Topcon Gets Buyout Bids From KKR, EQT as Japan M&A Heats Up

(Bloomberg) — Topcon Corp. is weighing takeover bids from suitors including KKR & Co. and EQT AB, the latest sign of escalating buyout activity in Japan.

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The Tokyo-based eye-care equipment maker held its first round of bids in September, narrowing the offers to those from KKR and EQT, according to people familiar with the matter. The government-backed Japan Investment Corp. also plans to submit an offer in the second round, which may take place by the end of December, said the people, who asked not to be identified discussing matters that are not public.

Shares of Topcon surged 9.8% on the news, their biggest intraday jump in more than 10 months.

A Topcon representative said that no bidding was taking place. Representatives of KKR, EQT and JIC declined to comment.

Topcon has been under pressure from ValueAct Capital to hive off operations or go private, with the US activist investor arguing that the Japanese company’s ¥198 billion ($1.3 billion) market capitalization represents a conglomerate discount, the people said. ValueAct is Topcon’s largest shareholder, holding a 13.69% stake, according to data compiled by Bloomberg.

Japanese companies are fielding more proposals from activist investors, who are heartened by local regulators’ stance on corporate governance reforms. Companies such as Fuji Soft Inc. have opted to go private following pressure from activists, even as a weak yen fuels buyout activity.

The winning bidder is expected to acquire all Topcon shares and delist the company, the people said. A management buyout is also a possibility, they said.

Topcon was founded in 1932 as a maker of surveying instruments, cameras and binoculars for the Japanese army before becoming an affiliate of what later became Toshiba Corp. It now makes medical devices and geopositioning instruments used at construction sites.

–With assistance from Lisa Du.

(Updates with share reaction)

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