Being listed may be a huge benefit for startups and young companies that want to get their name in the public eye or hope to gather funds from the market.
But for talent agency Yoshimoto Kogyo Co. — known as the king of the comedy industry — being a public company has been more of a burden than a boon. At times it has made it difficult to quickly reach key business decisions.
Yoshimoto said Friday it plans to go private in a buyout by an investment fund involving broadcasters and other companies as the major talent agency seeks to expand its entertainment business in Asia.
Quantum Entertainment, a consortium of 13 companies, will make a tender offer for Yoshimoto’s shares at a price of ¥1,350 each from Monday through Oct. 29. It plans to buy at least 70 percent of all outstanding shares, other than those held by Yoshimoto.
Investors in Quantum Entertainment, headed by former Sony Corp. Chairman and Quantum Leaps Corp. Chief Executive Officer Nobuyuki Idei, include advertising agency Dentsu Inc., Internet company Softbank Corp., Internet search engine Yahoo Japan Corp. and five TV broadcasters.
“Through this deal, we hope to significantly expand our activities across borders and beyond the media framework,” Yoshimoto Kogyo Director Shigeki Fujiwara said at a news conference.
He said the company will come up with a new business strategy under shareholders who understand Yoshimoto’s business.
In the business year to last March, Yoshimoto posted a profit drop for the first time in five years. Sales from TV program production and its comedians are flat as broadcasters — Yoshimoto’s main clients — cut production costs.
To increase profit, the major talent agency is seeking new markets overseas as well as new services for mobile phone users.
As a private company, Yoshimoto would have an easier time convening shareholders’ meetings.
Unlike public companies which have any number of shareholders, a private company can be more nimble in making vital business decisions to respond to changes in the economy.
Yoshimoto could have an additional motive.
“It may decrease the influence of the founding family,” said one source at Yoshimoto.
But a major brokerage executive points out that becoming a private company doesn’t mean it will have carte blanche to do anything it wants.
“Having shareholders with closer ties to the business would mean bigger expectations compared with shareholders in general,” the executive said.
Even with the benefits that may come Yoshimoto’s way, it wasn’t an easy deal to pull off. In fact, it was initially planned for this spring, but the company’s main banks and other creditors were opposed.
“Yoshimoto depends too much on a small number of popular celebrities, which is a risk, and there are other unpredictable factors,” one of its creditors said.
Established in 1912, the Osaka-based entertainment agency represents many of Japan’s popular comedians and celebrities, including Shinsuke Shimada, Samma Akashiya and comedian duo Downtown and Ninty-Nine.
“We don’t know why the company wants to become private even after we listened to your explanation,” another creditor reportedly told Yoshimoto.
KDDI Corp., operator of the au cell phone service, was asked to join the tender offer but decided against it.
“It looked like the prospects were unclear, including the fact that the funding scheme was revised during the negotiation process,” said a source familiar with the talks.
But broadcasters were eager to join in the scheme because TV stations depend heavily on Yoshimoto’s comedians for their programming.
Major broadcasters Fuji Media Holdings Inc., Nippon Television Network Corp. and Tokyo Broadcasting System Television Inc. jumped on board out of fear they would miss out on an important opportunity.
It may look like they were being cornered, but they have their own agenda to push, observers say.
Deeper ties with Yoshimoto “will allow broadcasters to become once again a place to nurture TV celebrities, not just offering a place for (comedians) to appear,” said an official at one broadcaster.