Tokyo / Osaka Stock Exchange Merger To Be Approved

The Japan Fair Trade Commission will give the go-ahead to the planned merger between Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co. (8697). The commission is expected to officially approve the merger sometime this week. The TSE will launch a tender offer for the OSE as soon as the announcement is made. The merger will be completed by next January with the creation of a holding company. The combined exchange will be the 3rd largest exchange in terms of the aggregate market capitalization of the companies listed.

BOJ Sees Economy Improving in All 9 Regions in Japan

The Bank of Japan upgraded its assessment of all nine economic regions in Japan in July. This was the first time since October 2009 that all regions have been upgraded in the bank's quarterly Regional Economic Report. The report was released at a meeting of managers from the central bank's 32 domestic branches and general managers based in the U.S. and Europe.

The BOJ sees the nation's economy recovering steadily on the back of domestic demand. Most regions see a mild recovery or pickup in the economy. Seven regions see consumption increasing or picking up, while eight regions noted a rise or pick up in capital spending.

Tokyo Metropolitan Government to Back VC Investments

Tokyo Metropolitan Government has appointed Daiwa Corporate Investment to manage Tokyo Metropolitan Government backed VC fund. Tokyo will provide JPY 2 billion (USD 25 million) to seed the fund. The fund will provide risk capital to prospective venture companies in such areas as energy, environments, semiconductors and electrical parts.

INCJ Tops Up Capital

Innovation Network Corporation of Japan (INCJ) has increased its capital base by allocating shares to 8 Japanese companies - Cannon, Sony, Toyota, Marubeni, Sumitomo Mitsui Bank, Mitsubishi Chemical, Mitsusbishi Heavy Industries and Mitsubishi Corp with JPY 500 million each totaling to JPY 4 billion (USD 50 million). While this brings INCJ's private sector shareholder ownership to JPY 13 billion (USD 160 million) by 26 companies, it merely accounts for 8.3 % of its total capitalization. The Government has been continuously adding capital to INCJ and it is now reaching USD 1.8 billion. As the result, the private sector ownership has been on decline, obscuring INCJ's position as a public-private entity. Considering its total investable capital of over USD 20 billion, which is made available to INCJ through the Government guaranteed loans, the USD 50 million share allotment is nothing but a symbolic act.

Japan's Overseas M&As Hit Record High in H1 2012

The number of overseas M&As by Japanese businesses in the first 6 months of 2012 rose by 15% from H1 2011 to 262, topping the previous record of 247 in 1990. The M&A deals totaled JPY 3.49 trillion (USD 44 billion), up 9% from a year earlier. The tally is the second highest after the 4.46 trillion yen in H1 2006, according to M&A advisory firm Recof Corp.

The first half of this year featured large-scale acquisitions by trading houses. Mitsubishi Corp. paid JPY 230 billion (USD 2.9 billion) to acquire concession rights to a natural gas field in Canada. Marubeni Corp. purchased major U.S. grain firm Gavilon LLC for roughly JPY 300 billion (USD 3.8 billion).

Mid-tier regional companies also acquired foreign companies as well. Taiho Kogyo Co. acquired the No. 1 Chinese aluminum bearing maker, while Chubu Yakuhin Co., a drugstore chain operator obtained a stake in a Chinese drugstore company. In addition, smaller firms also appear to have acquired overseas businesses to follow their customers' moves. Of the M&As with disclosed price tags, small deals worth less than JPY 1 billion (USD 12million) accounted for nearly 40%.

KKR Might Invest In Troubled Chip Maker Renesas Elec.

According to The Nikkei, Renesas Electronics Co., a struggling chipmaker, hopes to raise its capital by issuing roughly 50 billion yen in new shares to Kohlberg Kravis Roberts & Co., an US-based investment firm. Renesas announced it posted a group net loss of 62.6 billion yen for the year ended March. This is the second straight year to post a net loss. As a result, Renesas need structural reforms as well as financial supports. Renessa's major shareholders NEC Corp. , Hitachi Ltd., and Mitsubishi Electric Corp.. are ready to provide financial assistances.

Sumitomo To Sell Half Shares Of TV Shopping Co. To Bain

Sumitomo Corporation, a major trading house in Japan, announced that Sumitomo sold a 50% stake in subsidary Jupiter Shop Channel Co., Ltd., the largest TV shopping company in Japan, to Bain Capital. With integrating Bain's knowledge and worldwide network into the robust business foundation by Jupitar, Sumitomo will increase Jupiter's corporate value through the expansion of its customer base, improvement of cost competitiveness and promotion of expansion into Asia.Bain Capital in Japan has acquired Bellsystem 24, a leading call-center operator, in 2009 and Skylark, a major family-restaurant chain operator, in 2011.

Recruit Co To Invest In US, Asian Start-Ups

Recuit Co., a major information service provider, has set up 2 funds, valued at approximately 3 billion yen in total, to invest in promising internet start-up firms in Asia and the US, according to The Nikkei. Recruit will focus on investment in next-generation technologies in the US using the 1 billion yen fund and set aside the rest for opportunities in Asia. The company has already set up an office in California's Silicon Valley area.

WL Ross-backed OHIZUMI MFG. To Go Public

OHIZUMI MFG. Co., Ltd., a temperature sensors-based electrical parts manufacturer, announced that OHIZUMI will be listed on The Tokyo Stock Exchange on the 22nd of June. OHIZUMI has expanded worldwide since WL Ross & Co. LLC, a global turnaround group, invested in January 2003.

