LONDON – Struggling Japanese chip company Renesas Electronics Corp. now looks set to be saved by a Japanese buyout led by a government investment fund.
The fund called the Innovation Network Corp. of Japan (INCJ) plans to invest 150 billion yen (about $1.9 billion) in Renesas in return for a two-thirds stake in the company. A group of about 10 companies will invest a further 50 billion yen in total, according to reports attributed to Nikkei
and the Daily Yomiuri
INCJ is expected to appoint senior manager from outside the company and to sell off the System LSI business unit for integration with similar units at Fujitsu and Panasonic, according to a Daily Yomiuri
report. [Get a 10% discount on ARM TechCon 2012 conference passes by using promo code EDIT. Click here to learn about the show and register.]
Many other changes, closures and lay-offs are expected but the deal appears to have averted a potential takeover of Renesas by private equity firm Kohlberg Kravis Roberts. In late August, Kohlberg Kravis Roberts proposed investing about 100 billion yen (about $1.25 billion) in Renesas.
Renesas is forecasting a net loss of about 150 billion yen (about $1.9 billion) on sales revenue of about 880 billion yen (about $11.3 billion) for the fiscal year to March 31, 2013. At the beginning of October Renesas announced it had secured loan deals that would allow the company to follow through on a planned reorganization that would involve substantial lay-offs and retreats from manufacturing and certain markets. This could involve the loss of 12,000 jobs or about 30 percent of its workforce and the sale or closure of as many as half its domestic manufacturing sites.
Related links and articles:
Renesas raises money for reorganization
Japan Inc. reportedly moves to block KKR’s Renesas takeover
KKR said to target Renesas with $1.27 billion bid