Private equity firm, KKR & Co. L.P. (NYSE:KKR) agreed to acquire the health care subsidiary of Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) for $1.67 billion (165 billion yen).
KKR and Panasonic Healthcare agreement
According to the press statement of Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752), its board of directors approved the share transfer agreement with PHC Holdings Co. Ltd. (PHCHD), an affiliate company of KKR & Co. L.P. (NYSE:KKR). Under the agreement, all the shares, related assets and other peripheral transactions of Panasonic Healthcare Co. Ltd. will be transferred to PHCHD.
Panasonic Corporation (TYO:6752) will obtain a 20 percent share of the total voting rights of PHCHD after the completion of the agreement, which is expected March 31, 2014. The Japanese electronics company estimated that the deal would contribute a profit of 75 billion yen. It is also reviewing the effects of the transactions to its annual financial results ended March 2014.
Kazuhiro Tsuga on partnership with KKR
Kazuhiro Tsuga, president of Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) said, “We believe that partnering with KKR will also allow us to learn from KKR’s global operational and business management expertise as we pursue the next stage in growth.”
Panasonic Healthcare was originally established by Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) under the name Matsushita Kotobuki Electronics Industries Ltd in 1969. Panasonic changed the name of its subsidiary a few times and then eventually to Panasonic Healthcare when it decided to focus on the healthcare business in 2010.
Panasonic Healthcare functions
According to the Japanese electronics company, Panasonic Healthcare is engaged in the medical device business, which is a promising sector and it is expected to continue to grow in the healthcare industry. The healthcare unit makes instruments that measures blood glucose and provided digital medical-record systems.
Panasonic Corporation (TYO:6572) said additional investment and introduction of knowledge in the medical field is necessary to ensure the future growth of Panasonic Healthcare. According to the Japanese firm, it cannot provide additional investments for the healthcare unit because of its current situation.
Data compiled by Bloomberg showed that Panasonic Healthcare is the largest acquisition of KKR & Co. L.P. (NYSE:KKR) in Japan. Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) sold its healthcare subsidiary amid its 250 billion yen initiative to turnaround losses from its electronics business over the next two years.
KKR & Co. L.P. (NYSE:KKR) recently raised another $6 billion for its investment pool in Asia. In 2007, it raised $4 billion for the pan-Asian fund and $1 billion fund for China in 2010. According to the private equity firm, it has $5.5 billion investments in 30 companies across Asia.