Hitachi Power Tools Sold to Private Equity Firm KKR

Hitachi Power Tools Sold to Private Equity Firm KKR

Welcome to a Cordless Drill Battery specialist of the HITACHI Battery

We’ve been impressed with the quality and performance that Hitachi Power Tools has brought to the market recently and apparently, we’re not the only ones who’ve taken notice. That quality and performance translated into such robust business that private equity firm KKR (Kohlberg Kravis Roberts) recently announced a deal for a majority stake in Hitachi Koki, purchasing the power tools division.

Hitachi sold KKR all of the common stock holdings which comprises 40.25% of the business as well as a 10.9% stake previously held by Hitachi Urban Investment, Ltd (HUI).

KKR is famous for leveraged buyouts (LBOs), where a combination of cash and a relatively large amount of debt, collateralized by the company’s cash flow, is used to purchase the company. It’s not immediately clear how the Hitachi-KKR deal was structured, but the price per share KKR paid values its stake at $1.3 billion. KKR plans to use its vast resources and network to grow Hitachi’s business. At the same time, Hitachi is freed up to focus more on its core operations such as infrastructure.

In the investment world, a purchase like this doesn’t come without a lot of research on the front end. Hitachi bought out Metabo back in 2015 which gave them access to Metabo’s impressive industrial level tools and LiHD battery platform with battery such as HITACHI DN10DY Battery, HITACHI WR 9DM Battery, HITACHI FEB 12S Battery, HITACHI EB 1230H Battery, HITACHI EB 12 Battery, HITACHI EB12G Battery, HITACHI WH 12D Battery, HITACHI EB1414 Battery, HITACHI EB 1212S Battery, HITACHI EB 1230X Battery, HITACHI EB 1220BL Battery, HITACHI EB1412S Battery. While there has been no direct claim by Hitachi that their cordless tools are benefiting from the relationship with Metabo, their most recent tools certainly indicate they’ve been improving the line drastically.

All of that culminates in the fact that KKR must see some major potential. After all, this isn’t a power tool company buying out another brand to bring its success in-house – this is an investment firm and they expect to make money.

Certainly, expect Hitachi’s pneumatic lineup to remain solid from top to bottom and the cordless line to continue its improvement. There’s no indication that KKR intends to materialistically change what Hitachi is doing. For now, it appears the fact that Hitachi Power Tools has been sold to KKR is a strong vote of confidence that there’s enormous potential in the coming years. How much confidence? This excerpt from their January 13th announcement says it all:

In the electric power tool industry to which the Company belongs, cordless tools are becoming increasingly prevalent, and this trend is expected to continue in the future. Further, due to the influence of the so-called IoT (Internet of Things), electric power tool products which can connect to the Internet are becoming popular, and efforts are being directed toward increasing customer satisfaction by enhancing various features to enable management of these products using the Internet. This situation has resulted in intensifying market conditions, inside and outside Japan, with increasing competition being seen in the development/introduction of new products and in expansion of sales and marketing as well as pricing competition among competitors.

In response to the above situation faced by the Company with the trend toward cordless products, KKR believes that faster growth is possible through reform of the Company’s manufacturing/development, sales and service systems, such as the development and introduction of new products with a focus on cordless products utilizing batteries and circuitry technologies developed in-house, reinforcement of a sales/marketing strategy aimed at having the Company’s high technological superiority recognized by customers, improvement of efficiency by integrating overseas manufacturing and sales operation bases as part of the structural reform which is in progress, and additional non-linear growth opportunities centered on M&A.