Global private equity giant KKR is exiting Japanese DJ equipment maker AlphaTheta (formerly known as Pioneer DJ) and is selling its stake to photo processing machine manufacturer Noritsu.
Tokyo Stock Exchange-listed Noritsu said it will acquire all shares of AlphaTheta for 35 billion yen ($324.9 million), and will also use a 30 billion yen non-recourse loan to pay the interest-bearing debt of the target company.
The acquisition is aimed at increasing the profitability of the company’s businesses and achieving growth in the medium-term management plan, Noritsu said in a regulatory filing.
The deal comes shortly after AlphaTheta rebranded the business earlier this year.
In 2015, KKR acquired an 85.05 per cent stake in Pioneer DJ for 59 billion yen (which was then $551 million), as electronics producer Pioneer Corporation carved out the disc jockey equipment unit.
Its intention to sell Pioneer DJ was reported by Nikkei Asian Review in May 2019.
“Pioneer had decided to prioritise its onboard vehicle device operation, a decision that involved offloading its audiovisual units and other segments,” the report said.
“We are proud to have worked with the management team and employees of Pioneer DJ, now AlphaTheta, to assist the business’ growth in key global markets and to accelerate the company’s migration towards a software-subscription model to align with emerging industry trends – all as a standalone company,” Hiro Hirano, co-head of private equity for KKR Asia Pacific and CEO of KKR Japan, said in a statement on Monday.
Since the KKR investment, AlphaTheta has expanded sales into key emerging markets, particularly India and China, and has transformed into a software business, enabling interconnectivity between equipment and gadgets.
The company claims a more than 60 per cent market share in the global DJ equipment industry.
It posted a consolidate net income of almost 3.5 billion yen in 2019, compared to 4.3 billion yen in 2018 and a loss of over 1 billion yen in 2017.
Meanwhile, Pioneer Corporation – the former parent company of AlphaTheta, sealed a bailout deal with Baring Private Equity Asia (BPEA) in 2018 in an effort to improve its deteriorating cash flow. The “Pioneer Revitalisation Plan” comprised a 77 billion yen ($714.6 million) investment from BPEA in Pioneer and a cash offer from BPEA to existing Pioneer shareholders of approximately 25 billion yen ($232 million).