Fuji Soft Sticks With KKR Despite Higher Takeover Offer From Bain

Fuji Soft Inc., a leading Japanese software company, has chosen to endorse KKR & Co.'s takeover bid despite receiving a higher offer from Bain Capital. This decision, announced on October 18, 2024, has significant implications for the company's future and the broader Japanese M&A landscape.


Fuji Soft's endorsement of KKR's offer is a pivotal moment in the rare takeover battle for the company. The Yokohama-based firm plans to recommend its shareholders accept the first phase of KKR's tender offer, which runs through October 21. The board's decision comes despite Bain's higher bid of ¥9,450 ($63) per share, compared to KKR's ¥8,800 proposal. Bain had expressed its intention to start its tender bid in late October if Fuji Soft expressed support for the move.

The strategic goals and financial capabilities of KKR and Bain played a significant role in Fuji Soft's decision. KKR's two-stage takeover, which began on September 5, demonstrated the private equity firm's commitment to the acquisition. Additionally, KKR's binding pact with major shareholders, including 3D Investment Partners Pte and Farallon Capital Management, ensured it would acquire at least 32.68% of Fuji Soft's shares. This certainty likely influenced Fuji Soft's decision to support KKR's offer.


Fuji Soft's founder, Hiroshi Nozawa, has expressed support for Bain's offer, stating that its approach aligns with the company's vision. However, the company has doubts about the feasibility of Bain's goal of taking the company private. Major shareholders are also struggling to reach a consensus regarding Bain's proposal, which may have contributed to Fuji Soft's decision to back KKR's offer.

The intense takeover battle between KKR and Bain for Fuji Soft is fueled by regulatory and market conditions in Japan. A weaker yen and regulators' promotion of shareholder value are driving M&A activity in the country. Fuji Soft's earlier agreement to a buyout by KKR, despite receiving a higher-priced non-binding offer from Bain, reflects the company's judgment that KKR's offer was more certain to occur.

In conclusion, Fuji Soft's endorsement of KKR's takeover bid, despite a higher offer from Bain, highlights the importance of certainty and strategic alignment in the acquisition process. The intense takeover battle for the company reflects the broader trends in Japan's M&A landscape, driven by regulatory and market conditions. As the takeover process unfolds, both KKR and Bain will need to address the concerns of major shareholders and Fuji Soft's founder to secure a successful acquisition.