The Nikkei reported this morning that Kohlberg Kravis Roberts & Co. has decided to take over management of Renesas Electronics Corp. (6723) by spending JPY 100 billion (USD 1.27 billion) to acquire new shares from the struggling chipmaker.
KKR has presented its proposal to Renesas' three major shareholders, NEC Corp. (6701), Hitachi Ltd. (6501) and Mitsubishi Electric Corp. (6503), as well as the chipmaker's main banks. It hopes to reach a formal agreement as early as next month and to own a majority stake of the company by December.
Renesas has a market capitalization of about JPY 95 billion (USD 1.21 billion) . By seeking more than 5,000 voluntary early retirements and closing down some facilities, it expects to report an extraordinary loss of 150 billion yen for the current fiscal year. Renesas also plans to eliminate up to 14,000 jobs (roughly 30% of its workforce) and shut or sell nine domestic plants within three years.
NEC, Hitachi and Mitsubishi Electric have already agreed to provide a total of JY 50 billion (USD 630 million) through loans and other measures and 4 major banks are prepared to lend up to JPY 50 billion (USD 630 million) in total.
According to the Nikkei report, Renesas had requested that KKR spend JPY 50 billion (USD 630 million) on a private placement of new shares. But KKR apparently determined that it needs to take management control for a quicker restructuring and KKR may replace Renesas' management if the US fund becomes unsatisfied with the restructuring progress.
The news sent Renesas shares more than 30% higher this morning.
The news sent Renesas shares more than 30% higher this morning.
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