KKR mulls teaming with Japan state fund on Panasonic unit stake-media

(Reuters) – KKR & Co LP is considering teaming up with a state-backed Japanese investment fund to secure a stake in Panasonic Corp’s healthcare business, media reported, although people familiar with the matter said the U.S. firm has not approached the fund yet.

A purchase, which could be worth $1.5 billion, would mark the private-equity firm’s largest investment in a Japanese company. Last year KKR sought a controlling stake in chipmaker Renesas Electronics Corp but lost out to a group led by the state-backed Innovation Network Corp of Japan.

In its bid this time for the Panasonic unit, Bloomberg and the Wall Street Journal reported, KKR is seeing to assuage local misgivings about foreign buyout firms by considering investing with the government-private fund.

But people familiar with the process said the U.S. firm has not approached the Japanese fund. Two people said teaming up with INCJ is one of various options KKR could pursue.

The people said KKR, which recently raised a $6 billion Asia fund, had enough cash to make the purchase alone.

KKR and INCJ declined to comment.

Sources familiar with the matter told Reuters last week that KKR was set to gain preferential negotiating rights for the majority stake in Panasonic Healthcare Co, which makes blood-sugar monitoring equipment and electronic medical record-keeping systems.

KKR and other foreign buyout firms have struggled to secure deals in Japan amid suspicion they will strip assets and lay off workers to gain the biggest possible return on their investments.

Panasonic, which has lost $15 billion over the past two years, is offloading a majority stake in the profitable healthcare unit as it pulls back from outlying businesses and loss-making consumer electronics to focus on automotive components, appliances, industrial machinery and other fields where it is a leading manufacturer.

In the financial year ended in March, Panasonic Healthcare made 8.7 billion yen in operating income on 134.3 billion yen in sales, giving it an operating profit margin of 6.5 percent.