Valiant to take SME Fuji Foods private

Valiant is offering a 24.4% premium over the target’s six-month trading average, for a total deal value of around JPY7 billion ($76.7 million), seeking to acquire a stake of 76.67% or more.

The privatization of the company in partnership with Valiant is driven by the need for prompt and drastic changes in its operations, in the face of sales volumes that have fallen by JPY600 million ($6.76 million) to JPY60.2 billion ($678 million) in the 2009 fiscal year, due to heavy competition and slow growth in the food business.

One private equity source told AVCJ that this was a sign of more things to come. “Local companies have better transparency in their businesses so far, compared to last year,” he said. “With loan providers coming back to the market, I think more deals involving delistings through MBOs and TOBs will happen.”

Mitsui Sumitomo Bank and Mitsubishi UFJ Bank will provide JPY13 billion ($143 million) of loans for the deal, while JPY2.1 billion ($23 million) will be financed by Mezzanine Corp., a Japanese mezzanine lender.

Founder of Fuji Foods Koshiro Omura and CEO Kinzaburo Omura have both agreed to sell their personal stakes of 4.25% and 5% respectively. Food Business Supply Co., another stakeholder 50% owned by Omura, will also exit its entire 3.1% direct holding in Fuji Foods, alongside M&C Asset Management, another stakeholding entity owned by Omura family members.

If the takeover bid, slated to end August 2nd this year, is successful, the company will delist from JASDAQ, and the private business will be 66.6% controlled by Valiant Partners, with the remainder held by the founding members. Another holding company, Fuji Agency, 25.79% owned by Koshiro Omura and 48.68% owned by Food Business Supply, will not sell its 12.84% stake in Fuji Foods.

Established in 1963, Fuji Food started as a prepared salad supplier to retail outlets; one of the pioneers in the industry. Along with the growth in the convenience store business in Japan, the company has started to supply its products to York Seven – now the convenience store giant Seven Eleven – in 1974. The company subsequently grew its business to eleven food factories nationwide, with international operations in the US and Taiwan. Its food products include sandwiches, pastries and lunch boxes. 

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• Topics
• North Asia
• Consumer
• Buyouts
• Valiant Partners Co.