Hitachi Kokusai Electric: GPIF likely to tender shares to KKR

The Government Pension Investment Fund (GPIF) of Japan, the fifth largest shareholder of Hitachi Kokusai Electric [TYO: 6756] with a 3.87% stake, is likely to tender into HKE Holdings G.K.’s ongoing revised JPY 2,900 (USD 25.44) per share offer, because the pension fund in principle cannot hold on to a stock that has the prospect of being delisted at the end of an offer.

HKE’s tender offer, which is conditional on acceptances from half the free float (24.8m shares) is likely to succeed, a few shareholders said, basing their belief on the fact that most shareholders, including Elliott Management with an 8.59% stake, are in the money. The tender offer started on 12 October and will end on 24 November.

Nisshinbo Holdings [TYO: 3105], which holds 24,606 shares via its subsidiary Japan Radio, and Hirakawa Hewtech [TYO: 5821] with 9,598 shares plan to tender their shares as requested by their customer Hitachi Kokusai, according to spokespeople at these companies. Hitachi Kokusai has a total number of 105,221,259 outstanding shares.

In a tender offer situation, “GPIF’s uttermost priority is its management performance and to maximize the benefit of its pension holders. Thus, premiums that comes with the offer cannot be ignored,” said a person familiar with GPIF. GPIF, the world’s largest pension fund with JPY 145tn (USD 1.28tn) in assets, held 3.87% stake in Hitachi Kokusai based on Bloomberg reported filings.

The person familiar said GPIF carries out share-tendering exercises through external asset managers, who make decisions on their own. Prior to each exercise, the asset managers are not required to consult with GPIF to check with the pension fund whether their analysis would bring in desirable results.

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