NEW YORK -- A Japanese-led consortium is reportedly planning to rescue Renesas Electronics by blocking an attempt by the U.S. private equity firm KKR's to purchase the ailing chip company, Japan's economic journal Nikkei reported Friday (Sept. 21).
The new consortium includes Toyota Motor, Panasonic and a Japanese government-backed fund called the Innovation Network Corp. of Japan (INCJ). The group is reportedly looking to invest more than 100 billion yen (about $1.28 billion), Nikkei reported, with plans to acquire a majority stake in Renesas by the end of 2012.
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Consortium's members include key members of Japan’s automotive ecosystem, Nissan Motor Co. and Honda Motor Co. along with Canon Inc. and Fanuc Corp. Other members include parts and components makers such as Denso Corp. and Keihin Corp. Nikkei also speculated that the consortium might invite Germany's Bosch and other foreign companies to join.
Japan's government appears to view the survival of Renesas as critical to the future of key industries such as automotive and industrial machinery. Still, it is highly doubtful that the chip maker could engineer a miraculous recovery, even if rescued by the industry consortium. Renesas previously failed to make drastic cuts and to orchestrate a major restructuring.
Nikkei reported: “In late August, Kohlberg Kravis Roberts proposed investing about 100 billion yen in Renesas. Major lenders were ready to accept at one point but are wary that microcontroller supplies could be disrupted if KKR pushes for significant additional restructuring.”
It also reported that KKR’s “tough demand” which includes seeking the removal of Renesas’ entire board, additional loans from the lenders and three shareholders, made the KKR’s offer “difficult to accept."
Under the INCJ's lead, the team is putting together an investment plan so that an alternative for rescuing Renesas can be presented to its shareholders, including NEC Corp., Hitachi Ltd. and Mitsubishi Electric Corp., as early as next month, Nikkei reported.
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