Integral pursues $144m tender for Japan office services business
Integral Corporation has launched a tender offer for Daiohs Corporation, a Tokyo-listed provider of office services – such as coffee machines and water dispensers as well as cleaning services – at a valuation of approximately JPY 20.2bn (USD 144m).
The private equity firm is looking to acquire 7.35m shares for JPY 1,500 apiece, according to a filing. The minimum acceptance threshold for the offer to proceed is 2.87m shares, or a 21.39% stake.
The management team and founding family of Daiohs will tender a portion of their shares but retain the rest and continue to be involved in running the business. For example, Shinichi Okubo, the company’s CEO, chairman, and second-largest shareholder, will reduce his holding from 11.92% to 3.63%. However, the management team’s 41.64% interest will be rolled over in its entirety.
The company’s stock has risen from JPY 1,031 in early August to close at JPY 1,497 on September 2, which equates to a market capitalisation of JPY 20.1bn. The gain on September 2 alone was 14.2%.
Daiohs was established by Okubo in 1969 as Komeya Ohkubo. It is credited with introducing US-style office coffee to Japan, and then expanded into other subscription-based, repeat-use office services. These include water dispensers and cleaning equipment and cleaning services. The company also has an office coffee business in the US with a significant market share on the West Coast.
According to an Integral statement, Daiohs has long been aware of the need to strengthen its global governance structure. The company resolved to address internal controls, as well as make investments in IT, following financial reporting problems involving its US subsidiary. These reforms were expected to cause stock price volatility, prompting a decision to go private.
Revenue for the 12 months ended March 2022 was JPY 28.8bn, up from JPY 23.3bn a year earlier. Over the same period, Daiohs swung from a net loss of JPY 2.25bn to a net profit of JPY 378m.
Integral is deploying its fourth fund, which closed on JPY 123.8bn in 2020, up from JPY 73bn in the previous vintage. Overseas LPs accounted for 50% of the corpus.
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