• Kyodo

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Industrial conglomerate Hitachi Ltd. has decided to advance talks with a consortium led by U.S. private equity fund Bain Capital to sell its subsidiary Hitachi Metals Ltd., sources familiar with the matter said Thursday.

Hitachi will negotiate with the group, which also involves investment fund Japan Industrial Partners Inc., the sources said, in a potential deal that could be worth several hundred billion yen given Hitachi Metals’ market capitalization of about ¥800 billion.

Hitachi is seeking to sell its over 50% stake in Hitachi Metals as the firm has been streamlining its business portfolios to focus on growth areas such as digitalization.

It has moved to acquire overseas companies, most recently U.S. software engineering firm GlobalLogic Inc. in March.

Since the process for the Hitachi Metals sale began last year, multiple groups have expressed interest, according to the sources.

In addition to the Bain Capital-Japan Industrial Partners group, another one led by U.S. and Japanese investment funds Kohlberg Kravis Roberts & Co. and Japan Investment Corp. has also been in the race.

Hitachi has been parting with subsidiaries that used to be major players within the group. It sold its chemical unit Hitachi Chemical Co. to Showa Denko K.K. in 2020.

Hitachi Metals had a net loss of ¥33.94 billion in the nine months to December as sales dropped 19.3% to ¥541.40 billion, hurt by weak demand amid the coronavirus pandemic. The firm was found to have falsified test results to check the quality of special steel and magnet materials.

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