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Japanese investment group to bail out Renesas

Posted: 17 Oct 2012 ?? ?Print Version ?Bookmark and Share

Keywords:government investment fund? System LSI business unit? Fujitsu? Panasonic?

Renesas Electronics Corp., which was almost bought out by Kohlberg Kravis Roberts (KKR), now looks set to be rescued by a Japanese buyout led by a government investment fund.

In return for a two-thirds stake in the company, the Innovation Network Corp. of Japan (INCJ) plans to invest around $1.9 billion. A group of about 10 companies will also invest an additional $633 million in total, according to reports by 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.

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, KKR 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 reorganisation 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 per cent of its workforce and the sale or closure of as many as half its domestic manufacturing sites.

- Peter Clarke
??EE Times

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