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Bain Capital has launched an sudden $4.3bn counterbid for IT firm Fuji Delicate, reigniting Japan’s most fiercely contested takeover battle of the 12 months with a renewed problem to rival non-public fairness group KKR.
Senior M&A advisers in Tokyo mentioned the transfer added one more twist to a deal that has already examined the bounds of what non-public fairness is keen to do in Japan and clears the best way for a proliferation of aggressive dealmaking.
Bain plans to boost its provide worth for Fuji Delicate to ¥9,600 ($63) a share, the non-public fairness agency mentioned on Wednesday, topping KKR’s most up-to-date worth of ¥9,451 and valuing the corporate at near $4.3bn.
KKR’s bid, which got here in simply ¥1 greater than Bain’s earlier provide, had put it in pole place after its rival’s first strategy was rejected by Fuji Delicate’s board in November.
The combat between the 2 overseas non-public fairness teams, which have historically averted overt battle over Japanese takeover targets, kicked off in August. The deal’s progress, which is being intently watched by firms throughout the Tokyo Inventory Change, has pushed Japan into uncharted terrain.
Fuji Delicate’s share worth rose 1.4 per cent in Tokyo on Wednesday to ¥9,663, in anticipation of the bidding struggle persevering with. A proper announcement of the raised provide, first reported by the Nikkei enterprise each day, is predicted as quickly as Wednesday night in Tokyo.
The newest provide is about to check Fuji Delicate’s urge for food for an prolonged bidding struggle and raises questions on which provide is “pleasant”. KKR has the approval of Fuji Delicate’s board, however Bain’s takeover strategy, backed by the corporate’s founder and main shareholder, Hiroshi Nozawa, will solely transfer forward if the board approves, mentioned the agency.
“That is undoubtedly beginning to flirt with hostile territory, nevertheless it’s very clear everyone seems to be attempting to keep away from precisely that accusation,” mentioned a senior M&A adviser in Tokyo. “Bain is intentionally positioning itself as a ‘white knight’.”
The brand new provide will disappoint KKR, which thought it was near clinching a deal. It had already gained management of greater than a 3rd of the corporate’s shares in a earlier tender that concerned activist funds 3D Funding Companions and Farallon Capital Administration promoting their stakes.
Folks aware of KKR’s pondering mentioned that they had thought Bain was in a troublesome place, partly due to the Fuji Delicate board’s directive that, having had its preliminary provide rejected, the non-public fairness group ought to destroy confidential info obtained to this point in the course of the course of.
In a press release on Wednesday, nonetheless, Bain voiced its objection to that provision citing the 2023 revised M&A pointers and the strain it places on firms to stay open to the most effective deal for shareholders.
Bankers and advisers have referred to as Fuji Delicate a great non-public fairness goal due to the inherent worth of the enterprise, a useful actual property portfolio and the presence of two battle-hardened traders within the inventory.
It was 3D, the group’s largest shareholder, that proposed the corporate go non-public and solicited gives for its stake. KKR agreed a cope with 3D and introduced a young provide in August, aimed toward taking the corporate non-public at ¥8,800 a share.
These plans had been thrown into disarray when Bain shocked the market by placing out a non-binding proposal, earlier than following up with a binding provide that was 7 per cent greater than KKR’s.
Crucially, KKR’s current stake has created a blocking place meaning Bain can’t win sufficient shares to provoke a squeeze-out to take management and would face the prospect of impasse even when it did achieve a sizeable holding.
“If that occurs, you’d have two important traders within the firm who won’t be aligned on the corporate’s worth creation technique and subsequent steps,” mentioned an individual aware of KKR’s pondering. “This deadlocked scenario makes any significant decision-making difficult and can have a destructive impression on Fuji Delicate’s enterprise technique, prospects and staff.”
Fuji Delicate didn’t instantly reply to requests for remark. KKR declined to remark.