November 08, 2013

Carlyle Is Set To Further Divest Chimney Through The TOB Announced By Yamaya

According to disclosure documents filed by Carlyle today,  Carlyle has entered into an agreement with Yamaya Corporation, Tohoku-based liquor retailer, where Carlyle funds will subscribe to the tender offer announced by Yamaya to acquire up to 50.22 % (or 48.66% excluding the exiting holdings) of Chimney Corporation, bar and casual restaurant chain operator.

The TOB price is set at JPY 1510 per share, which equates to a premium of 51.6% over the last 3 months average price and and 53.6% over the last 6 months average price. Total proceeds to buy a 48.6% stake of Chimney is JPY 14.3 billion.

Carlyle had delisted Chimney through a tender offer announced in November 2009 for approximately JPY 20 billion and subsequently squeezed out minority share holders.

In December 2013, Chimney was re-listed and Carlyle sold about 1/2 of its holdings. Currently, Carlyle funds collectively own 48.42%. The IPO price was JPY 945.

 Given the TOB ceiling is only 50% of the outstanding shares, (my understanding is that) there is no guarantee that Carlyle can sell all its stakes at the TOB, but the sale at this price for any amount would improve the return of Carlyle Japan II Fund.

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