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CASE STUDY

  • Capital and business alliance negotiation between the major domestic clothing company (the "Company E") and the major Chinese spinning company (the "Company F")

    Financial Advisor to the Company E from 2009 to 2010

    Transaction Summary

    The task was accomplished by arranging a private placement of the Company E shares, valued at JPY4billion with 41% of the voting rights, which was subscribed by the Company F. This was the first instance of a company listed on the First Section of the Tokyo Stock Exchange to receive Chinese capital investment in a significant proportion.

    Transaction Features

    1. Equity Investment by Chinese Company

    It was an unprecedented transaction by which the company with over 100 years of proud history accepting the Chinese capital in such a major scale. The project encompassed from identifying and evaluating a potential investor, assessments of probable responses of customers, suppliers, dealing banks, employees and shareholders, as well as presentations to supervising governmental offices of the Japanese and the Chinese governments requiring well considered judgments and skillful management of processes.

    2. The Company under Revitalization Process

    The Company E suffered consecutive years of losses, and it was undergoing corporate restructuring. Along with this transaction, the company was in process of divesting a profitable subsidiary as a part of financial enhancement. The critical factor for this project to obtain a fresh capital was dependent on the credibility of the business plan after the divesture of subsidiary.

    3. The Private Placement of Substantial Proportion at Preferential Condition

    The transaction was defined as a private placement of substantial proportion by the listing rules of the Tokyo Stock Exchange due to equity dilution of over 25%, and classified as a placement with the preferential condition, according to the policy of the Japan Securities Dealers' Association since the shares were issued at the favorable price, and therefore, an approval by the shareholders meeting was required.

    4. Stance of the Largest Shareholder

    The largest shareholder with approximately 25% of voting rights of the Company E had declared non-confidence for the incumbent management. In order to obtain the approval at the shareholders meeting, therefore, producing the business plan with credible growth strategy was demanded, which was attractive both to the largest shareholder and other shareholders, and the plan should be fully disseminated through IR and PR.

    In this transaction, we have performed the central role encompassing from the start to the closing, including identifying and negotiating with the Company F as the investor, development of the business plan and forecast model of the future cash-flow, structuring the investment scheme, managing due-diligence, and coordination with the largest shareholder.

  • Acquisition of a Japanese surveying instruments manufacturer (the "Target Company") by a Japanese surveying and medical instruments manufacturer (the "Company")

    Financial Advisor to the Acquirer (the "Company") from 2006 to 2008

    Transaction Summary

    The Company made a Tender Offer from December 2007 through January 2008 to acquire about 94% of the shareholder's voting rights of the Target Company and convert it a consolidated subsidiary of the Company.

    In August 2008, the Company accomplished to make the Target Company as its wholly owned subsidiary by acquiring all the outstanding shares of common stock issued by the Target Company.

    Transaction Features

    1. Antimonopoly Law Issues

    The global surveying instruments market was highly competitive and oligopolistic by the top 4 players including the Company and the Target Company as well as the two other leading manufacturers in the U.S. and Europe. Especially in Japan, total market shares of the Company and the Target Company was more than 60% in some products. In view of the circumstances, prior consultations with the Japan Fair Trade Commission (the "JFTC") were conducted in order to investigate potential impediments concerning the Antimonopoly Law.

    To sort out the antimonopoly issues delineated in the process of review with the JFTC, we proposed solutions including OEM supply of some products and business transfer of sales subsidiaries to third parties. We also calculated the value of this acquisition merit reduced by such solutions.

    Along with clearing the antimonopoly hurdles, we made a substantial contribution to the successful completion of the transaction by developing the structure for the Company to enjoy the benefits of this integration.

    2. TOB

    This transaction is a rare case for a Japanese domestic TOB. A typical Japanese domestic TOB is undertaken as a part of intra-group business restructuring by a parent company to raise shareholding ratio or acquire 100% ownership of its subsidiary or affiliated company. Another typical example includes an acquisition of a target company by its managers and executives in connection with MBO. In this case, however, the Company and the Target Company had no capital ties each other. It is also a significant point to be emphasized that the Company made a friendly takeover for one of its most powerful competitors, the Target Company.

    With consideration of the fact that the largest shareholder of the Target Company was an investment fund, we proposed and implemented an efficient structure based on the careful review of antimonopoly issues as well as the U.S. securities regulations related to TOB.

    We provided the Company with a comprehensive range of advisory services throughout all phases of TOB including financial analysis and valuation, arrangements for due diligence, documentation as well as developing strategic and tactical plans and orchestrating an overall timetable.