U.S. investment firm KKR has received first negotiation rights to take Yomeishu Seizo private, the Japanese company said, marking the latest move toward a buyout in the busiest year ever for corporate deals in Japan.
KKR plans to finalize terms such as the purchase price and launch a tender offer in January for the Japanese herbal health tonic manufacturer, according to people familiar with the matter. Yomeishu said in a statement on Tuesday that it¡¯s uncertain whether the U.S. firm will launch a tender offer in January, and that nothing has been decided.
Yomeishu¡¯s shares jumped as much as 14% on the news. Its market value climbed about ?11.3 billion ($72 million) from Monday to ?90.3 billion, according to Bloomberg-compiled data. KKR plans to take over all the shares, said the people, who asked not to be identified as the information isn¡¯t public.
Two auctions have been held to date with multiple funds, including KKR, making bids, they said. The decision on whether to proceed with a tender offer will be made after finalizing the terms with Tokyo-based investment firm Yuzawa KK, Yomeishu¡¯s largest shareholder. If the conditions are met, the tender offer will be carried out, the people said.
A wave of corporate governance reforms in Japan has led to an increase in buyouts by investment funds, management and founders, in a market that¡¯s seen record deal volume this year. Activist investors have also had more impact in recent years, and this trend is expected to continue.
Representatives of KKR weren¡¯t immediately available to comment.
Yuzawa holds 27.99% of the company¡¯s outstanding shares, and its acceptance of the deal is essential for the tender offer to be successful. Taisho Pharmaceutical Holdings, a major shareholder of Yuzawa, sold all of its shares to Yuzawa in March.
Mitsubishi UFJ Morgan Stanley Securities was picked by Yomeishu as its financial adviser earlier this year to consider capital strategies, including going private.
Yomeishu has assets including real estate and cash. It owns an 11-story office building in a prime location in Tokyo¡¯s Shibuya district, where its headquarters are located. It also owns large factory and related retail outlets in Nagano Prefecture.
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