Carlyle gets its bearings in Japan
US-based private equity major The Carlyle Group is to acquire 96.56% of all outstanding shares in Japanese bearing parts maker Tsubaki Nakashima Co. from Nomura Principal Finance Co. (NPF), in what now holds the title as the largest private equity deal in the domestic market in a year and half.
Although the financial terms of the deal were not disclosed, the deal was said to be valued at approximately JPY70 billion ($856.9 million), including debt, Nikkei news reported. Established in 1936, Tsubaki Nakashima manufactures a variety of precision linear motion ball screws and ways, and claims to be one of the world's leading companies that specialize in the manufacturing of steel balls.
NPF took 97.18% of the company's shares for JPY$101.4 billion in 2007 (then $864 million), and de-listed the company from both the Tokyo and Osaka stock exchanges upon the asset's purchase.
Like other makers of similar industrial products, Tsubaki Nakashima's business has grown in light of increasing demand in markets such as Greater China, India, Eastern Europe and the US - geographies the company supplies to.
Under Carlyle's ownership, Tsubaki Nakashima will reportedly expand its business across global markets and bolster its supply capacity. It will also focus on developing new products, new technologies and new markets.
Tamotsu Adachi, Managing Director and Co-Head of Carlyle Japan, said publicly, "Tsubaki Nakashima is absolutely essential to bearing manufacturing for the automotive and machinery industries. It has solid market positioning and advanced engineering capabilities, making it highly competitive in global markets."
"These competitive advantages along with the optimum timing to invest in growing market needs led to our investment decision," a spokeswoman for Carlyle told AVCJ. She added that Tsubaki Nakashima is currently in a strong position to capture future market share from competitors in fast-growing emerging markets. The positive effects linked to the ongoing economic upturn in developed international markets can be leveraged to enable further overseas expansion, she concluded.
Not since Bain Capital's buyout of Japanese call centre Bellsystem24 Inc. for JPY120 billion ($1.46 billion) in December 2009 has the market seen a deal size that recalls memories of the good old buyout days in Japan. This is important for the local private equity market, which has been struggling to prove its model since the global financial crisis. In the wake of losses associated with LBOs that met their fate in the downturn, the SME market has become more watched. Deals like Bain's and now Carlyle's show that the Japanese market still has large assets to offer. The transaction is expected to close by the end of the month.
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