State-backed Japan Investment Corp (JIC) on Wednesday said it would join Dai Nippon Printing (7912.T) and Mitsui Chemicals (4183.T) to buy out Shinko Electric Industries (6967.T) for 684.9 billion yen ($4.71 billion).
The buyout of the chip-packaging unit of Fujitsu (6702.T) marks the latest intervention in the chip sector by JIC, which is overseen by the powerful trade ministry. It follows a deal announced in June for JIC to acquire materials maker JSR (4185.T) with a plan to drive industry reform.
The JIC-led group plans to launch a tender offer in August of next year after receiving necessary regulatory approvals in Japan and overseas, JIC said.
"Competition in the chip industry is expected to intensify, with growing needs for swift and flexible development and production," JIC said in a statement. "By taking Shinko Electric private, we believe we can strongly support the company's advanced chip packaging businesses."
It will offer to pay 5,920 yen per Shinko Electric share for a total of 399.8 billion yen ($2.75 billion)to buy the 50% stake not owned by Fujitsu.
Shinko Electric will then buy back the remaining 50% from Fujitsu for 285.1 billion yen in the two-tier buyout.
Shares of Shinko Electric closed up 5.5% at 5,528 yen on Tuesday after the Tokyo Stock Exchange suspended trading in them following a Bloomberg report on the buyout.
Shinko Electric will be owned 80% by JIC, 15% by Dai Nippon Printing, 5% by Mitsui Chemicals after the buyout is completed.
Fujitsu's offer to sell Shinko Electric had drawn interest from global buyout firms Bain Capital, KKR (KKR.N) and Apollo Global Management, sources had told Reuters earlier. Trading firm Mitsubishi Corp (8058.T) was also considering a bid, separate sources had said.
Semiconductor packaging remains an area of strength for Japan, with Shinko, Ibiden (4062.T) and Toppan Holdings (7911.T) all major players in the global chip-supply chain.
The packaging stage of production is increasingly being seen as critical for driving advances in chip technology, with the U.S. last month kicking off a $3 billion programme to boost its packaging capabilities.
Japan has designated chips as "specified critical materials," spending billions of dollars as subsidies to boost its ability to produce advanced chips and to maintain its edge as a maker of materials and manufacturing tools.
($1 = 145.4900 yen)
