Marunouchi Capital Set To Buy Seijo Ishii Supermarkets

Marunouchi Capital, a Mitsubishi Corp affiliated investment fund, has begun final negotiations to acquire high-end supermarket operator Seijo Ishii Co., for more than 40 billion yen, according to Nikkei. Marunouchi Capital submitted the highest bid among the short-listed bidders. Seijo Ishii has been well known for its wide lineup of imported foods and its network of about 80 retail outlets in Tokyo, Osaka, Nagoya and other urban locations. The supermarket chain is a wholly owned subsidiary of Rex Holding Co., a PE (Advantage Partners)-backed food chain operator.

ACA To Exit Investment In CSK

Sumisho Computer System Corporation (SCSC), an IT unit of Sumitomo Corp. Group, announced that SCSC and Sumitomo Corp, one of its major trading companies, will make a tender offer for CSK, a PE-backed information service company. ACA Investment, one of Sumitomo's investment units, is a 36.48% equity holder in CSK and approved the offer. ACA invested in September 2009. The TOB price is set at 203 yen, a 45% discount over its 3-month average. If the deal is successful, SCSC will merge with CSK.

Secom To Make Secom Techno Delist

Secom Co. Ltd., a pioneer and the largest firm in the security services industry, announced that Secom has made a tender offer for Secom Techno Service Co., Ltd., a technical service provider of installation and maintenance of security equipment, to make it a fully owned company. Secom, a 67% equity holder, plans to buy all outstanding shares of Secom Techno. The TOB price is set at 3500 yen, a 32.6% premium over its 3-month average. Secom, by integrating the security installer, hopes that consolidated group management will lead to faster decision making and better use of human resources.

Toshiba Tec To Tender Offer For Subsidiary of Yokogawa Elec.

Toshiba Tec. Co., Ltd, a listed manufacturer of information terminals for the retail sector announced that Toshiba Tec made a tender offer for Kokusai Chart Co., a manufacturer of recording chart paper. Kokusai Chart is a consolidated subsidiary of Yokogawa Electric Co., a top-ranked manufacturer of industrial instruments. Toshiba Tec reached an agreement with Yokogawa Elec. to acquire the 54% share in Kokusai Chart. This is a divestment deal for Yokokawa Elec., which will now focus on its core business. The TOB price is set at 330 yen, a 2.7% discount over its 3-month average.

Carlyle To Exit Remaining Shares in Kito

Kito Corp., a Yamanashi-based crane maker, announced a secondary public offering of its shares owned by The Carlyle Group (19.08%), a global mega buyout firm. Kito went private with Carlyle in 2003. Since Kito went public in 2007, Carlyle has gradually decreased its shares and will have exited its investment in Kito completely through this transaction.

Fuji F&M To Go Private Via TOB

Fuji Fire and Marine Insurance Co., a medium-sized non-life insurance firm, announced that Fuji F&M approved a tender offer from Chartis Japan Capital Company LLC, which was set up by Chartis Inc, an non-life insurance unit of AIG Group. The TOB price is set at 146 yen, a 29% premium over a 3-month average. The AIG group originally held 54.66% shares of Fuji F&M.

Daiwabo To Make O-M Ltd. 100% Unit via TOB

Daiwabo Holding Co., Ltd., a textile-based conglomerate, announced that Daiwabo has made a take-over bid for O-M Ltd., a listed manufacturer of automatic machines, machine tools, and other machinery. The TOB price is set at 540 yen, a 76% premium over its 3-month average. The deal size is valued at a maximum of 12.3 billion yen. Daiwabo, originally a 27% equityholder of O-M, will make O-M a fully owned subsidiary through this deal.

AP, CITIC Capital To Exit Shares In Pokka

Sapporo Holdings Limited, one of Japan's major brewers, announced that Sapporo has acquired shares of Pokka Co., a PE-backed beverage manufacturer, to make Pokka a consolidated subsidiary of Sapporo. Sapporo will increase its holdings in Pokka from 21.4% to 85.5%, purchasing from Advantage Partners, a Tokyo-based mega buyout firm, CITIC Capital, a PE unit of CITIC Group, and Meiji Seika Kaisya. Ltd., a leading confectionary manufacturer. Sapporo plans to beef up its soft drink business through this acquisition. Pokka went to private via MBO with AP and CITIC Capital in 2005.

Japan PE Mission Led by the Government

The below is an excerpt from BRIGHTRUST JAPAN BUYOUT MONTHLY (Jan 2011 issue)

INVEST JAPAN MISSION LED BY THE GOVERNMENT

A group of 25 Japanese private equity funds joined a "Invest Japan" mission organized by MInistry of Economy, Trade and Industry (METI) and Japan External Trade Organization (JETRO http://www.jetro.go.jp/en/invest/). The mission visited Hong Kong in January 17-18 attending Asia Financial Forum (AFF).

