Private equity giant KKR will take the plunge and grab a majority stake in Panasonic's healthcare arm for $1.67 billion. The deal caps months of rumors and speculation about the Japanese consumer electronic giant's strategy for the division and search for a potential buyer.
Their agreement will leave KKR owning 80% of Panasonic Healthcare, with Panasonic retaining a stake in the other 20%--all through a KKR subsidiary. Panasonic didn't rush into its investor search lightly. As Bloomberg explains, the company pursued two rounds of bidding before New York's KKR took the lead. Assuming the agreement clears all the regulatory and other closing processes, the sale will close by the end of March 2014.
The sale also gives Panasonic a major cash infusion as it seeks to reverse losses and focus on more profitable products. Panasonic Healthcare makes everything from blood glucose monitoring meters and sensors to electronic health record systems, plus various kinds of biomedical lab equipment. And its corporate parent is spending about $2.5 billion to reorganize and reverse losses in business areas including TVs and semiconductors, Bloomberg previously reported.
Panasonic President Kazuhiro Tsuga said in a statement that his company and KKR will work together to grow Panasonic's healthcare business, which will remain part of Panasonic.
Henry Kravis, KKR's co-founder and co-CEO, said in a statement that he sees Panasonic Healthcare as having "significant growth potential."
In a major coup for KKR, the Panasonic investment represents the firm's largest acquisition in Japan, Bloomberg noted. Kravis underscored that fact, explaining in his statement, "Japan is a very important and attractive market for KKR."
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