January 25, 2024 | Technology | Asia | Active

Shinko Electric Industries / JIC-led Consortium: Deal Insight

On 12-Dec-23, Japanese government investment vehicle Japan Investment Corp (“JIC”) announced its intention to acquire Fujitsu’s (6702 JP) chip-packaging unit, Shinko Electric Industries (“Shinko”), through a tender offer. Should it succeed in taking Shinko private, JIC will own 80% of the company alongside co-investors Dai Nippon Printing (7912 JP, 15% of pro forma control) and Mitsui Chemicals (4183 JP, 5%). The JPY 5,920 per share offer price represents a 13.0% one-day premium and an 18.9% premium to the target’s undisturbed price on 31-May-23, the day before Bloomberg reported that Fujitsu was exploring a sale of Shinko. The consortium has entered into a master agreement to acquire Fujitsu’s 50.02% stake in Shinko for JPY 4,218.1 after the tender offer completes. As such, the group seeks to acquire 49.98% through the tender offer; the minimum acceptance threshold is 16.65%. The tender offer will be launched within 10 business days after the fulfilment of all conditions and is set to be open for 20 business days, expected to commence “in or around late August 2024.” Regulatory approvals include antitrust clearances from Japan, China, and South Korea, and potentially from Vietnam. Additionally, foreign investment clearances, most likely from the US (a notification with CFIUS will be made), are required. Consistent with Japanese take-private transactions, the offer is subject to a recommendation from the target’s special committee and, similarly, Shinko’s board needs to provide a unanimous opinion in favour of the offer when the tender offer commences. Fujitsu is bound by a non-solicitation agreement with a fiduciary-out clause. In the event of a third-party proposal, Fujitsu may accept the counterbid but is obliged to notify JIC. Additional conditions include the absence of legal impediments and Fujitsu’s compliance with ...

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