In today’s briefing:
- Fuji Soft (9749 JP): Nearing the Endgame as KKR Bumps to JPY9,850
- Proto Corp (4298) – MBO After Restatement Scandal Is Opportunistic at ¥2,100 (+64%)
- Tecnos Japan (3666 JP): Ant Capital’s JPY1,155 Tender Offer
- Tohto Suisan (8038 JP): Aso’s Unusual Tender Offer
- Tecnos Japan (3666 JP) – Small Cap IT Consultant Goes Private – Activist Pitches In
- TOC (8841) Buyback Makes One Wonder When The Takeout Comes
- Proto Corp (4298 JP): MBO Tender Offer Represents an All-Time High
- Fuji Soft (9749) – KKR Bumps Bigly In Bain Boyg; Buyers Bully a Bagarre
- Nintendo (7974)| Nintendo: Switch 2 Can’t Come Soon Enough
- Tohto Suisan (8038 JP) – Aso Corp To Launch Tender Offer at ¥7,500/Share
Fuji Soft (9749 JP): Nearing the Endgame as KKR Bumps to JPY9,850
- KKR & Co (KKR US) has increased its Fuji Soft Inc (9749 JP) offer to JPY9,850, a 4.2% premium to the previous JPY9,451 offer and a 2.6% premium to Bain’s JPY9,600 offer.
- A bump from KKR was expected and necessary, as the shares have consistently traded above its previous offer. Bain is scheduled to launch its competing offer this week.
- Expect a final round of bids, as KKR’s offer is not final. The shares closed above KKR’s offer, which remains below the high end of the IFA DCF valuation range.
Proto Corp (4298) – MBO After Restatement Scandal Is Opportunistic at ¥2,100 (+64%)
- Proto Corp (4298 JP) is not the name on people’s lips, but everyone who knows cars in Japan knows this company. They have run car mags for decades.
- Now they do other things too but car magazines, websites, and associated data provision are worth 90% of OP. And they are ubiquitous, and growth has been good.
- Management forecasts for growth are a damp squib. This is opportunistic.
Tecnos Japan (3666 JP): Ant Capital’s JPY1,155 Tender Offer
- Tecnos Japan (3666 JP) has recommended a tender offer from Ant Capital at JPY1,155, a 38.7% premium to the last close.
- The offer is reasonable as it is above the midpoint of the target IFA’s DCF valuation range and represents a seven-year high.
- Ant has secured irrevocables from the top three shareholders. However, the largest shareholder’s irrevocable has a counteroffer and share price clause, which could result in a competing bid.
Tohto Suisan (8038 JP): Aso’s Unusual Tender Offer
- Tohto Suisan (8038 JP)‘s tender offer from Aso Corp is JPY7,500, a 39.1% premium to the last close. Tohto Suisan is currently in breach of the tradable share ratio.
- Unusually, the offer has no lower or upper limit. If the required ownership ratio is secured, Aso will implement squeeze-out procedures.
- While supportive, the Board has left the decision to accept or reject the offer at the shareholders’ discretion. The offer is attractive and represents an all-time high.
Tecnos Japan (3666 JP) – Small Cap IT Consultant Goes Private – Activist Pitches In
- Tecnos Japan (3666 JP) decided it wanted to go private. It has a bunch of large shareholders and a lot of retail, and was getting kicked out of TOPIX.
- An activist bought 6% last spring, Tecnos conducted a bidding process last fall. Ant Capital won. The activist has 10+% now. They and two others with 25% agreed to tender.
- This should get done easily. It is not expensive, but an auction is good process and should be a model for deals done in future.
TOC (8841) Buyback Makes One Wonder When The Takeout Comes
- 7 years ago I wrote a big piece titled TOC’s BIGLY Buyback Makes It a Takeout Target. I thought the shareholder structure and buyback plans looked like a creeping takeover.
- In December 2017, Effissimo had sold a very large stake back to the company. I wrote in March 2018. 10mos later they did another and I wrote again.
- Since then they’ve bought back a bit more. Today they are buying back another 5%. It still looks like a potential takeover.
Proto Corp (4298 JP): MBO Tender Offer Represents an All-Time High
- Proto Corp (4298 JP) has recommended an MBO tender offer at JPY2,100, a 64.1% premium to the last close.
- The offer is attractive as it is above the midpoint of the target IFA’s DCF valuation range and 25% above the all-time high.
- Despite the presence of two substantial shareholders, an attractive offer suggests that this is a done deal. The tender offer ends on 21 March, with payment on 28 March
Fuji Soft (9749) – KKR Bumps Bigly In Bain Boyg; Buyers Bully a Bagarre
- In Dec 2024, Bain announced it would overbid KKR’s bid without requiring Fuji Soft’s approval, backed by the founding family. In early Jan 2025, we got an anticipated start date.
- That anticipated start date is upon us. KKR’s deal to close 7 Feb is now bumped to ¥9,800 and extended 7 days, suggesting Bain’s bid beacons.
- I think they’ll have to go to ¥10,000 and from here there may not be much upside. I’d rather stay away.
Nintendo (7974)| Nintendo: Switch 2 Can’t Come Soon Enough
- Switch slowdown: Nintendo’s Q3 revenue and profit fell sharply as the ageing console nears the end of its cycle, missing hardware sales expectations.
- Guidance cut: Full-year revenue and profit forecasts were lowered, but investors remain focused on the upcoming Switch 2 launch.
- Muted upside: Switch 2 is an incremental upgrade, unlikely to expand the market significantly or boost Nintendo’s valuation beyond its current fair value of ¥9,000 per share.
Tohto Suisan (8038 JP) – Aso Corp To Launch Tender Offer at ¥7,500/Share
- 4+ years ago Aso Corp launched a Tender Offer to buy 33.4% or up to 100% of marine products wholesaler Tohto Suisan (8038 JP). They got just over a third.
- Then it became a zombie as I warned Tohto Suisan Partial Tender Offer – A Weird Tender Which Leads To Listed Zombie-Ism. But it moved around.
- Today, Aso announces a tender to take out minorities, almost all of whom are other corporate holders. It’s at a 39% premium and 1.2x book. It should get done.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
