Capital for an injunction” to stop what it claims is a breach of a non-disclosure agreement. He said there was.
KKR offered nearly $4 billion for the business in August, but Bain’s subsequent efforts to outbid it have stoked discord and a market unaccustomed to public takeover battles between private equity bidders. is trying new territory.
The situation culminated in December when Bain launched a shocking $4.3 billion counter-bid and then announced its intention to proceed without the support of Fujisoft’s board of directors, a rarity in Japan. This is a high-risk strategy.
Bain, with the support of Fujisoft’s founder and major shareholder Hiroshi Nozawa, is trying to position itself as a white knight, and the board of directors’ rejection of the takeover offer at 9,600 yen per share was due to investors. argued that it was not in the best interests of
But KKR’s November low bid of 9,451 yen has repeatedly won support from the board, in part because the group has invested in shares owned by activist funds 3D Investment Partners and Farallon Capital. This is due to the fact that it already controls more than a third of Fujisoft after its previous bid. management.
The investment gives KKR the power to block a full takeover by Bain, meaning it could face an impasse even if it acquires a significant stake.
In supporting KKR’s bid, Fujisoft’s board cited concerns about the potential for an impasse between the two companies if Bain’s proposal went ahead, as well as the possibility that the higher price proposed by Bain would result in a longer turnaround time. The company used the argument that shareholders could not be adequately compensated because of the Complete.
KKR filed a motion for an injunction against Fujisoft with its board of directors on Sunday. KKR said it was acting on Fujisoft’s November directive that Bain should destroy any confidential information it had obtained so far in the process after its initial offer was rejected.
“There is absolutely no reason for Fujisoft to continue allowing Bain Capital to misuse such large amounts of confidential information,” KKR wrote in a letter to the company’s board of directors and the special committee tasked with evaluating the bid. mentioned in. The letter was made public on Monday.
Bain had previously opposed the board’s request to destroy the information, citing Japan’s merger and acquisition guidelines and pressure on companies to continue accepting deals that are best for shareholders.
KKR also stated that Bain Capital was suspected of misleading the market and inflating the stock price by stating that “Bain would make a hostile tender offer” when in fact it could not, and asked the board of directors to do so. Requested regulatory involvement. Execute. . . Or they won’t. ”
KKR has indicated that Bain is hoping that a rise in Fujisoft’s stock price will cause KKR’s offer to fail and rivals to face no opposition.
However, KKR said: “Despite this apparent obstruction, we do not intend to withdraw our tender offer and privatization proposal.” Bain declined to comment.
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Fujisoft shares closed 2.1% lower on Monday, but were still slightly above Bain’s asking price of 9,690 yen, which analysts say suggests further bids are expected. states.
Just when changes in corporate governance, takeover guidelines and a resurgence in inflation make Japan appear ripe for a much-needed surge in deals, a public spat threatens private equity’s reputation. are.
KKR said in a separate release on Monday that “such conduct seriously undermines the reputation and trust of the broader private equity industry, which has been built over a decades-long track record of value creation as a friendly acquirer. I’m thinking about it.”
But some see this battle as a positive sign for the market.
“The fact that this fight is being fought in public is a good thing in itself. We want more of this…if not more,” said one senior M&A lawyer in Tokyo.
