Kokusai Electric saw its shares plummet by 9% during early trading in Tokyo on Wednesday, following a report from Reuters that private equity giant KKR intends to reduce its ownership stake in the Japanese chip manufacturing equipment firm.
According to the report released late Tuesday, KKR plans to sell approximately half of its current 43% stake in Kokusai Electric to external investors. This move comes as KKR seeks to capitalize on the recent strong performance of Kokusai’s shares. As part of the transaction, Kokusai Electric will initiate a share buyback program in the market.
Analyst Travis Lundy from Quiddity Advisors, writing on Smartkarma, commented, “I anticipate an initial downturn in the stock price in response to this news, followed by a potential recovery. This has been the observed pattern with recent offerings that include buyback provisions.”
As of Tuesday’s closing price, Kokusai Electric boasted a market capitalization of approximately $8.5 billion, marking a notable 75% increase in its share value year-to-date.
The company has set its sights on enhancing profit margins, leveraging investor enthusiasm driven by anticipated investments in technologies such as artificial intelligence that are expected to bolster the chip equipment sector.
