Panasonic To Sell Health Care Unit To KKR

The Nikkei  reported that Panasonic Corp. (6752) has reached a basic agreement to sell 80% of its health care business, Panasonic Healthcare Co.,  to KKR for nearly JPY 150 billion (USD 1.5 billion).

The parent will retain the remaining 20% stake, given that it still has some outstanding R&D projects in the field. Panasonic Healthcare Co. makes electronic chart systems and sensors for measuring blood sugar levels, generated JPY 8.7 billion in operating profit on sales of JPY 134 billion in the year ended March 2013.

Panasonic announced plans in March to sell off its health care business, and has accepted bids since May. In the final round in August, KKR and two others, reportedly Bain Capital / Mitsui &Co. / Development Bank of Japan consortium and Carlyle/Toshiba consortium, took part. Earlier this month, the electronics firm gave KKR preferential negotiating rights.

The process indicates that no Japanese local PE firms can be a serious contender in a large size buyouts, which can be attributed to the lack of investable capital at most Japanese funds as well as their unwillingness to match aggressive pricing in the auctions.