Hitachi [TYO:6501] is in the process of selecting a financial advisor to examine strategic options, including a potential sale of its stake in Tokyo-based functional materials manufacturer Hitachi Chemical [TYO:4217], sources familiar with the situation said.
A beauty parade was held with many investment banks and advisory firms pitching for the role, the sources noted. The first and second sources said they believed Hitachi has not yet selected the winner.
Global private equity firms, such as KKR, Carlyle, and CVC could be among those keen on Hitachi Chemical, the fifth source said. Potential strategic buyers could include Mitsubishi Chemical Holdings [TYO:4188] as it is a peer in the chemical segment, the fifth source added.
Hitachi Chemical has been widely tipped as among divestiture candidates for Hitachi this year, according to the sources. It is believed Hitachi will aggressively pursue several divestitures this year in a bid to raise cash following its USD 6.4bn acquisition of ABB’s [VTX:ABBN] Power Grid Business as well as about JPY300bn (USD 2.73bn) in losses stemming from the cancellation of its Wylfanuclear plant project in the UK.
In recent years, Hitachi has been making moves to divest its subsidiaries, including its 51.67% stake in Tokyo-based manufacturer of electronic equipment Hitachi Kokusai Electric to KKR in January 2018 for a total consideration of JPY99.24bn and its 42.16% stake in Tokyo-based power tools maker Hitachi Koki(now called Koki Holdings). The total deal value for Hitachi Koki was JPY147.1bn, according to Mergermarket data.