Shares in U.S. private equity firm KKR & Co were higher today after it sealed a $2.31 billion deal to buy Japanese medical, agricultural, and construction product maker Topcon.
From Eyecare to Robots
KKR, alongside JIC Capital, a wholly owned subsidiary of Japan Investment Corporation, is supporting the management buyout of the Tokyo-listed company led by Topcon President and CEO Takashi Eto. KKR will then hold a majority interest in the company.
Topcon is almost 100 years old, having been launched in 1932, and makes products such as eye screening devices, auto-steering systems for tractors, and robotic lasers for construction sites. Industrial conglomerate Toshiba previously owned 30% of Topcon but sold its entire stake in 2015.
In its most recent quarterly earnings, Topcon projected a group operating profit of $46.51 million for the year ending March 31.
Japan in the Shop Window
Topcon said that the “New Topcon 2.0” will further accelerate its growth, particularly in its eye care business. It also wants to use its optical technology to develop products for the space and defense industries.
Japanese firms are becoming increasingly attractive to overseas buyers and investors given the large focus in recent years on improving corporate governance and boosting shareholder returns. A rise in more activist investors is also putting pressure on boards to do deals.
In addition, a weak yen has also created a favorable environment for dealmaking, particularly for private equity groups. Indeed, KKR has already bought IT company FujiSoft this year.
Is KKR a Good Stock to Buy Now?
On TipRanks, KKR has a Strong Buy consensus based on 12 Buy and 2 Hold ratings. Its highest price target is $214. KKR stock’s consensus price target is $173.08 implying an 47.25% upside.
