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Hamamatsu re-submits NKT Photonics bid

26 Jul 2023

Major Japanese photonics company wants to consult with Danish authorities that blocked a planned €205M deal.

Hamamatsu Photonics has resurrected its plan to acquire Denmark's NKT Photonics, after the €205 million deal agreed with parent company NKT A/S was blocked by the Danish government earlier this year.

Initially agreed back in June 2022, the acquisition would see NKT Photonics, which specializes in high-stability fiber lasers and supercontinuum sources, become part of the larger Japanese operation.

That switch in ownership was expected to yield several benefits, with Hamamatsu described by NKT Photonics CEO Basil Garabet as a company that “lives and breathes photonics”.

The deal would also have enabled NKT A/S to focus fully on its core business in electrical cables, with the cash raised from the sale forming part of a wider strategy to support a future manufacturing expansion.

German, US, and UK authorities all approved Hamamatsu’s acquisition plan, but it was subsequently blocked by the Danish Minister for Industry, Business, and Financial Affairs, on grounds of national security.

National security
Shortly after that decision, in early May, the NKT A/S chairman Jens Peter Due Olsen told an investor call:

“[The] transaction was prohibited by the Danish authorities under the Danish Foreign Investment Act. Normally approvals are granted within 90 business days and this prohibition came out of the clear blue sky after more than a nine-month process.

“We have not received any other reason than that it is for so-called national security reasons and that we will not receive any other explanation. Also, we cannot appeal and we cannot really get any insights into the merits for the prohibition as it is grounded in national security.”

Olsen pointed out that NKT was unable to engage in a dialog with the Danish authorities regarding the decision directly, as the obligation to do this would fall on the buyer in such cases, but added at the time:

“We still have a contract, and we do expect Hamamatsu to live up to this. We do know they are trying to find solutions.”

Internal and external consultations
And, in the past few days, Hamamatsu has re-submitted its acquisition plan. Although it has not indicated what, if any, changes it has made to the deal in light of the Danish government’s concerns, the Japanese firm stated:

“After the necessary internal and external consultations, on July 20, 2023 we again submitted to the Danish Business Authority an application to acquire shares in NKT Photonics as a subsidiary of our company.

“Going forward, we will conduct activities to obtain approval promptly, including consultations with relevant Danish authorities. If we have any matter that should be disclosed in future, we will make an announcement promptly.”

If the re-submitted deal is now approved in Denmark, NKT Photonics would become Hamamatsu’s dedicated fiber and laser division, an area that the Japanese firm’s CEO Akira Hiruma said had “significant growth potential”.

Under the terms of the original agreement NKT Photonics would have responsibility for fiber and laser development and manufacturing, with an unchanged product portfolio, and its name and branding retained.

The two firms also said initially that there were no plans for any changes to NKT Photonics’ global sites - and that NKT Photonics’ entire 400-strong workforce would transfer to Hamamatsu.

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