METI and JETRO formed the mission of Japanese VC and BO GPs to increase overseas investors awareness and interest in Japan's private equity. A luncheon was hosted by Japan Consulate in Hong Kong and METI on 17th inviting local PE professionals and a Japan Private Equity session was held at AFF on 18th. It appeared many attendants at both events had a presumption that Japan is not keen to attract foreign capital. On the contrary, the senior officials from METI and JETRO conveyed a clear message that Japan strongly welcomes overseas investments and that the recent corporate tax cut is a very meaningful step forward. They also took time to explain the benefit of tax reform in April 2009 - now foreign investors by and large can be exempted from assuming a permanent establishment status in Japan (hence no tax filing obligation), even if they directly invest in a local limited partnership. The April 2009 tax change prompted many "undiscovered" Japanese funds to seek overseas investors.

Brightrust participated in the mission and gave a presentation at the luncheon alongside with the Government officials.

Please drop us mail@brightrust.jp a short message if you would like to receive our presentation "Japan Private Equity Market Overview", which contains updated market data.

Please also let us know if you would like more detailed information on April 2009 tax reform. We can send you an official English text.

Tanaka Galvanizing To Go Private Via MBO

Tanaka Galvanizing Co., Ltd., the largest specialist processor of hot galvanizing steel structures and steel products, announced that Tanaka approved a tender offer from Tanaka Holding Co., Ltd. an investment vehicle set up by Tanaka's founding family. The TOB price is set up at 200 yen, a 48% premium over a 3-month average. The deal size is about 1.3 billion yen. SMBC is ready to provide up to 2 billion in financing. Tanaka went public on the Jasdaq exchange in 1997.

Art To Delist Via MBO

Art Corporation, a top-ranked specialist in the moving industry, announced that it has approved a tender offer from CT Total Transport Co., an investment vehicle set up by Art's founding family. The TOB price is set at 1800 yen, a 42% premium over its 3-month average. The deal size (excluding those held by the family) is about 8.7 billion yen. Art incurred a debt of 16.7 billion yen as of September 2010. Sumitomo Trust is ready to provide up to 28.6 billion yen in financing. Art will be delisted from the first section of the Tokyo Stock Exchange upon the successful conclusion of the deal.

Marunouchi Capital To Invest in Die Manufacturer

Marunouchi Capital Co., Ltd., a buyout firm sponsored by Mitsubishi Corp and MUFG, will make an investment in Yamamoto Seisakusyo, Inc., a Saitama-based die manufacturer, according to Nikkei. Marunouchi Capital supports Yamamoto in expanding sales abroad, especially in China, lifting annual sales from 12 billion yen to 20 billion yen. Yamamoto is a technolgy-oriented company holding 340 employees and 2 plants in Japan and the US.

CCC To Go Private Via MBO

Culture Convenience Club Co., Ltd., an operator of FC store chains, announced that CCC received a tender offer by MM holdings, an investment firm set up by Mineaki Masuda, CCC's CEO. The TOB price is set at 600 yen, a 35% premium over a 3-month average. The appointed pricing consultant indicated the share price would be between 666-994 yen on a DCF basis; the initially-proposed TOB price at 575 was raised to 600 yen in CCC. The maximum deal size is about 70 billion yen. Mizuho Corporate Bank and Mitsui Sumitomo Bank are ready to provide up to 100 billion yen in financing. CCC has been famous as a FC operator of Tsutaya, the nationwide CD&DVD rental shop. Since the FC operator plans to change the business model drastically, it would not be appropriate for it to remain on the stock exchange, according to the CCC's press release.

Unison Takes Wine Importer Enoteca Private

Unison Capital has announced that it will sponsor the MBO of Enoteca Co. (3049) alongside with H.C.B.C. Enterprises Ltd., an investment firm headed by the wine importer's board member George Joseph Ho. JPY 6.2 billion will be spent to buy Enoteca stock via a tender offer. It is offering 120,000 yen per share -- a 46% premium over Wednesday's closing price.

According to the press release, the discussion between Enoteca management and Unison started as late as October last year. The recent surge of high-end wine prices has put pressure on the company's profitability, while Chinese consumer's strong demand for french wines opted the wine importer to expand into nearby Asian markets with the support of Unison.

INCJ To Invest In Spin-Off From JEOL

JEOL Ltd., the largest manufacturer of electron microscopes, announced that JEOL has divested the nuclear magnetic resonance business unit and set up a new firm, in which INCJ, a private-public investment fund, decided to make an investment. The new firm, called JEOL RESONANCE, will issue new shares to INCJ and Jastec Inc., an affiliate of Kobe Steel Group as well as a major supplier of resources for NMR machines. INCJ is to be the largest stakeholder (50.1%).

Works Application To Go Private Via MBO

Works Application Co., Ltd. a well-run package software developer and maintenance provider, announced that Works Appli. supported the takeover bid by WPK Holding Inc., an investment firm set up by the current managements and a JV between Polaris Capital and K&C. Polaris is a middle market buyout firm and K&C is a Tokyo-based buyout firm, whose CEO used to be an outside director of Works. The TOB price is set at 55,000 yen, a 43% premium over a 6-month average. The total proceeds for acquiring all outstanding shares will equate to JPY 25.5 billion. Bank of Tokyo-Mitsubishi UFJ will lend up to JPY 17.1 billion. Works Application reported a revenue of JPY 21 billion with an operating profit of JPY 1,444 million for the FY ending June 2010 and a revenue of JPY 11 billion and an operating profit of JPY 914 million for the 6 month period ending December 2010.