Hitachi to Sell Metal Unit to Bain Group for $3.5 Billion

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Hitachi Ltd. is selling its metal unit to a group led by Bain Capital for 382 billion yen ($3.5 billion), accelerating the Japanese conglomerate’s plan to restructure its sprawling business.

Hitachi, which owns more than half of Hitachi Metals Ltd., will sell its stake at 1,674 yen per share, the Tokyo-based company said Wednesday. Bain, which is part of a consortium that includes Japan Industrial Partners and Japan Industrial Solutions, will also launch a tender offer in November to acquire the shares in Hitachi Metals that the parent doesn’t own.

Bain is expanding in Japan, along with Carlyle Group Inc. and KKR & Co., as competition heats up among the world’s biggest private-equity firms to win deals from businesses undertaking overhauls.

The Japanese company, which is more than a century old, has been overhauling its business that extends from kitchen appliances to power grids to boost its margin. Hitachi exited a $26 billion U.K. nuclear power project in September and signed a string of multibillion-dollar deals, including the buyout of Hitachi High-Tech Corp., and most recently the $9.6 billion purchase of U.S. software development company GlobalLogic Inc.

The parent’s consolidation comes at a tough time for Hitachi Metals, which has suffered a hit to its earnings from the pandemic and the revelation of falsified quality test results last year. The company had a second straight annual loss in the fiscal year ended March and is pushing through structural reform, including 3,200 job cuts, or 9% of its workforce, by March 2022.

Hitachi Metals closed up 0.6% in Tokyo, with the deal announced after stock markets closed. Bain’s tender offer of 2,181 yen a share represents a 15% premium over Hitachi Metals’ closing price. The company makes a variety of products from steel for defense equipment to rare-earth magnets used in motors to power electric vehicles.

Bain has set 56.8 million shares as the minimum condition for the tender offer to be successful and will obtain loans from banks including MUFG Bank Ltd. to finance the deal.

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