Sources suggest Japanese fund is considering Renesas bailout

According to sources in Japan a Japanese government fund is considering a bailout of Renesas Electronics as part of a consortium including the Toyota Motor Corp, countering a 100 billion yen ($1.3 billion)bid for the chip maker that has been made by the private equity firm KKR. According to the Japanese media Innovation Network Corp”s plan could include an offer of more than 150 billion yen in return for a controlling stake in Renesas.

According to the sources quoted the offer could be made to the company’s shareholders – NEC Corp, Hitachi and Mitsubishi Electric as early as next month. Reports in the media suggest that the group wants to acquire a majority stake in Renesas before the end of the year.

Being customers of Renesas, Toyota and other Japanese manufacturers might be persuaded to help the chip maker in order to secure their supply chains and again, according to the sources quoted in the Japanese media, Toyota and the government fund could be joined by Panasonic, Nissan, Honda, Canon, the Fanuc Corp and automotive parts makers Denso and Keihin. The group could also invite German industrial group Bosch and other foreign firms to join it.

KKR is also in talks to buy control of Renesas, in a deal that would give KKR more than 50 percent of the cash-strapped business, and could speed the pace of its restructuring in the face of falling prices and aggressive overseas competition.

Renesas is the world”s leading manufacturer of microcontroller chips used in cars and is the process of laying off 12 percent of its workforce and plans to sell or consolidate half of its domestic plants.

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