Advantage, Japan’s Orix abandon Yayoi buyout - sources
Advantage Partners and Japan’s Orix Corp. have reportedly dropped out of the running for software developer Yayoi, which was put on the block by MBK Partners last year.
According to sources cited by Reuters, a failure to agree on the valuation of the company may have led Orix to abandon the sales process. Orix was tipped as the most likely auction winner, which is why this news may place a dampener on South Korea-based MBK's attempt to sell Yayoi.
It was reported last November that Advantage, Orix and Bain Capital had advanced into the final round of bidding for the business, in what was at the time expected to be one of the biggest sales in the market at about $800 million. It is unknown whether Bain remains interested in the asset.
Previous reports cited the involvement of both KKR and Olympus Capital Partners in the auction, which started in October.
Advantage, meanwhile, had been looking to take a stake in Yayoi for the second time. It invested an undisclosed amount in the company in 2003 and divested its shares to Livedoor as part of its buyout of the firm in 2004. Livedoor sold Yayoi to MBK in 2007.
MBK purchased Yayoi for JPY71 billion (then $611 million) at the height of the leveraged buyout boom, marking its first foray into Japan. Reports in October suggested that MBK could earn anywhere between $650 million and $977 million and from the sale, which would see MBK reap a strong return on its investment.
A Nikkei report from 2007 noted that MBK paid a high price for Yayoi, which at the time had less than 100 staff and an EBITDA of around JPY4 billion. If that figure was accurate, MBK bought the firm for 18x earnings. Yayoi's EBITDA for the past year reached JPY5 billion, so an $800 million sales price would translate to 12.5x multiple.
Bain's participation in the auction marks its second attempt at purchasing a leading software player in recent months. In August, it acquired Australian accounting software developer MYOB from Archer Capital and HarbourVest, beating KKR and UK software maker Sage.
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