The board of directors of Japan’s leading hoist manufacturer, Kito Corporation, have approved a $33m takeover bid from US venture capitalists The Carlyle Group.
Carlyle and Kito said in a joint statement on 17 July that Carlyle’s Japanese division would launch a tender offer before 27 August 27 for 66.7 per cent of the shares in Kito.
It is offering 270 yen per share, which is 26% above the average price of the past three months. Total price paid by Carlyle would be 3.9 billion yen ($33m).
Carlyle Group, one of the world’s largest private equity funds, is benefiting from Japan’s new Industrial Rehabilitation Law, which is designed to facilitate mergers and acquisitions.
Kito senior managing director Yoshio Kito told Hoist that the deal represented not so much a sale of the company as a simplification of the shareholding structure.
He said that Carlyle’s ownership, the Kito board expected three main benefits. Firstly, financial support to enable Kito to accelerate its global strategy. Secondly, management support from Carlyle’s financial experts. And thirdly, access to Carlyle’s global network.
Kito’s existing management team will join the partnership with Carlyle through a management buyout, Yoshio Kito said. ‘I will also be a shareholder of Kito. Therefore, daily business operations will be managed by current management members of Kito.’
He added that Carlyle expects to exit Kito within the next five years through an initial public offering (IPO) after increasing its corporate value through global expansion.
In 2001 Kito forged an alliance with Demag Cranes & Components GmbH of Germany for manufacturing and marketing overhead travelling cranes and related products. As an initial step, Kito was given exclusive rights to distribute Demag C&C products in Japan.
Both companies are now in the hands of venture capitalists, since control of Demag C&C was bought by US private equity investor Kohlberg Kravis Roberts & Co (KKR) in 2002.
Also active in Japan is KCI Konecranes which in November 2002 took a 49% shareholding in Meiden Hoist System Company Ltd. Meidensha Corporation’s stake was reduced to 51%. Meiden Hoist System now uses KCI Konecranes’ CXT hoist technology under license. KCI Konecranes has an option to buy an additional 16% of the shares, exercisable before 31 March 2008.
