Kohlberg Kravis Roberts & Co is set to gain preferential negotiating rights for a majority stake in Panasonic Corp's <6752.T> healthcare unit, sources familiar with the matter said, a potential $1.5 billion deal that would mark the U.S. firm's largest investment in a Japanese company.
An agreement would be in line with KKR's plans to invest further in Japan after recently raising a $6 billion Asia fund, the biggest ever in Asia for a private equity firm.
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It would also help Panasonic which is selling assets after posting a combined $15 billion in losses in the last two financial years.
Toshiba Corp <6502.T>, and a consortium that included U.S. investment fund Bain Capital, Japanese trading house Mitsui & Co Ltd <8031.T> and the Development Bank of Japan were also bidding for the healthcare unit, sources have previously said.
Those sources had valued the sale of shares in the unit, which makes blood sugar monitoring equipment and electronic medical record-keeping systems, at around $1.5 billion. The sources have not disclosed the precise size of the stake under discussion.
In the financial year ended in March, the unit made 8.7 billion yen ($87 million) in operating income on 134.3 billion yen in sales, giving it an operating profit margin of 6.5 percent.
KKR's advance was first reported on Friday by the Nikkei business newspaper, which said Panasonic aims to reach an agreement before the end of this month.
KKR last year sought to buy a controlling stake in Japanese chip maker Renesas Electronics Corp <6723.T> but lost out to a group led by the state-backed Innovation Network Corp of Japan. ($1 = 100.03 Japanese yen)
(Additional reporting by Junko Fujita; Writing by Mari Saito; Editing by Edmund Klamann and Edwina Gibbs)