Separating from Hitachi: the KKR take-private and the carve-out of the deposition business (2017)

A parent that let go of its best business — and the speed gained by the side that left

What Hitachi gave up was, at that moment, its fastest-growing business. Semiconductor equipment was what lifted the revenue forecast for the year to March 2018 from ¥169 billion to ¥199 billion, and that strength was part of why the tender price had to be raised from ¥2,503 to ¥3,132 a share. That Hitachi separated it anyway suggests a judgement made under president and CEO Higashihara Toshiaki about the weight of carrying, inside a social-infrastructure balance sheet, a business that swings every few years with the silicon cycle. Selling while a business is still climbing is a decision that cannot be taken once results have turned.

The two price increases show that the separation did not run along the line the seller had drawn. The original ¥2,503 failed to clear; only after Elliott Management entered did the tender reach 26% acceptance. Nor was the equipment business’s path afterwards smooth — the sale to Applied Materials came apart for want of regulatory approval. And yet the speed that Sakuma Kaichiro described, of no longer having to report progress upward and secure approval, is what the separation actually delivered, and it is what carried the company to a relisting five years later.