Carlyle Group to Acquire Rigaku Corporation; Street is Cautiously Optimistic

The Carlyle Group, together with Mr. Hikaru Shimura, President and CEO of Rigaku, has agreed to acquire all outstanding shares of Rigaku, through a holding company, in an 80% – 20% ownership split. Financial details of the transaction have not been disclosed. That said, Reuters reported that the deal is thought to be valued around $1 billion.

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Carlyle (CG) is a global investment firm with deep industry expertise and will assist Rigaku in its ambition of going public in the next few years.

Rigaku was founded in 1951 and has grown to become Japan’s leading technology company in the field of X-ray analysis, measurement and testing instruments, with a diversified customer base of over 10,000 customers globally.

Annual revenue amounts to approximately 44 billion yen, with around two thirds of this generated outside of Japan.

Takaomi Tomioka, Deputy Head of Carlyle Japan, commented, “Under the leadership of Mr. Shimura, Rigaku has grown into a leading global player with superior technology, a solid and diversified customer base, and highly competitive R&D and manufacturing capabilities. It is an honor that he has chosen Carlyle as the partner to take Rigaku into its next phase by building a robust global organization under a new management team. We greatly look forward to working with Mr. Shimura throughout this transition, and are committed to supporting the future growth of Rigaku, building upon the success of his life’s work.” (See CG stock analysis on TipRanks)

Merrill Lynch analyst Michael Carrier reiterated his Buy rating on CG a month ago and set his price target at $39, which implies 24% upside potential from current levels.

Carrier double-upgraded Carlyle Group to Buy from Sell in November, citing the company’s “multiple upcoming catalysts,” with potential for accelerated growth going forward. Carrier believes that the potential for improved earnings and margin growth expected in the second half of 2021 to 2023 as Carlyle’s flagship funds “re-enter the market” makes the company an attractive investment.

Consensus among analysts is a Moderate Buy based on 3 Buys and 4 Holds. The average price target of $34.21 suggests upside potential of around 10% over the next 12 months.