Nikkon Holdings, a Japanese logistics group specializing in the automotive supply chain, will hold a second round of bidding in the first half of September to be taken private, with investors Bain Capital and Lone Star Funds considering proposals, people with knowledge of the matter said. The first round was conducted in June, following reports in May that Tokyo-based Nikkon selected financial advisers and set up a special committee of outside directors to consider the matter. A spokesperson for Bain declined to comment.
Representatives for Nikkon and Lone Star did not immediately respond to requests for comment. While the two U.S. investment funds advanced to the next round and conducted duel diligence, the recent rally in Nikkon’s shares could make it difficult to make a return on their proposed investments, said the people, who asked not to be identified because the information isn’t public. Nikkon shares have climbed more than 50% this year, fueled by news of the potential privatization, giving the company a market capitalization of ¥665 billion ($4.2 billion).
As a result, any take-private bid for Nikkon may end up being below the company’s valuation, which could complicate the bidding process and make it difficult to for investors to justify tendering their shares, the people said. Some other recent take-private deals also saw stock prices rising in anticipation of a tender offer, prompting buyers to set their bids below the prevailing market price at the time of the announcement. Last year’s acquisition of Mitsubishi Logisnext by Japan Industrial Partners and KKR & Co.’s recent deal to buy Taiyo Holdings were also conducted through discounted tender offers.
Investors in Japan are becoming more vocal in pushing companies to bolster shareholder returns, including calling for sales of real estate holdings that have little connection to core business operations. Nikkon has indicated it will sell off properties such as shipment facilities that aren’t expected to generate more profits. U.S. investment firm Farallon Capital Management owns 23% of Nikkon’s shares, while Hong Kong-based Oasis Management holds 17%, according to Bloomberg-compiled data.
Extract — continue reading at the source.
