Bain Capital LP pulled off its bid for Japanese nursing home provider Nichiigakkan Co., overcoming shareholder opposition and a last-minute offer from a rival private equity company.
The U.S. investment firm’s ¥1,670 a share tender offer values Nichiigakkan at ¥121.9 billion ($1.1 billion). It is taking an 82.27 percent stake in the Tokyo-based company, which will be delisted as planned from the first section of the Tokyo Stock Exchange after necessary procedures, Nichiigakkan said Tuesday.
The deal, part of a management buyout, has faced roadblocks since its early May announcement. Hong Kong-based hedge fund Lim Advisors Ltd. had questioned the timing and price of the offer, which came during the pandemic-fueled market turmoil.
President Nobusuke Mori and other Nichiigakkan management members will continue to run the company, whose business also includes hospital staffing.
Bain had to extend the offer period three times in addition to raising its purchase price from the initial ¥1,500 a share because the stock stayed well above that level for most of the time after Lim, which has represented investment funds that own Nichiigakkan shares, maintained that the fair value is ¥2,400 a share.
“Activists played a certain role in this deal — the share price was bumped because investors and activists were willing to buy higher than the originally offered price,” said Travis Lundy, a special situations analyst who publishes on Smartkarma. Still, the agreed amount was “quite inexpensive” and a “good price for the buyer,” he said.
On Monday, Baring Private Equity Asia said it had proposed to some Nichiigakkan founding family members to pay ¥2,000 a share in a tender offer, although the Japanese firm said it hadn’t received such an offer.
Going private is expected to make decision-making quicker as Nichiigakkan needs to streamline its operations after its growth slowed following diversification efforts.
Initially, the company offered to buy its shares for ¥1,500 apiece.