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Bain Capital has halted its $4bn pursuit of Japan’s Fuji Soft, conceding to rival KKR in one of the most bruising battles in global private equity.
The firm said on Monday it would not launch its planned tender offer for the IT services company or raise its bid to match KKR’s pitch of ¥9,850 ($65) a share.
The concession follows months of rare public hostility between the two private equity groups during which KKR accused Bain of bidding in bad faith and allegedly misusing confidential information.
Their bidding war has been considered a watershed moment for private equity in Japan, with the firms deploying aggressive tactics that market observers said were largely avoided in the past.
The takeover battle began last summer, when activist fund 3D Investment Partners proposed that Fuji Soft go private, leading to a sales process that was then taken on by the board.
KKR made an opening offer of ¥8,800 a share. Fuji Soft has been considered a prized asset because its property portfolio, valued at upwards of $1bn by the buyout groups, makes the cost of acquiring it more manageable. Its core IT services business is also seen as ripe for a turnaround.
Fuji Soft’s board backed KKR, which had bought more than a third of the company’s stock from activist investors, creating a blocking stake.
Bain had the support of Fuji Soft’s founding family, still major shareholders, and decided late last year to press ahead with a takeover bid without the board’s approval — a highly unusual move in Japan.
Bain on Monday said its actions “contributed to the interests of the target company’s shareholders”. KKR declined to comment.
With KKR’s current offer nearly 12 per cent higher than when the contest started, analysts said the saga had proven to be a boon for minority investors.
“The lesson to be learned here is that bidders and boards are not necessarily defending minority interests,” said Travis Lundy, an independent analyst. “Sometimes it takes outside pressure.”
Fuji Soft shares closed at ¥9,834 in Tokyo on Monday, giving it a market capitalisation of $4.4bn. They hit a peak of ¥9,900 this month amid hopes that Bain and KKR’s takeover bids might go higher.
