Private equity firm Bain Capital has raised its proposed tender offer for Japanese nursing home operator Nichii Gakkan to 1,670 yen ($15.8) per share from an earlier price of 1,500 yen.
The sweetened takeover bid values the Tokyo-based company at 122 billion yen ($1.15 billion), about 12 per cent higher than Bain’s initial proposal on May 8.
The share purchase period is due to complete by August 17, instead of August 3 as earlier announced, according to Nichii Gakkan’s latest regulatory disclosure.
This is the third extension of the management buyout deadline. It was first extended in June, as Hong Kong-based Lim Advisors, a shareholder in Nichii Gakkan, claimed that Bain’s tender offer price of 1,500 yen was “substantially below fair value,” estimating the Japanese firm’s value around 60 per cent higher at 2,400 yen per share.
Lim Advisors argued that Bain’s offer was “opportunistic … taking advantage of COVID-19 related weakness in the share price at the expense of minority investors.”
The buyout deadline was extended for the second time last month as Nichii Gakkan’s stock cruised above Bain’s 1,500 yen offer.
Bain is executing the transaction through a unit named K.K. BCJ-44.
In the latest announcement in Japanese, Nichii Gakkan’s board is understood to have invited Effissimo Capital Management (another shareholder with 12.64 per cent voting rights) to join the bidding group and reinvest in the acquiring company.
Effissimo had earlier rejected the tender offer.
Nichii Gakkan said in the May 8 announcement that Bain Capital will finance the deal with 27 billion yen from its funds, and obtain loans of up to 98.6 billion yen from MUFG Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation and Nomura Capital Investment.
Nichii Gakkan’s representative director and president Nobusuke Mori, along with senior executives who are family members of the late founder and former chairman Akihiko Terada, were then considering investing directly or indirectly in K.K. BCJ-44.
This is not the first time Bain Capital has faced obstacles in executing a management buyout deal in Japan. Last year, it failed to acquire printing services firm Kosaido despite raising its bid by nearly 15 per cent.
Having been present in Japan since 2006, Bain has invested in 17 local companies including Showa Aircraft Industry, Cheetah Digital, Works Human Intelligence, Toshiba Memory (currently Kioxia), Japan Wind Development and Domino’s Pizza Japan.