Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Equity Bottom-Up

Pan Pacific International Holdings / Equity Bottom-Up

Japan’s Ministry of Agriculture wants to expand food exports from ¥1 trillion to more than ¥5 trillion over the next 10 years, and <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP)</a> is keen to help. As part of its mission, PPI hopes to change the general perception of Japanese food products as expensive treats by selling them to Asia’s mass market.With a parallel target of 500 stores overseas by 2030, PPI could also provide enough retail demand to account for a major chunk of the total food exports out of Japan.

Japan’s Ministry of Agriculture wants to expand food exports from ¥1 trillion to more than ¥5 trillion over the next 10 years, and Pan Pacific International Holdings (7532 JP) is keen to help. As part of its mission, PPI hopes to change the general perception of Japanese food products as expensive treats by selling them to Asia’s mass market.With a parallel target of 500 stores overseas by 2030, PPI could also provide enough retail demand to account for a major chunk of the total food exports out of Japan.

Donki in Asia: ‘PPIC’ the New Food Export Club Propelling PPIH to 500 Stores Outside Japan

Muji’s US bankruptcy and poor trading in Europe, along with weaker sales at home, led to <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a>’s first revenue decline in a decade and the first loss in 19 years. Growth in Asia and the promise of significant growth in the food category – an idea we are very bullish about – suggest hope for a rebound next year.

Muji’s US bankruptcy and poor trading in Europe, along with weaker sales at home, led to Ryohin Keikaku (7453 JP)’s first revenue decline in a decade and the first loss in 19 years. Growth in Asia and the promise of significant growth in the food category – an idea we are very bullish about – suggest hope for a rebound next year.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Overnight it became clear in a Nikkei <a href="https://asia.nikkei.com/Business/Business-deals/Japan-s-Nitori-wins-over-Shimachu-with-2bn-takeover-bid" target="_blank" rel="noopener">article</a> that <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a> was going to succumb to the charms of bidder <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> and accept its proposal of a takeover at ¥5500. Shimachu had heretofore officially supported a bid by <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">DCM Holdings (3050 JP)</a> at ¥4200/share, but acceptance of Nitori means that its bid will not be officially "hostile."After the close, Shimachu and Nitori defined that support in a set of documents and the comment in the media from Shimachu was that DCM had not responded. DCM's Tender Offer (discussed in <a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a>) ends on 16 November, the same day Nitori's starts. DCM can still respond by a) extending the time period at the same price, b) raising the price and creating an automatic extension, or c) doing nothing. At the very least, I expect DCM to extend by 10 business days because doing so would extend their own Tender Offer past the JFTC Phase 1 response deadline to the Nitori application (Nitori will launch without having received official approval). More below.<hr>The list of insights in this series (on this particular event) are as below:<table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 724.8px;"><h3>Previous Insights on the DCM (3050) and Nitori (9843) Approaches to Shimachu (8184)</h3></td></tr>
<tr>
<td style="width: 88.8px;">Date</td>
<td style="width: 615.2px;">Insight Title</td>
</tr>
<tr>
<td style="width: 88.8px;">21 Sep 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/dcm-partial-offer-for-shimachu-coming" target="_blank" data-smartkarma-citation="insights:43444" rel="noopener">DCM Partial Offer for Shimachu Coming?</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">4 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">21 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/nitori-to-make-a-rival-bid-for-shimachu-more-fun-to-go" target="_blank" data-smartkarma-citation="insights:44353" rel="noopener">Nitori To Make a Rival Bid for Shimachu? More Fun To Go</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">28 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/gaming-out-a-nitori-bid-for-shimachu" target="_blank" data-smartkarma-citation="insights:44636" rel="noopener">Gaming Out a Nitori Bid for Shimachu</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">29 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/nitori-bids-up-for-shimachu-now-things-slow-down" target="_blank" data-smartkarma-citation="insights:44679" rel="noopener">Nitori Bids UP For Shimachu - Now Things Slow Down</a> </td>
</tr>
</tbody></table>

