UNIZO Governance Shows Itself, Now Investor Stewardship Matters

I last wrote a full insight on the Unizo Holdings (3258 JP) takeover situation on 28 January. That was the occasion - a month after Lone Star's Chitocea Holdings had "won" the bidding at ¥5100/share (and obtained a deal which had the "mechanism" that UNIZO management was looking for, and so got the approval of the board and independent committee) - where Blackstone came back and said "I'll bid ¥5600!"

That put the cat amongst the pigeons. The shares immediately jumped there.

• The next day Fortress - which actually has an existing and live bid out there - raised its Tender Offer price to ¥5200 from ¥4100/share. That was above Chitocea's bid. This required a response from Lone Star to shut down those two rivals who had now overbid.
• On the 30th of January Chitocea extended their ¥5100/share bid to 14 Feb vs 4 Feb, and UNIZO announced it would start talks again with Blackstone but the shares were trading just below ¥5600 for several days.
• On the 9th of February, Chitocea upped their bid to ¥5700/share - above Blackstone's ¥5600/share - and extended to 28 February. The market reacted by sending shares higher than Chitocea's bid, obviously expecting Blackstone to come back higher. UNIZO immediately reacted with support for the new bid as it put Blackstone again as an under-bidder, so there was no real need to talk anymore.
• On 24 Feb, Blackstone raised its bid to ¥6000/share, meaning its bid was a full 5% higher than Chitocea's bid, which was due to expire five days later.
• The next day Chitocea extended to March 18th. Theoretically, it was up to UNIZO to continue negotiating with Blackstone. Fortress also extended to March 18th the next day but their bid was still down at ¥5200/share.
• On 28 Feb, UNIZO released a statement which was a long-winded way of saying they still liked the Lone Star bid at ¥5700/share because Lone Star is nice.

UNIZO has also now put up a website specific to the Chitocea Offer called https://www.unizo-offer-information.com/ which comes out with two main points, shown in blue below.

The New News

Over the weekend, it was reported in the Nikkei Business electronic edition that UNIZO employees - for whom this "Employee BuyOut" (EBO) is meant - had reported UNIZO president Ozaki to the Tokyo Stock Exchange and a report had been filed with the Oversight Committee that the terms of the EBO as publicly announced were false.

The story as it unfolds is not a little bit shocking. And it shows that the entire EBO construct is different than it seems. I am surprised it took more than two months for the story to come out.

This should become a scandal.

It is not clear this changes anything, but it certainly makes a mess of things.

More discussion below the fold.