TOKYO — Hitachi has given preferential negotiating rights to sell its metals unit to a consortium of investment funds led by Bain Capital, in a possible deal estimated to top 800 billion yen ($7.27 billion), Nikkei learned on Wednesday.
Bain, Japan Industrial Partners and Japan Industrial Solutions are in talks for Hitachi’s roughly 53% stake in Hitachi Metals. The unit is currently listed on the Tokyo Stock Exchange.
Hitachi told Nikkei that it had not made any final decisions regarding a buyer.
Hitachi seeks to transform itself into an information technology-focused company to drive future growth and better compete with overseas rivals like Siemens. It decided at the end of March to acquire U.S. digital engineering services company GlobalLogic for $9.6 billion.
Expecting little synergies between tech-focused operations and Hitachi Metals’ expertise in automotive and jet alloys, Hitachi began seeking buyers for the unit in late 2020. Several overseas funds have since placed a bid.
Hitachi Metals has long been considered one of Hitachi’s most important units, along with Hitachi Kasei, which Showa Denko acquired in 2020 and has renamed Showa Denko Materials, and Hitachi Cable, which merged into Hitachi Metals in 2013.
Its portfolio ranges from specialty alloys to magnets to fighter jet parts, and the company holds high market shares in a range of products. It is Japan’s top producer of tool steel, and is one of the world’s leading players in high-end ferrite magnets, like those used in motors.
But Hitachi Metals has faced headwinds recently, partly due to a massive loss in its magnet business. The company expects to have booked a record net loss for the second consecutive year through March totaling 46 billion yen. It announced in October that it would cut about 3,200 jobs, or roughly 10%, of its employees, including through a voluntary retirement scheme.
