On Wednesday, during early trading in Tokyo, Kokusai Electric's shares fell by 9%. This came after a Reuters report that private equity firm KKR plans to reduce its stake in the Japanese chip equipment manufacturer.
According to Reuters on Tuesday evening, KKR plans to sell about half of its 43% stake in Kokusai Electric to investors and realize gains after a surge in the stock price, while Kokusai Electric will repurchase shares from the market.
Travis Lundy, an analyst at Quiddity Advisors, wrote on Smartkarma: “I expect this news to lead to a drop in the stock price, followed by a slight rebound. This is a common pattern for recent share issuances accompanied by buyback plans.”
As of Tuesday's close, Kokusai Electric's market value was about $8.5 billion, with its stock up about 75% so far this year.
The company aims to improve profit margins, while investors are supporting chip equipment manufacturers, anticipating that investments in technologies such as artificial intelligence will drive the industry's growth.
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