Fuji Soft founder backs buyout by Bain over KKR offer, letter says

By Kane Wu, Makiko Yamazaki and Anton Bridge

TOKYO/HONG KONG (Reuters) -Fuji Soft founder and shareholder Hiroshi Nozawa said in a letter to the company, seen by Reuters, that he supports U.S. buyout fund Bain Capital’s takeover bid for the Japanese software developer.

Bain made a binding offer on Oct. 11 to buy Fuji Soft for 9,450 yen a share, valuing the Japanese company at $4 billion and outbidding rival bidder KKR by about 7%.

Fuji Soft, however, said in a Oct. 15 filing that there were no discussions between the company and Bain Capital regarding the terms of its tender offer. Its board has recommended that shareholders accept KKR’s tender offer of 8,800 yen a share.

Nozawa, in the letter on Thursday to the company’s board and special committee on the bids, urged Fuji Soft to withdraw its recommendation for KKR’s buyout offer, stating Bain’s offer was better.

“It is obvious that Bain Capital’s purchase price, which is higher than KKR’s purchase price, is in the common interest of shareholders,” Nozawa said in the letter.

Shares in Fuji Soft closed at 9,630 yen on Thursday, above both of the offer prices.

KKR and Fuji Soft declined to comment on the founder’s letters. Bain Capital told Reuters it would continue to support Fuji Soft by acting as a “white knight” to the management and founder.

Bain and KKR have become rivals in a rare showdown to take over the Yokohama-based informational technology group, which has been at odds with some of its major shareholders.

KKR has said it has secured backing for its bid from Fuji Soft’s major shareholders 3D Investment Partners (3DIP) and Farallon Capital. Combined, the two have tendered 32.68% of Fuji Soft shares to KKR, according to the buyout firm’s announcements last month.

Nozawa, who together with family members own an 18.5% stake in Fuji Soft, sent a separate letter to the media on Thursday which said: “We hope that 3DIP, Farallon, and other major shareholders will accept Bain Capital’s tender offer and support us in quickly establishing a framework for future efforts to increase corporate value.”

The Nikkei business daily first reported on Nozawa’s letter to the company.

KKR last month brought forward the start of its tender offer by about a week and said it would conduct the tender offer in two stages.

Bain has said it would launch its tender offer process in late October and the offer would be conditional on the board’s affirmative opinion.

(Reporting by Makiko Yamazaki, Kaori Kaneko, Anton Bridge and David Dolan in Tokyo, and Kane Wu in Hong Kong; Editing by Mark Potter, Jane Merriman and Jamie Freed)