Bain launches $1.3b tender offer for Japanese ad agency

The GP plans to pay JPY3,660 per share for the Tokyo-listed company's 41.4 million total outstanding shares, a premium to the October 2 closing price of JPY3,170. The day after the announcement ADK's shares opened at JPY3,720. Following the acquisition, the PE firm will delist the company. Bain has set the minimum level of acceptance for its offer at a 50.1% stake.

According to the terms of an agreement between ADK and its largest shareholder, London-based media company WPP Group, ADK has the right to request that WPP sell its 24.9% holding. After receiving the request, WPP must either sell the shares to a third party at a price designated by ADK within 180 days or sell them on the open market within a year.

WPP has not publicly responded to Bain's tender offer, but a source close to the UK company told Reuters the offer significantly undervalued ADK. The Japanese company will also sell its 2.4% stake in WPP.

ADK is Japan's third largest advertising agency by market share, with clients across multiple sectors. According to its most recent annual report, the company recorded revenue of JPY353 billion for the year ended December 2016, up from JPY352 billion the year before. Over the same period, net profit fell from JPY5.6 billion to JPY2.6 billion.

The company is looking to make significant changes to its business model in response to growing demand for digital advertising strategies and sees privatization as the best way to provide needed financial and strategic flexibility.

"In collaboration with Bain Capital, we will set a course towards bold structural reforms and growth strategies that will help us to enhance our competitiveness and to expand our market share, both in Japan and overseas," said Shinichi Ueno, president and group CEO of ADK, in a statement. "Furthermore, this new partnership will open access to a broader network of strategic partners, enabling ADK to build on its success in markets across Asia and elsewhere in the world."

Bain is an active investor in Japan: its portfolio in the country currently includes restaurant operator Skylark and mushroom producer Yukiguni Maitake, and it recently fully exited its holding in Domino's Pizza Japan. In addition, the GP is leading a consortium that recently agreed to purchase the Nand flash memory unit of Toshiba Corporation for JPY2 trillion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Media
• Technology
• Buyouts
• Japan
• Bain Capital Asia
• TMT