MBK set for a second stint with Japanese jeweler Tasaki

The deal, structured as a tender offer, will see the private equity firm pay JPY2,205 per share for all outstanding shares in Tasaki, a 42% premium to the March 23 closing price. The stock gained 12% the following day, reaching JPY1,735, before it was suspended from trading.

Tasaki executives, including the CEO, who between them hold a 3.31% stake have indicated they will vote in favor of the tender offer. The Tasaki board has also recommended that shareholders accept the offer. MBK is seeking to acquire at least 9.54 million shares, or 66.67%. It will commit JPY18.7 billion in equity and finance the rest of the tender offer through debt provided by Sumitomo Mitsui Banking Corporation, according to a filing.

Founded in 1954 as a processor and retailer of pearls – the company still operates its own cultured pearl farm – Tasaki sells a range of jewelry through a global network of stores. Its products are available in more than 60 outlets in Japan as well as in the US, Europe, China, Hong Kong, Taiwan, South Korea and Malaysia.

The company ran into financial difficulty in 2008, prompting MBK to invest JPY7 billion for a 79.5% stake. In July 2015, Tasaki bought back a 24.45% interest from the private equity firm for JPY10 billion. This was soon followed by a JPY20.1 billion block trade that reduced MBK’s holding from 54.29% to approximately 3%. The GP completed its exit in December 2015, raising JPY900 million.

However, Tasaki’s struggles have continued, driven by declining birth and marriage rates in Japan. The company wants to counterbalance declining domestic sales through international expansion. MBK will provide financial and strategic support to management in order to make this happen. The Longreach Group took a similar approach following its acquisition of bridal jewelry specialist Primo Japan in 2015.

Tasaki generated sales of JPY22.3 billion for the 12 months ended October 2016, up from JPY20.9 billion the previous year. Net income fell to JPY1.69 billion from JPY3.59 billion over the same period, ending a turnaround that had seen the company move from a loss in 2012 to post three successive years of increasing profitability.

MBK will make the investment through its third North Asian buyout fund, which closed at $2.7 billion in 2013. Last December, the firm closed Fund IV at $4.1 billion, but the Tasaki deal likely falls under the previous fund because engagement with management on a deal started in May of 2016.

MBK submitted a tender offer for another Japanese company, golf course operator Accordia Golf, in November of last year. The bid, which valued the business at approximately JPY102.5 billion, won the required shareholder support in January. Accordia is now in the process of being delisted.

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• Topics
• North Asia
• Buyouts
• Consumer
• Japan
• MBK Partners