Japan's Renesas rescue: White knights or protectionism?

TOKYO -- It was the auto parts company almost no one had heard of until it brought down the entire industry last year.

Now, Renesas Electronics Corp. is back in the headlines, and again not necessarily for a good reason.

This time, the world's top maker of microcontroller chips for cars is reportedly at the center of a brewing takeover battle between an American private equity firm and an alliance of Japanese companies backed by their government.

The question: Are these Japanese companies, which include Toyota Motor Corp. and Panasonic Corp., legitimate white knights with a viable plan for rescuing Renesas?

Or is it an example of Japan Inc. circling wagons to ward off the predatory ambitions of foreign private equity investors, derisively referred to hear as "hagetaka," or vultures?

Renesas crashed the global supply chain last year when Japan's March 11 earthquake took a key plant off line for months.

Its chip plants are up and running, but the problem is that the Japanese company is in financial dire straights, due mostly to competition from chipmakers in neighboring South Korea.

The company booked a 62.6 billion yen ($719.5 million) net loss in the fiscal year ended March 31, 2012.

It expects that loss to swell to a 150 billion yen ($1.72 billion) net loss in the current fiscal year ending March 31, 2013.

Kohlberg Kravis Roberts & Co., the longtime New York private equity firm that dates back to the 1980s, offered about 100 billion yen ($1.15 billion) to banks and the three main shareholders for control of Renesas, Bloomberg reported. That bid apparently rattled others.

A Japanese consortium that includes Toyota, Panasonic and a a government-backed turnaround fund called the Innovation Network Corp. of Japan, are now weighing their own counteroffer, Japan's Nikkei business daily reported over the weekend.

Other members are Nissan and Honda, suppliers Denso and Keihin, the robot-maker Fanuc and camera giant Canon.

On the surface, this could be construed as a knee-jerk reaction to foreign interlopers. Toyota and other automakers wouldn't want control of a critical supplier in unpredictable hands.

They are no doubt leery of private equity's track record in the auto industry, as showcased by Cerberus' mauling of Chrysler.

And for that reason, the counteroffer could be seen as a legitimate self-defense move. And not necessarily Japanocentric.

German parts giant Bosch and other overseas companies are likely to be invited to join the rescue, the Nikkei says.

And Bloomberg notes that Japanese white knights didn't rally behind another big microchip maker that was scooped up by the Americans. Micron Technology Inc., of Boise, Idaho, agreed in July to buy Elpida Memory Inc., after Elpida filed for bankruptcy protection, the news service reported.

Whatever avenue is taken, however, it behooves the auto industry to have a stable Renesas. Its importance to the global industry was made all-too-painfully clear last year. Without Renesas' chips, a lot of companies can't build cars.

And a key element of Renesas' revival plan, unveiled in July, is a greater dependence on automotive microchips, not less.

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