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.

Industrial Production Index Rises 3.1% In Dec

The Ministry of Economy, Trade and Industry announced that the industrial production index rose a seasonally adjusted 3.1% from the previous month to 94.6 (2005=100) in December. The increase was larger than the expected 2.9% expansion. For the 12-month period through December, the index rose 15.9% from a year earlier, marking the first rise in three years.

S&P's downgrades Japan to AA-

Yesterday Standard & Poor's lowered the long-term sovereign-debt rating of Japan by one notch to AA- from AA, the first downgrade for Japan since April 2002. The surprise downgrade has put Japan on a par with China, Taiwan, Saudi Arabia and Kuwait. S&P foresees Japan's fiscal deficit remaining at high levels for several years while it expressed a skeptical view on the ability of the current government by saying "In our opinion, the Democratic Party of Japan-led government lacks a coherent strategy to address the negative aspects of the country's debt dynamics." Moody's Investor Services said it was maintaining its own AA2 rating, but echoed worries over political gridlock.

The JGB market showed little change yesterday and today. 95% of outstanding JGBs are held by domestic institutional and retail investors, who are wary of long-term prospects but convinced that near-term credit risk is minimal, surely not more than that of AA-rated Spain.

Biotech Firm Hayashibara To Go For ADR Turnaround Process

Hayashibara Co., a Okayama-based biotechnology company, announced it will enter an alternative dispute resolution (ADR) process with more than 30 creditors regarding debt totaling as much as 140 billion yen. The firm, known for its sweeteners and anti-cancer researches, announced later that it was proud of its 28 billon yen in sales in 2010.

Advantage Partners In Talks Over Tokyo Star Bank

Advantage Partners LLP, a Tokyo-based large cap private equity firm, is reportedly in talks with a consortium of more than 10 Japanese and non-Japanese creditors with regard to the restructuring of its problematic investment in Tokyo Star Bank Ltd. The Yomiuri, Japan's largest newspaper, reported that the consortium has proposed to set up a new fund between the creditors and AP and the plan may be agreed on as early as this month. Under the restructuring plan, the bank consortium will take the helm, while AP may still retain minority voting rights. The share transfer price is expected to be (close to) zero. The consortium includes Lone Star, previous owner of Tokyo Star Bank, Shinsei Bank, Aozora Bank, Credit Agricole SA and the Development Bank of Japan.

In 2008, AP paid JPY 250 billion (USD 3 billion) to acquire Tokyo Star Bank through TOB. One-third of the total proceeds was funded by AP funds and the remaining two-thirds was funded by the banks. AP has used share dividends from Tokyo Star Bank to service interest payment. Recent losses booked by the Bank - though very modest at JPY 2.7 billion (USD 30 million) in FY ending March 2010 and JPY 3.1 billion (USD 37 million) for the succeeding 6 months period - has made it difficult for the bank to continue to pay dividends.

Ant Capital Exits Investment In Maruboshi

CMC Co., a listed manual-service provider, announced that it has acquired 100% of shares in Maruboshi Co., a PE-backed service provider of high-quality technical documents. CMC paid 1.68 billion yen. Maruboshi was acquired by Ant Capital Partners Co., Ltd., a Tokyo-based private equity firm, in 2008.

NEC, Lenobo In Talks On PC Joint Venture

NEC Corp., is in the final stages of negotiations with Chinese firm Lenovo Group Ltd. to join forces in the personal computer business through a joint venture, according to the Nikkei.

Condominium Market Starts To Recover

The Real Estate Economic Institute released a report of a 22.4% increase in the number of new condominiums put on the market in the Tokyo metropolitan area on the year to 44,535 units in 2010. It is the first increase in six years. The figure is projected to rise 12.3% to 50,000 units this year. After years of being stuck in the doldrums, Japan's condominium market is beginning to show signs of recovery, prompting property companies to resume aggressive condo. development in the metropolitan area.

Goldman Sachs To Boost Research Coverage of Japan

Goldman Sachs Japan Co., has been beefing up its research operations for Japanese equities, according to Nikkei. Goldman began hiring analysts late last year, taking on talent specializing in the insurance and transport industries in December. It started following individual Japanese internet and media companies this month, and is due to add an analyst for the machinery industry shortly. As a result, Goldman Sachs Japan's research team is expected to soon cover nearly 300 Japanese companies. These moves are interpreted as a sign that foreign investors' interest in Japanese stocks are recovering.

3 Foreign and 2 Domestic Companies On Short List For Bankrupted Takefuji

US fund Cerberus, US Buyout Shop TPG Capital, nonbank financial firm J Trust Co., PE-Backed Tokyo Star Bank and major South Korean consumer credit company A&P Financial are on the short list for Takefuji Corp's rehabilitation sponsor, according to Nikkei. They are expected to offer an acquisition price at the end of next month, with the sponsor likely decided on by March.

Valiant Partners Exits Shares In Pharmacy

Valiant Partners Co., a mid-sized private equity firm, announced that it has exited its investment in Hanshin Dispensing Pharmacy Co., a Kobe-based pharmacy firm. Valiant sold the shares to pharmaceutical wholesalers and the founders' own company. Hanshin went private in a MBO with Valiant in 2007.

Image Holdings To Go Private In MBO With Fund

Image Holdings Co., a listed mail order company announced that Image will go private with Mizuho Capital Partners, a Tokyo-based private equity firm. An investment entity set up for the buyout will launch a tender offer at 314 yen per share, a 26 (22)% premium over its 3 (6)-month average.

Goldman to Exit Accordia Golf

Accordia Golf Co. (2131) announced that Goldman Sachs will sell all its shares of the golf course operator. Through its group company, Goldman has been Accordia's largest shareholder with a stake of 44.7% - worth JPY 37 billion or USD 447 million at yesterday's market closing price. Accordia also announced the termination of its operational partnership agreement with Goldman. After purchasing a string of Japanese golf courses following the bubble burst in the 90s, Goldman took the golf course operator public in 2006. At the time of the IPO, Accordia was managing 10 golf courses for Goldman. Since then Accordia has acquired the bulk of the courses and currently manages just one on behalf of Goldman.

At today's opening, Accordia's stock price plunged as much as 13%. The sale price will be determined based on the closing price on a date between January 17th to 19th. Accordia will buy back its shares up to JPY 2 billon (USD 24 million).

PE-Backed REINS Sells Red Lobster Japan To Restaurant Operator

REINS International Inc., the Advantage Partners-backed food chain operator, announced it has sold all shares of Red Lobster Japan Co. Ltd., to CELUX Inc., a Tokyo-based operator of various kinds of restaurants. Financial terms are not disclosed. REINS purchased Red Lobster Japan in 2002 from retail giant Aeon Co.