KKR to Speed Up $4 Billion Fuji Soft Offer to Thwart Bain

(Bloomberg) — KKR & Co. is moving up the start of its tender offer for Fuji Soft Inc. to Sept. 5, seeking to preempt a competing bid from Bain Capital and head off a potential bidding war with its private equity rival.

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KKR is speeding up its roughly ¥600 billion ($4 billion) planned buyout of the Yokohama-based software company from the originally scheduled mid-September start, according to people familiar with the matter, who asked not to be named as the discussions are private. It’s trying to get a deal moving before Bain formally submits a proposal to buy out Fuji Soft for 5% more than KKR’s offer of ¥8,800 a share, or around ¥9,200 to ¥9,300 per share.

Bain’s higher-priced non-binding offer spurred hopes for a rare Japanese bidding war, propelling Fuji Soft’s stock above the offer prices, with shares jumping 7.4% to a record high ¥9,630 on Wednesday in Tokyo.

Bain has said that it plans to submit a legally-binding proposal as early as October to launch a possible take-private buyout in November. KKR’s new accelerated buyout schedule increases the chances that its takeover will be completed before then.

A representative of Fuji Soft did not immediately respond to a request for comment. A representative of KKR declined to comment.

Private equity firms are circling Japan for potential deals, even as growing technological protectionism worldwide limits the number of realistic targets. Last month, Japan designated chipmaking equipment as a sector key to national security, requiring prior notice and screening of foreign investors planning to take a stake.

But a weaker yen and regulators’ emphasis on shareholder value and governance are now encouraging companies to test the country’s willingness to embrace M&A, most recently with Alimentation Couche-Tard Inc.’s proposed buyout of Seven & i Holdings Co.

Fuji Soft contracts software from Fujitsu Ltd., a supplier of computer systems for some of Japan’s biggest banks such as Mizuho Financial Group Inc. and government agencies. The software company’s been fielding demands from Singapore-based 3D Investment Partners, its largest shareholder according to Bloomberg-compiled data, to consider steps such as taking the company private.

Fuji Soft said it agreed to a buyout by KKR, even though it had also received a higher-priced offer from Bain, because it judged KKR’s offer was legally binding and more certain to occur. It also said Bain’s offer had not obtained consent from 3D Investment Partners and that there remained doubts about how the deal would be financed.

–With assistance from Lisa Du.

(Updates with background)