Elliott stake in Japan’s Hitachi Kokusai complicates stalled KKR bid

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TOKYO/HONG KONG (Reuters) – U.S. hedge fund Elliott Management Corp said on Monday it has a stake of just over 5 percent in Hitachi Kokusai Electric (6756.T), further complicating a stalled bid by U.S. buyout firm KKR & Co LP (KKR.N) to acquire the company.

KKR agreed in April to buy the chip making equipment and video solutions business from Hitachi Ltd (6501.T) in a deal valuing the unit at about $2.3 billion.

Under the plan, KKR planned to purchase up to 48.33 percent at 2,503 yen each. Hitachi Kokusai was planning to buy back a 51.67 percent stake held by Hitachi at 1,710 yen a share, then cancel those shares.

The plan was put on hold in August after a third-party committee said the terms of the deal could be disadvantageous to minority shareholders.

Elliott’s disclosure sent Hitachi Kokusai’s shares, already trading above KKR’s offer price, even higher and they ended up 4.6 percent at 2,895 yen.

“We are encouraged by the company’s recent business success and the board’s efforts to safeguard shareholders’ interests through the establishment of the third-party committee,” Elliott said in a statement.

Hitachi Kokusai saw first-quarter April-June sales jump 64 percent to 47.6 billion yen ($439 million) from the same period a year earlier, while operating profit climbed to 6.5 billion yen from 218 million yen.