Polaris To Sell Some Shares In Ekitan

Polaris Capital Group Co., Ltd., a leading private equity firm, annnounced Polaris sold a portion of the shares(26.2%) in Ekitan & Co. Ltd., a listed traffic-related information provider, to CSI, a listed health-related information provider. Polaris acquired Ekitan in October 2007 via MBO from Toshiba. Ekitan went public in March 2011. Polaris still hold the about 25% share in Ekitan as a major shareholder.

TPG To Sponsor Failed Condo. Developer

Joint Corporation, a failed condominium-focused real estate developer, announced that TPG, a global private equity firm, and Savills Japan, a London-based real estate service provider, acquired all shares of Joint Corporation from its former sponsor Reno Corp.. Their joint venture, TPG Savills Financial Holdings, Ltd., will manage the failed but recovering developer. Joint went bankrupt in May 2009.

MUL Principal To Exit Investment In Tarami

Mitsubishi UFJ Lease & Finance Co., Ltd., a major leasing company, announced its investment unit MUL Principal Investment Co., Ltd., has sold all shares of Tarami Co., a Nagasaki-based fruit jelly producer, to DyDo DRINKO, INC., a leading soft drink maker. MUL Principal invested in October 2009.

ALC To Go Private Via MBO With Nippon Mirai Capital

ALC Press Inc., a listed language-focused educational service provider, announced that ALC approved a tender offer from an investment vehicle by Nippon Mirai Capital Co., Ltd., a medium-sized private equity firm. The TOB price is set at 27,500 yen, a 33.73% premium over its 3-month average. Shinsei Bank is ready to provide up to 2.6 billion yen in financing. ALC went public in August 2006.

Asahi To Acquire Beverage Maker From Ajinomoto

Asahi Group Holdings Ltd., a beer-based beverage conglomerate, announced that Asahi will acquire all outstanding shares of Calpis Cp., Ltd., a soft drink maker, from Ajinomoto Co., Inc., a major seasoning manufacturer. Asahi will pay about 119 billion yen. Calpis is proud of its 107 billion yen in sales as of March 2012. Asahi aims to expand its soft drink business through this deal, and will become the No.3 player following Coca-Cola and Suntory Beverage & Food Ltd. Ajinomoto purchased Calpis in 2007.

Daiwa PI To Exit Investment In Meisei Elec.

IHI Corp.,  a heavy industrial machines conglomerate, announced that IHI has made a tender offer for Meisei Electric Company, a PE-backed measuring equipments manufacturer. The TOB price is set at 90 yen, an 8.16% discount to its 3-month average. Major shareholders Daiwa SMBC Principal Investment Co., an investment unit of Daiwa Securities Group and NEC agreed to the offer. Meisei will remain on the stock exchange after the deal. Daiwa invested in Feburary 2003.

New Horizon To Exit Investment In Housetec

New Horizon Capital Co., Ltd., an independent private equity firm, announced that New Horizon and Yamada Denki Co., Ltd., a major mass discount home electronics retailer, signed a share-transfer agreement for all shares of Housetec Holdings, a housing equipment and environmental facilities manufacturer. New Horizon acquired struggling Housetec from Hitachi Chemical in January 2008. Yamada Denki has been an aggressive M&A player, purchasing SXL Co., Ltd., a listed house maker, from Nomura investment group in August 2011.

Unison To Acquire Showa Yakuhin From Funds

Unison Capital, Inc., a major private equity firm, announced that Unison will acquire all shares of Showa Yakuhin Kako Co., Ltd., a medium-sized pharmaceutical company, held by Tokio Marine Capital, Polaris Capital Group, and PineBridge Japan Partners. They invested in April 2008.

Asahi To Acquire Beverage Maker From Ajinomoto

Asahi Group Holdings Ltd., a beer-based beverage conglomerate, announced that Asahi will acquire all outstanding shares of Calpis Co., Ltd., a soft drink maker, from Ajinomoto Co., Inc., a major seasoning manufacturer. Asahi will pay about 100 billion yen to Ajinomoto. Calpis is proud of its 107 billion yen net sales as of March 2012. Asahi is aiming to expand its soft drink business through this deal and will become the No.3 player following the Coca-Cola group and Suntory Beverage & Food Ltd..

Micron Picked To Sponsor Failed Elpida

Elpida Memory Inc., a bankrupt DRAM maker, has informally announced its choice of major US chipmaker Micron Technology Inc. as the sponsor of its rehabilitation efforts, according to the Nikkei. Micron is expected to pay more than 200 billion yen to acquire Elpida. In the second round of bidding held last Friday, a consortium of China's Hony Capital and US-based TPG Capital also participated and failed. The Korean chip maker SK Hynix Inc. announced before the auction that it won't be proceeding with a bid for Elpida. SK Hynix once said that it might work with possible partners such as Toshiba to bid. Consequently there are no major Japanese electronics manufacturers who are engaged in the global DRAM market that they once dominated.

Biznet To Go Private

Biznet Corp., an office supply procurement servicer, announced that Biznet approved a tender offer from its parent company Plus Co. The TOB price is set at 102 yen, a 36% premium over its 3-month average. Plus Co. is a stationary manufacturer as well as a 49% shareholder of Biznet. Biznet went public in August 2005.