Private equity firm KKR is nearing a deal to acquire Japanese medical gear maker Topcon, according to people familiar with the matter, marking the latest sign of increased leveraged buyout activity in Japan.
If the talks are successful, a deal could be signed in the coming days, the sources said, requesting anonymity as the discussions are confidential. The price being discussed has not been disclosed yet.
Topcon has a market value of about 323.4 billion yen ($2.15 billion), and opened at 2,944.5 yen per share on Thursday, down 0.9% from Wednesday’s closing price.
KKR and Topcon declined to comment.
The potential deal comes as Japan’s corporate governance reforms, rising shareholder activism, and a weak yen have created a favourable environment for dealmaking, particularly for private equity firms.
A growing number of Japanese firms under pressure from activist funds have recently chosen to go private, including chemicals company JSR and software firm Fuji Soft.
Topcon has been exploring a sale with the help of its advisers, and several private equity firms have been bidding to take the company private.
Founded in 1932, Tokyo-based Topcon also manufactures and sells eyecare, smart infrastructure and positioning products. Industrial conglomerate Toshiba previously owned 30% of Topcon, but sold its entire stake in 2015.
Activist investors ValueAct Capital and Oasis Management Company are the largest shareholders of Topcon, holding stakes of 13.69% and 10.58%, respectively, according to data compiled by LSEG.
In its most recent quarterly earnings, Topcon projected a group operating profit of 7 billion yen ($46.51 million) and sales of 211 billion yen for the year ending March 31.
($1 = 150.4900 yen)
Reuters
