KKR in deal to buy Singapore's Unisteel

Kohlberg Kravis Roberts & Co. has agreed to buy Singapore disk drive component maker Unisteel Technology , sources involved in the auction said on Thursday, beating out private equity firms Bain Capital and Carlyle Group [CYL.UL].
A deal with Unisteel would mark KKR's second purchase of a Singapore disk drive maker in the last year.

Unisteel's stock was halted on Tuesday, having risen more than 10 percent in the two days before the suspension. The company said on Thursday that it has entered into advanced stages of a transaction with an unidentified group that approached the company.

The sources identified the group to Reuters as U.S. private equity giant KKR, and said the firm is in final negotiations to buy Unisteel.

They would not confirm how much KKR is paying for Unisteel, which has a market capitalization of $520 million.

Reuters reported on May 2 that Unisteel had hired Australian bank Macquarie to put the company up for sale, with Bain, KKR, Carlyle and TPG Capital [TPG.UL] among the firms vying for the business. Unisteel confirmed Macquarie's hiring later that day. ADVERTISEMENT



The hard disk drive industry has been in upheaval in recent years as leading players Seagate Technology and Western Digital scooped up suppliers. Major parts makers such as Nidec and TDK also bulked up to fend off increasingly cut-throat competition and tumbling prices.

Private equity firms have swooped in on the industry, attracted by low valuations and steady cash flows.

Last year, KKR acquired Singapore hard disk drive component maker MMI Holdings, while Standard Chartered Private Equity and CVC Asia Pacific bought computer casings maker Amtek Engineering Ltd.

In addition to relatively cheap shares and strong cash flows, private equity firms pounced on the Unisteel auction because it was a chance for them to take a majority stake in an Asian asset -- a rare chance these days in a region where many companies are reluctant to give up control.