KKR Takes Control of Fuji Soft, Winning the Fierce Takeover Battle Against Bain Capital

KKR secures 58% stake in Fuji Soft, ending a competitive bidding war with Bain Capital / Reuters

In a highly contested bidding war, KKR, the U.S.-based private equity giant, has emerged victorious, acquiring a 57.92% stake in Fuji Soft, a leading Japanese software developer. The successful acquisition concludes an intense competition with rival private equity firm Bain Capital, which had also been vying for control of Fuji Soft.

The battle between KKR and Bain intensified in recent months, with both parties repeatedly raising their offers in an effort to sway Fuji Soft’s shareholders. Ultimately, KKR’s offer of ¥9,850 per share, made earlier in February, proved to be the decisive factor, overshadowing Bain’s competing offer. The decision came after Bain announced its withdrawal from the takeover race, ending months of escalating tensions.

The dispute began in August of the previous year, when KKR first made its bid to take the company private. Bain quickly entered the fray, offering a higher bid in October, which gained the support of Fuji Soft's founder, Hiroshi Nozawa. Nozawa’s backing of Bain's offer led to significant challenges for KKR, particularly given the founder's public criticism of the privatisation process.

Despite the founder's endorsement of Bain, Fuji Soft’s board chose to support KKR’s offer over Bain’s. This led Bain to take a more aggressive stance, launching a hostile bid in December. Bain sharply criticized the Fuji Soft board, expressing concerns over the handling of the privatization process and questioning the board's loyalty to shareholders' interests. The private equity firm also claimed that its higher bid was more beneficial for the company’s stakeholders.

Tensions between the two private equity firms escalated when Bain refused to comply with Fuji Soft's request to dispose of confidential information obtained during its due diligence process. This standoff led KKR to request that Fuji Soft consider taking legal action against Bain, further intensifying the legal and financial drama surrounding the takeover.

Fuji Soft had previously been under pressure from activist investor 3D Investment Partners, a Singapore-based fund that had called for the company to divest its real estate assets and initiate share buybacks. In 2023, 3D began soliciting take-private offers from various private equity firms, even suggesting that Fuji Soft appoint an external auditor to oversee the privatisation review process.

The deal is a testament to the growing interest from global private equity funds in Japan’s corporate landscape, particularly in companies with underutilized assets or weak governance structures. These firms view such companies as prime targets for restructuring and reform to unlock value for shareholders.

KKR’s victory in securing control of Fuji Soft marks a significant milestone in Japan's robust deal-making environment. As part of the next steps, KKR plans to proceed with a squeeze-out process aimed at acquiring the remaining shares of Fuji Soft. This process is expected to be completed through an Extraordinary General Meeting scheduled for late April 2025. Once finalized, KKR will aim for 100% ownership of the company.

This acquisition by KKR is expected to streamline Fuji Soft’s operations, tapping into KKR’s extensive global network and financial expertise to accelerate the company’s growth trajectory. As Fuji Soft prepares to transition into private ownership, the future looks promising for the software developer under KKR's leadership.