Lone Star emerges as white-knight bidder for Japanese hotel chain Unizo (updated)

HIS Co

22/12/2019 14:43

(Updates with share moves in paragraph 5)
    By Junko Fujita
    TOKYO, Dec 22 (Reuters) - Japanese hotel chain Unizo
Holdings  3258.T  said on Sunday it had received a friendly
buyout offer from U.S. investment fund Lone Star, a deal that
could end a five-month takeover battle involving Blackstone
Group  BX.N , Fortress Investment Group and activist investor
Elliott Management. 
    Lone Star will launch a tender offer to buy Unizo on Tuesday
at 5,100 yen ($46.60) per share, valuing it at 175.4 billion
yen, Unizo said, topping the 5,000 yen that Blackstone was
planning to offer. Its shares closed on Friday at 4,900 yen.
    The scheme would allow a group of Unizo employees to own a
73% stake in Unizo's common shares, while Lone Star would take a
27% stake, the company said.
    However, Lone Star would buy 45 billion yen worth of
preferred shares in Unizo as well as providing 130 billion yen
in loans to Unizo. That would eventually allow Lone Star to
exercise the right to control 99.99% of Unizo's voting rights
indirectly, Unizo said.
    Unizo shares were trading up 4.9% at 5,140 yen early on
Monday, after rising as much as 6.1%.
    Unizo said Lone Star was not seeking to control Unizo so it
was unlikely that Lone Star would exercise that right. 
    The deal, if successful, would be the first high-profile
transaction in Japan by Dallas-based Lone Star since it was one
of the most active funds in the country after the collapse of
the asset inflated bubble economy there in the early 1990s. 
    Lone Star back then was known as a distressed investor,
buying for example a failed bank, struggling golf courses and
hotels on the cheap. It turned them around quickly, selling them
on or listing them on the public market for a profit. 
    Unizo was little known until it became a target of a hostile
bid from Japanese travel agent H.I.S. Co  9603.T  in July. The
company at one stage turned to SoftBank Group-owned  9984.T 
Fortress to fend off the bid, but later withdrew its support for
the white-knight offer.
    Fortress is currently running a tender offer to buy Unizo
for 4,100 yen per share.  urn:newsml:reuters.com:*:nL4N27V0GI
    In October Blackstone emerged as a potential bidder offering
5,000 yen per share, but it has not launched a bid. 
    Unizo said it would oppose Fortress's bid and would end
talks with Blackstone. 
    Unizo had been fighting off both suitors in a way that has
made it a test case for the Japanese government's efforts to
attract foreign investors via improved corporate governance. 
    Unizo asked both Fortress and Blackstone for control of how
any potential owner would exit its investment through an entity
to be created by a group of non-executive employees.
    U.S. hedge fund Elliott Management, which became Unizo's
largest shareholder with a 13.14% stake, has voiced concern that
Unizo was trying to drive away suitors and suggested that
management members were seeking to preserve their jobs. 
    Unizo said if the transaction is successful, all board
members and other executives, including Chief Executive Tetsuji
Kosaki, would resign. 
      
($1 = 108.6400 yen)  

 (Reporting by Junko Fujita; Editing by David Evans and Stephen
Coates)
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