US fund Taiyo says it may buy into Brother bid for niche Japanese printer
19/04/2024 04:00
By Rocky Swift and Miho Uranaka
TOKYO, April 19 (Reuters) - The U.S. fund in a buyout
battle for a niche market Japanese printer company said it would
consider selling to rival bidder Brother Industries 6448.T if
it can say how it would manage the target company better.
The tussle over Roland DG 6789.T , a low-profile maker of
commercial printers, may herald an increase in contested deals
in Japan, where a reform push by the Tokyo exchange has sparked
a slew of share buybacks, unwindings of cross-shareholdings, and
management buyouts (MBO).
Taiyo Pacific Partners, the biggest stakeholder in Roland
DG, with a 19% stake, launched its tender offer in February,
offering 5,035 yen ($32.64) per share that was a 30% premium at
the time. A month later, Nagoya, Japan-based Brother, known for
its home printers, countered with a 5,200 yen per share offer.
Brian Heywood, executive officer of Washington state-based
Taiyo, said the onus is on Brother to show how it can resolve
problems that emerged between it and Roland DG on a co-managed
project in recent years.
Roland DG is "now a strong Japanese company that has been
approached by a bully with a lot of money, who tried to do
something with them before and it was unsuccessful," Heywood
told Reuters on Wednesday.
"If Brother comes out and can address those issues, and it's
an appropriate price, we're willing to consider selling into the
deal," he added.
Heywood joined Roland DG's board in 2020 after a period of
what he calls "very bad performance." From the low that year,
the shares have surged about five-fold to 5,490 yen as of
Thursday.
For its part, Brother said in its tender proposal that
synergies between the two companies would enable them to
"provide superior and new value in the industrial printer
market".
Taiyo manages about $2.1 billion in investments, primarily
in Japan and India. The "friendly activist" fund previously took
private the electric piano maker Roland Corp 7944.T , the
former holding company of Roland DG, before relisting the
shares.
The fund last week extended the tender period for Roland DG.
More extensions are possible, Heywood said, adding that he had
no immediate plans to raise his offer and may rescind it,
depending on the next steps by Brother and Roland DG's
management.
Japan saw 28 MBOs in 2023 worth a combined 628 billion yen,
the most in 17 years, according to LSEG data. With unprecedented
focus on corporate value and governance in Japan, contested
buyouts such as Roland DG's are likely to rise, Heywood said.
"I think this is a good thing macro wise for Japan," he
said. "There's a lot of opportunities for small companies in
Japan to proactively fix themselves or to do mergers
themselves."
($1 = 154.2400 yen)
(Reporting by Rocky Swift and Miho Uranaka. Additional
reporting by Makiko Yamazaki. Editing by Gerry Doyle)
((rocky.swift@thomsonreuters.com;))