Overnight it became clear in a Nikkei article that Shimachu Co Ltd (8184 JP) was going to succumb to the charms of bidder Nitori Holdings (9843 JP) and accept its proposal of a takeover at ¥5500. Shimachu had heretofore officially supported a bid by DCM Holdings (3050 JP) at ¥4200/share, but acceptance of Nitori means that its bid will not be officially "hostile."After the close, Shimachu and Nitori defined that support in a set of documents and the comment in the media from Shimachu was that DCM had not responded. DCM's Tender Offer (discussed in DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.) ends on 16 November, the same day Nitori's starts. DCM can still respond by a) extending the time period at the same price, b) raising the price and creating an automatic extension, or c) doing nothing. At the very least, I expect DCM to extend by 10 business days because doing so would extend their own Tender Offer past the JFTC Phase 1 response deadline to the Nitori application (Nitori will launch without having received official approval). More below.The list of insights in this series (on this particular event) are as below:
Previous Insights on the DCM (3050) and Nitori (9843) Approaches to Shimachu (8184)

Date
Insight Title


21 Sep 2020

DCM Partial Offer for Shimachu Coming? 


4 Oct 2020

DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again. 


21 Oct 2020

Nitori To Make a Rival Bid for Shimachu? More Fun To Go 


28 Oct 2020

Gaming Out a Nitori Bid for Shimachu 


29 Oct 2020

Nitori Bids UP For Shimachu - Now Things Slow Down 



Nitori's Bid for Shimachu Goes Friendly as Shimachu Dumps DCM

That <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> has had an interest in <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a> hasn't been secret, per se, since the Nikkei article on the 20th. That it has had a deep rather than passing interest has been seen in the tone and depth of the media articles which have followed this expression of interest. In <a href="https://www.smartkarma.com/insights/nitori-to-make-a-rival-bid-for-shimachu-more-fun-to-go" target="_blank" data-smartkarma-citation="insights:44353" rel="noopener">Nitori To Make a Rival Bid for Shimachu? More Fun To Go</a> I suggested their presence made for more fun and today we got more fun.   Today Nitori showed that it has a strong interest as it bid well through the mid-point of the DCF valuation range from its financial advisor, and just a few percent shy of its top end. The bid at ¥5500/share is now announced, and as long as the conditions remain un-breached, Nitori intends to launch a Tender Offer when the defeating conditions are met, without regard to whether Shimachu recommends the deal or not. Functionally, this means an "OK" from the JFTC and lack of serious intervention by Shimachu. The Offer is expected to launch, assuming conditions permit, by "mid November" (which I would take to mean latter half.This was a buy at ¥3500-3600 in late Sep when it was "just" a potential partial offer. It became a buy when it was at terms at ¥4200 and was too cheap. Now Nitori has come in and bid ¥5500/share it starts looking like we are closer to a fuller price. Not completely full mind you, but fuller. Tactics and response start to come into play. Will DCM respond? Will Shimachu's Independent Committee take the Nitori bid seriously? Will Shimachu reject?There are a bunch of moving parts here and while I tried to offer a preview in <a href="https://www.smartkarma.com/insights/gaming-out-a-nitori-bid-for-shimachu" target="_blank" data-smartkarma-citation="insights:44636" rel="noopener">Gaming Out a Nitori Bid for Shimachu</a> this bid actually probably falls between the cracks so I take yet another look. More below the fold. <hr><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 133.636px;"><h2>Insights so far in the series</h2></td></tr>
<tr>
<td style="width: 133.636px;">Date</td>
<td style="width: 569.091px;">Title</td>
</tr>
<tr>
<td style="width: 133.636px;">21 Sep 2020</td>
<td style="width: 569.091px;">
<a href="https://www.smartkarma.com/insights/dcm-partial-offer-for-shimachu-coming" target="_blank" data-smartkarma-citation="insights:43444" rel="noopener">DCM Partial Offer for Shimachu Coming?</a> </td>
</tr>
<tr>
<td style="width: 133.636px;">4 Oct 2020</td>
<td style="width: 569.091px;">
<a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a> </td>
</tr>
<tr>
<td style="width: 133.636px;">21 Oct 2020</td>
<td style="width: 569.091px;">
<a href="https://www.smartkarma.com/insights/nitori-to-make-a-rival-bid-for-shimachu-more-fun-to-go" target="_blank" data-smartkarma-citation="insights:44353" rel="noopener">Nitori To Make a Rival Bid for Shimachu? More Fun To Go</a> </td>
</tr>
<tr>
<td style="width: 133.636px;">28 Oct 2020</td>
<td style="width: 569.091px;">
<a href="https://www.smartkarma.com/insights/gaming-out-a-nitori-bid-for-shimachu" target="_blank" data-smartkarma-citation="insights:44636" rel="noopener">Gaming Out a Nitori Bid for Shimachu</a> </td>
</tr>
<tr><td colspan="2"></td></tr>
<tr><td colspan="2" style="width: 133.636px;">Additional recommended reading, by <a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a> </td></tr>
<tr>
<td style="width: 133.636px;">4 Oct 2020</td>
<td style="width: 569.091px;">
<a href="https://www.smartkarma.com/insights/a-new-era-of-home-centre-consolidation-starts-as-dcm-buys-shimachu" target="_blank" data-smartkarma-citation="insights:43851" rel="noopener">A New Era of Home Centre Consolidation Starts as DCM Buys Shimachu</a> </td>
</tr>
</tbody></table>

