Daily Brief Japan: Scsk Corp, Sumitomo Riko Company, Sumitomo Densetsu, Brainpad Inc, Advantest Corp, Nidec Corp and more

• Yesterday after the close, Sumitomo Corp (8053 JP) announced it would buy out minorities in Scsk Corp (9719 JP) at ¥5,700/share.   
• As a “parent takes out subsidiary” deal, this was not unexpected at some point in time. The register looks like there may be a number of people who expected that.
• This gets done pretty easily. It is not a bad price. 

• Today with the earnings announcement, Sumitomo Electric Industries (5802 JP) announced it would buy out minorities in Sumitomo Riko Company (5191 JP), its rubber products subsidiary. 
• The price is low, and especially so when one considers the significant net receivables and inventory number (about 2mos of revenue, but one turn of annual EBITDA).
• Crossholders and insiders, however, own nearly 15% of the company, and that makes blocking this deal difficult, despite its low price, and lack of synergies considered in the price.

• Today partway through the day, Daiwa House Industry (1925 JP), Sumitomo Electric Industries (5802 JP), and Sumitomo Densetsu (1949 JP) announced Daiwa House would buy out Sumitomo Densetsu for ¥9,760/share. 
• Sumitomo Electric will sell its stake to the company ¥6,877/share. Minorities get 11.9x Mar26 EBITDA. The Bidder is buying at 9.9x. 
• At an ATH, and a nice premium, and 3x book, this looks like a pretty good takeout price. Daiwa House has plans for it.

• Today after the close, Fujitsu Ltd (6702 JP), with 110,000 employees, announced a buyout of a small “labour-intensive” AI/ML sysdev business with 200+ data scientists.
• Brainpad Inc (3655 JP) is being bought out from its co-founders and others at a near-100% premium. Not an all-time high, but not a low price.
• Somewhat heavily shorted, this will trade tight, but I expect nobody will come over the top. 

• Brainpad Inc (3655 JP) has recommended a tender offer from Fujitsu Ltd (6702 JP) at JPY2,706, a 100.0% premium to the undisturbed price.
• The offer is attractive compared to historical trading ranges and is above the midpoint of the target IFA DCF valuation range. 
• The huge takeover premium resulted from an auction. The tender offer runs from 31 October to 15 December (30 business days). This is a done deal.  

• Sumitomo Densetsu (1949 JP) has recommended a tender offer from Daiwa House Industry (1925 JP) at JPY9,760, a 28.1% premium to the undisturbed price.
• The process is deficient due to the lack of an auction and the offeror’s reliance on less than 100% voter turnout to pass the EGM share consolidation vote.
• Nevertheless, the offer is attractive, as it represents an all-time high and is above the high end of the IFA DCF valuation range. 

• Advantest saw a 34% upside after earnings, aligning with previous buy recommendations and its inclusion in the Value Seeker Japan basket for long-term growth.
• A small inclusion into TPXC30 occurs today at the close, with Advantest’s fundamental outlook remaining in line with our recent insights.
• Murata seeing some flows as well today in at the close, and moves to the TPX 70 Large.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2026 based on trading data as of end-October 2025.

• Sumitomo Riko Company (5191 JP) has recommended a tender offer from Sumitomo Electric Industries (5802 JP) at JPY2,600, a 20.6% premium to the undisturbed price.
• The offer is arguably attractive as it is above the midpoint of the special committee/target IFA DCF valuation range and represents an all-time high. 
• The offer is light as it implies a discount to peer multiples. However, the significant cross-holders on the register suggest that the minimum tendering condition should be met. 

• Dominant Market Position in Automotive Components: Sumitomo Riko is a global leader in automotive anti-vibration products, such as engine mounts and suspension bushings, holding a significant market share. This leadership is built on its advanced polymer materials technology developed since its founding in 1929.
• Strong Financial Performance and Growth: The company has demonstrated exceptional growth, with a 3-year net income CAGR of 84.82%. This robust performance is reflected in its rapidly increasing dividend payments and a strong momentum score, indicating significant market capitalization growth compared to peers.
• Strategic Diversification and Future Focus: While the automotive sector accounts for the majority of sales, Sumitomo Riko is actively diversifying into non-automotive fields, including electronics, healthcare, and infrastructure. The company’s ‘2029 Vision’ and ‘2025 Mid-term Management Plan’ emphasize adapting to CASE (Connected, Autonomous, Shared, Electric) trends and capitalizing on new business opportunities to ensure sustainable growth.

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