In today’s briefing:
- Nakano Refrigerators (6411 JP): Marunouchi Capital’s JPY7,900 Tender Offer
- Ascentech (3565 JP): Orix (8591 JP)’s JPY1,680 Tender Offer
- [Japan M&A] NTT Docomo Buys Out Carta Holdings (3688) Minorities – Done Deal
- When Giants Clash: Yamada (9831) Vs. Nitori (9843)
- Carta Holdings (3688 JP): NTT DoCoMo’s JPY2,100 Preconditional Tender Offer Is a Done Deal
- Many Companies Are in Stage of Setting Caps to Ensure that Cash on Hand Grows No More than Necessary
- Timee 2Q Results: Revenue Decline Is Only Temporary
Nakano Refrigerators (6411 JP): Marunouchi Capital’s JPY7,900 Tender Offer
- Nakano Refrigerators (6411 JP) has recommended a tender offer from Marunouchi Capital at JPY7,900, a 35.0% premium to the last close price.
- The offer is attractive as it represents an all-time high and is above the midpoint of the IFA DCF valuation range.
- An attractive offer and irrevocables (33.19% ownership ratio) pave the way for deal completion. The tender runs from 17 June to 29 July.
Ascentech (3565 JP): Orix (8591 JP)’s JPY1,680 Tender Offer
- Ascentech KK (3565 JP) has recommended a tender offer from Orix Corp (8591 JP) at JPY1,680, a 14.6% premium to the last close price.
- Despite the lack of an auction, the offer is reasonable compared to historical trading ranges and aligns with the midpoint of the IFA DCF valuation range.
- Minimum tendering is set at a 66.67% ownership ratio, with irrevocables representing a 27.81% ownership ratio. Management’s significant stakes aid in deal completion.
[Japan M&A] NTT Docomo Buys Out Carta Holdings (3688) Minorities – Done Deal
- On 16 June 2025, NTT (Nippon Telegraph & Telephone) (9432 JP) sub NTT Docomo and Dentsu Inc (4324 JP) announced Docomo would buy out minorities in Dentsu sub Carta Holdings.
- It’s an OK price, not a great price. But while they are not calculated by advisors, at least the Target Board talks about the value of synergies to minorities.
- The price is light, but the combined irrevocables and large individual shareholders not brought over the wall get this over the line.
When Giants Clash: Yamada (9831) Vs. Nitori (9843)
- Yamada, Japan’s leading home appliance retailer, trade at a PER of less than 9x. Nitori, the leading furniture retailer trades at about 17x.
- Both companies, having saturated their core market, are diversifying into the other’s territory.
- Key Takeaway: Nitori is diversifying into a business with inherently lower margins, while Yamada moves into one with inherently higher margins.
Carta Holdings (3688 JP): NTT DoCoMo’s JPY2,100 Preconditional Tender Offer Is a Done Deal
- Carta Holdings, Inc. (3688 JP) has recommended a preconditional tender offer from NTT (Nippon Telegraph & Telephone) (9432 JP) at JPY2,100, a 37.2% premium to the last close price.
- The offer is preconditional on several regulatory approvals, expected to commence in late August, and aligns with the midpoint of the IFA DCF valuation range.
- Due to irrevocables from the controlling shareholder and key management, the required minority tendering rate is 11.2%. This low rate points to a done deal.
Many Companies Are in Stage of Setting Caps to Ensure that Cash on Hand Grows No More than Necessary
- Improvements in OP margin and Sales/Total Assets have been slow to improve ROE. More companies are including DOE in their dividend policy against the backdrop of increasing cash on hand.
- With costs expected to increase amid rising prices, sales and gross margins need to be raised, and therefore the component costs of investment and high-margin operations need to be raised.
- Restructuring the business portfolio later to determine cash allocation will not result in effective investment and must result in limited improvement in profit margins on sales.
Timee 2Q Results: Revenue Decline Is Only Temporary
- Timee Inc (215A JP) reported 2QFY10/2025 results on Thursday, 12th June. Revenues fell below consensus while OP beat consensus by a huge margin despite 2Q being a seasonally weak quarter.
- Top line was hit by unauthorized use of services which forced Timee to strengthen counter measures. End of client fiscal year in food industry also contributed to the decline.
- There are signs of recovery and the company’s share price moved up 7% on Friday on the back of strengthening profitability.
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