That Nitori Holdings (9843 JP) has had an interest in Shimachu Co Ltd (8184 JP) hasn't been secret, per se, since the Nikkei article on the 20th. That it has had a deep rather than passing interest has been seen in the tone and depth of the media articles which have followed this expression of interest. In Nitori To Make a Rival Bid for Shimachu? More Fun To Go I suggested their presence made for more fun and today we got more fun.   Today Nitori showed that it has a strong interest as it bid well through the mid-point of the DCF valuation range from its financial advisor, and just a few percent shy of its top end. The bid at ¥5500/share is now announced, and as long as the conditions remain un-breached, Nitori intends to launch a Tender Offer when the defeating conditions are met, without regard to whether Shimachu recommends the deal or not. Functionally, this means an "OK" from the JFTC and lack of serious intervention by Shimachu. The Offer is expected to launch, assuming conditions permit, by "mid November" (which I would take to mean latter half.This was a buy at ¥3500-3600 in late Sep when it was "just" a potential partial offer. It became a buy when it was at terms at ¥4200 and was too cheap. Now Nitori has come in and bid ¥5500/share it starts looking like we are closer to a fuller price. Not completely full mind you, but fuller. Tactics and response start to come into play. Will DCM respond? Will Shimachu's Independent Committee take the Nitori bid seriously? Will Shimachu reject?There are a bunch of moving parts here and while I tried to offer a preview in Gaming Out a Nitori Bid for Shimachu this bid actually probably falls between the cracks so I take yet another look. More below the fold. 
Insights so far in the series

Date
Title


21 Sep 2020

DCM Partial Offer for Shimachu Coming? 


4 Oct 2020

DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again. 


