U.S. private equity firm KKR (KKR) is considering making a takeover bid for Japanese conglomerate Toshiba, according to a Bloomberg report. KKR stock rose 2.4% to close at $53 on April 25.
Toshiba is open to a buyout and has hired Nomura Securities to advise it strategic alternatives. Toshiba’s management and shareholders have wrangled for a long time over the company’s future. In March, shareholders rejected the management’s proposal to spin off the company’s devices unit.
In addition to KKR, other private equity firms interested in a Toshiba buyout include Bain Capital and CVC Capital Partners. The interested parties could pursue Toshiba individually or join forces, according to the report.
KKR’s Deepening Japanese Presence
KKR’s interest in Toshiba shows its desire to further deepen its presence in Japan.
In March, it struck a deal to acquire Mitsubishi-UBS Realty, one of Japan’s largest real-estate asset managers, for about $2 billion.
Toshiba Buyout Approval Headache
Toshiba’s assets include nuclear power and defense equipment, making it a company of national security interest in Japan. Therefore, a takeover of the company would require Japanese government approval.
Toshiba management has said it would weigh the possibility of the government approval when considering buyout proposals, according to Bloomberg.
Wall Street’s Take
Consensus among analysts is a Strong Buy based on seven Buys and one Hold. The average KKR price forecast stands at $80.44 and implies 57.4% upside potential. Shares have declined 27.7% year-to-date.
Stock Investors
TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on KKR, with 11.3% of portfolios tracked by TipRanks increasing their exposure to KKR stock over the past 30 days.
Takeaway for Investors
Japan is one of the world’s largest economies. As a result, expanding the presence in the country may bode well for KKR stock.
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