Cerberus refuses to sell shares in Seibu IPO
Cerberus Capital Management pulled out of the Tokyo IPO of Japanese railway and hotel operator Seibu Holdings after the conglomerate slashed the estimated price of the offering by as much as a third.
According to a regulatory filing, Seibu now plans to price the offering at JPY1,600-1,800 a share - below earlier guidance of JPY2,300 a share - in response to weak public markets. The intended listing, revealed last month, was set to be the biggest Japan IPO so far this year.
Cerberus is the largest shareholder in Seibu with a 35.48% stake. It was expected to sell a 15.5% interest in the business but is understood to have dropped out due to the price being too low.
The IPO was also expected to draw a line under a three-year row between the Seibu management and the firm's PE-backers. Relations between the two soured in 2011 following disagreements over the timing and pricing of the IPO. The company planned to list in late 2012 but was held up because Cerberus wanted a higher valuation than that favored by management.
Seibu had delisted from the Tokyo Stock Exchange in 2004 following a scandal over misstating stakes held by shareholders in contravention of exchange rules. Cerberus paid $802 million for a 29.9% stake in the company in 2006, participating in a $1.2 billion bailout alongside Nikko Principal Investments.
Cereberus then raised its stake to 35.48% in June last year following an unsolicited public tender, although it fell short of its 44.7% target.
The tender offer had been sparked by moves from Seibu to sever formal ties with the firm. Cerberus then tried to assert more control over the Seibu management by having eight new directors appointed to the board but efforts were voted down by shareholders at the company's annual meeting.
The official IPO price is set to be announced on April 14, with the shares expected to list on the Tokyo Stock Exchange on April 23. Other shareholders, including Citigroup Capital Partners, UBS Securities, Norinchukin Bank and the Development Bank of Japan, are taking part in the offering as planned.
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