21 Oct 2020

Nitori To Make a Rival Bid for Shimachu? More Fun To Go 


28 Oct 2020

Gaming Out a Nitori Bid for Shimachu 


Additional recommended reading, by Michael Causton 

4 Oct 2020

A New Era of Home Centre Consolidation Starts as DCM Buys Shimachu 



Nitori Bids UP For Shimachu - Now Things Slow Down

This morning's Yomiuri newspaper has an <a href="https://www.yomiuri.co.jp/economy/20201028-OYT1T50030/" target="_blank" rel="noopener">article</a> (paywalled) which says that <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> will, within this week, launch a Tender Offer for <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a>, putting itself in competition with <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">Dcm Holdings (3050 JP)</a> which has already launched a Tender Offer at JPY 4200/share, currently set to expire on the 16 November.The possibility of Nitori coming in was  flagged by the Nikkei on the 20th, late, and Shimachu shares jumped more than 10% the next day, and have recently been trading in the JPY 4,700-4,800 area. This development was discussed in <a href="https://www.smartkarma.com/insights/nitori-to-make-a-rival-bid-for-shimachu-more-fun-to-go" target="_blank" data-smartkarma-citation="insights:44353" rel="noopener">Nitori To Make a Rival Bid for Shimachu? More Fun To Go</a> after discussing the original Tender Offer by DCM (which was stated as too light a bid) in <a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a> An official unsolicited TOB by Nitori would be an interesting hostile-but-not-necessarily-so bid for what may be the last good quality Tokyo-based asset of the type available to be scooped up (there are other chains of similar-type stores, but nothing so broad-based, branded, or extensive to my knowledge).Right now, we have a lack of information. We have a newspaper article by a paper which has not yet (to my knowledge) discussed the matter. But the shares are trading now through JPY 4,900/share.And it is worth gaming out the possibilities, preparing for how you will react when there is no additional news or immediate reaction.As a friend often iterates, "Plan the Trade, Trade the Plan."

This morning's Yomiuri newspaper has an article (paywalled) which says that Nitori Holdings (9843 JP) will, within this week, launch a Tender Offer for Shimachu Co Ltd (8184 JP), putting itself in competition with Dcm Holdings (3050 JP) which has already launched a Tender Offer at JPY 4200/share, currently set to expire on the 16 November.The possibility of Nitori coming in was  flagged by the Nikkei on the 20th, late, and Shimachu shares jumped more than 10% the next day, and have recently been trading in the JPY 4,700-4,800 area. This development was discussed in Nitori To Make a Rival Bid for Shimachu? More Fun To Go after discussing the original Tender Offer by DCM (which was stated as too light a bid) in DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again. An official unsolicited TOB by Nitori would be an interesting hostile-but-not-necessarily-so bid for what may be the last good quality Tokyo-based asset of the type available to be scooped up (there are other chains of similar-type stores, but nothing so broad-based, branded, or extensive to my knowledge).Right now, we have a lack of information. We have a newspaper article by a paper which has not yet (to my knowledge) discussed the matter. But the shares are trading now through JPY 4,900/share.And it is worth gaming out the possibilities, preparing for how you will react when there is no additional news or immediate reaction.As a friend often iterates, "Plan the Trade, Trade the Plan."

Japan

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

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Nitori Holdings (9843 JP)

Donki in Asia: ‘PPIC’ the New Food Export Club Propelling PPIH to 500 Stores Outside Japan

Don Don Donki stores are popular in Asia offering Japanese foods at low prices. PPIH is now working with the Japanese government to boost exports...

Michael Causton

Muji Leaks Red After Tough Summer

Ryohin Keikaku (Muji) had a tough six months from March but its plans to grow food sales from around 6% to 30% of sales along with expansion in...

Michael Causton

Nitori's Bid for Shimachu Goes Friendly as Shimachu Dumps DCM

Nitori and Shimachu signed a deal to make Nitori's JPY 5500/share friendly. The Tender Offer starts 16 Nov the same day as DCM's JPY 4200/share bid...

Travis Lundy

Nitori Bids UP For Shimachu - Now Things Slow Down

Nitori is out their bid, higher than the market was speculating. Now we wait. Shimachu's SC will get the dossier, there will be a beauty contest,...

Travis Lundy

Gaming Out a Nitori Bid for Shimachu

The Yomiuri says Nitori will launch a TOB as soon as this week. This means Shimachu is quite likely in play, imminently. There are multiple...

Travis Lundy

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