Private equity giant KKR has long had its heart set on Panasonic's medical device arm, and now the company is weighing whether to team up with a Japanese investment outfit to buy a majority stake in the $1.5 billion business, Bloomberg reports.
KKR has already claimed preferential negotiating rights for Panasonic's healthcare business, enduring two rounds of bidding, and now Bloomberg's unnamed sources say the company is in talks with the government-supported Innovation Network Corporation of Japan (INCJ), a public-private outfit equipped with $2.8 billion and charged with supporting high-tech business growth in the country.
The two firms are yet to enter formal discussions on whether to co-invest, the news service reports, and it's still possible KKR will go it alone.
Perhaps most interesting, however, is news that KKR and INCJ are considering a wider partnership, Bloomberg's sources said, combining their considerable capital and letting loose on Japan's fast-growing med tech market after establishing a beachhead with Panasonic Healthcare.
In the meantime, KKR's seat at the final negotiation table means it has outbid Bain Capital, TPG and Toshiba, all said to be involved in negotiations for Panasonic's health unit in the past month. The business makes ultrasound devices, blood glucose monitors, pain-relief laser treatments and other devices.
Panasonic plans to spend about $2.5 billion on restructuring over the next few years, Bloomberg notes, and cashing out of its still-profitable healthcare arm would give the tech giant some room to breathe as it looks to reverse the fortunes of its flagging TV and semiconductor businesses.
Faced with similar headwinds, fellow struggling Japanese giants Sony ($SNE) and Olympus ($OCPNY) have taken a different path, this year banding together to sell endoscopes and imaging technologies around the world in hopes the growing markets for medical devices will dull the blow of declining demand for consumer products.
- read the Bloomberg news