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Shares in Japan’s JSR untraded on surprise possible buyout

TOKYO : Shares in Japan’s JSR Corp were untraded with a glut of buy orders early on Monday, after the semiconductor materials maker said it was considering a deal to be acquired by state-backed Japan Investment Corp (JIC).

JSR’s market capitalisation was 677 billion yen ($4.71 billion) at Friday’s market close. JIC would spend about 1 trillion yen on the acquisition, the Nikkei newspaper reported, injecting 500 billion yen into a new company to make the purchase and borrowing 400 billion yen from Mizuho Bank.

Countries around the world are moving to tighten control over the supply of semiconductors, which are essential to the functioning of the defence, electronic and automotive industries, amid elevated tensions between China and the United States.

An acquisition by JIC, which is overseen by the powerful trade ministry, would be the latest in a series of increasingly muscular moves by Japan to juice up its chip industry, which has lost global market share in recent decades.

“JIC is starting here. It would surprise me quite a bit if that is where they stopped,” Travis Lundy of Quiddity Advisors wrote in a note on Smartkarma.

While Japan has a long and mixed record of intervening to save floundering industrial players, a move to take private a profitable company that has already undergone restructuring risks criticism for potential overreach.

JSR is a top supplier of photoresists, which are light-sensitive chemicals used to print patterns on wafers, to global chipmakers. It competes with companies including Tokyo Ohka Kogyo and Shin-Etsu Chemical.

JSR, which was set up in 1957 as a government-backed producer of synthetic rubber, reported a 20 per cent jump in sales to 408.9 billion yen in the year ended March, while operating profit declined 33 per cent to 29.4 billion yen.

Shares in JSR, which unusually for a Japanese company has a foreign-born CEO, have gained 25 per cent year-to-date. Activist investor ValueAct Capital is a major shareholder and has an executive on the board.

($1 = 143.6800 yen)

(This story has been refiled to fix a typographical error in paragraph 7)

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