Bain targets $236m buyout of Japan's Impact HD

The private equity firm is offering to acquire all outstanding shares for JPY 4,500 apiece, which represents an 8.5% premium to the January 26 closing price. The stock jumped 8.4% to close at JPY 4,495 on January 27.

The tender offer has a minimum acceptance level of 3.59m shares, or 48.55%. Yasuo Fukui, president and CEO of Impact HD, and the largest individual shareholder with 1.06m shares, has agreed to sell 560,700 shares. He will hold back the remaining 500,000 shares; an asset management business he owns will do the same with its 370,000 shares.

Two other shareholders who together own 406,000 shares have agreed to sell, while several board and management team members will offload smaller amounts.

Founded in 2004, Impact HD operates a 280,000-strong network of marketing field operatives who work on approximately 1.6m projects each year. They run in-store promotional campaigns on behalf of consumer brand clients, which typically involves negotiating product displays with store managers, coordinating promotional activities, and interacting directly with customers.

The company also offers call centre and market research services, as well as internet-of-things solutions that chiefly involve creating digital signage. It takes on about 300,000 market research projects a year and produces 260,000 units of digital signage.

While recognising the potential in data-based marketing, Fukui was also conscious of the need to introduce more sophisticated, digitalisation-centric services in the face of rising competition, according to a filing. On this basis, the company decided to seek external partners that could offer capital and expertise. It also resolved to delist because this allowed greater flexibility.

Fukui consulted local conglomerate Sojitz Corporation – a strategic partner and minority investor in Impact HD – on the next steps. This resulted in an introduction to Bain and, ultimately, a joint management buyout with the private equity firm and Sojtiz.

Impact HD generated JPY 13.3bn in sales for the 12 months ended December 2021, up from JPY 11.1bn a year earlier. Over the same period, a net loss of JPY 187m turned into a net profit of JPY 1.21bn. The company recently revised downwards its projected revenue for 2022 from JPY 16bn to JPY 14.6bn, while net profit is expected to be JPY 1.24bn rather than JPY 1.4bn.

Bain has participated in numerous tender offers in Japan, notably the JPY 816.8bn acquisition of Hitachi Metals, which is the second-largest private equity buyout in the country. Most recently, the private equity firm exited online advertising and media management business Net Marketing – just four months after completing the tender.

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• Topics
• North Asia
• Media
• Consumer
• Buyouts
• Japan
• Bain Capital Asia