October 28, 2013

J Star Divests Tokachi To Mediaflag

J-Star has sold its stake in Japanese-style confectionery Tokachi to Mediaflag (TSE 6067) for an undisclosed amount. The sale was originally reported on 18 September for the execution towards the end of October. The motivation of Mediaflag, provider of sales support and mystery shopping services for consumer goods companies, to acquire a small confectionary producer and retailer is quite intriguing. From the press release,  it appears that Mediaflag is trying to apply its marketing and operational know-how to improve Tokachi's profitability and it expects the small retailer also functions as a "labo" for their marketing support and data collection activities. Tokachi, together with its 100% subsidiary Tachibana, reported the combined sales of around JPY 2.1 billion and combined losses of around JPY 50 million in the past 3 years. J-Star acquired Tokachi in August 2007 from the founder and had Tokachi acquire Tachibana in March 2008.

According to PEI, "The exit multiple, according to a source with knowledge of the deal, was 1.3x.
J-Star declined to comment."

In July, J-Star closed its second SME-focused fund with JPY 20.4 billion, of which approx. 40 % were committed by overseas investors.

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