(Bloomberg) -- Topcon Corp. is weighing takeover bids from suitors including KKR & Co. and EQT AB, the latest sign of escalating buyout activity in Japan.
The Tokyo-based eye-care equipment maker held its first round of bids in September, narrowing the offers to those from KKR and EQT, according to people familiar with the matter. The government-backed Japan Investment Corp. also plans to submit an offer in the second round, which may take place by the end of December, said the people, who asked not to be identified discussing matters that are not public.
Shares of Topcon surged 23% to their highest since July last year. It was the company’s biggest jump in almost two years.
Topcon said in a statement it’s considering a range of management-related measures to raise corporate value, but nothing has been decided. Representatives of KKR, EQT and JIC declined to comment.
Topcon has been under pressure from ValueAct Capital to hive off operations or go private, with the US activist investor arguing that the Japanese company’s ¥198 billion ($1.3 billion) market capitalization represents a conglomerate discount, the people said. ValueAct is Topcon’s largest shareholder, holding a 13.69% stake, according to data compiled by Bloomberg.
Private equity firms and activist investors have long called for change in the world’s fourth-largest economy, home to many companies with global market share and cheap valuations. That activity is getting a boost from local regulators’ stance on corporate governance reform, even as a weak yen fuels M&A activity.
One result has been a rise in the number of companies, from Seven & i Holdings Co. to IT consulting company Fuji Soft Inc., exploring buyouts to go private.
The winning bidder is expected to acquire all Topcon shares and delist the company, the people said. A management buyout is also a possibility, they said.
Topcon was founded in 1932 as a maker of surveying instruments, cameras and binoculars for the Japanese army before becoming an affiliate of what later became Toshiba Corp. It now makes medical devices and geopositioning instruments used at construction sites.
--With assistance from Lisa Du.
(Updates with company statement and closing share price)
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