Daily Brief Japan: Fuji Soft Inc, Elan Corp, Seven & I Holdings, Intermestic, QD Laser, Goldwin Inc, TSE Tokyo Price Index TOPIX and more

• KKR has rejigged its Fuji Soft Inc (9749 JP) tender offer into a two-stage offer at an unchanged JPY8,800 price. The first stage has no minimum acceptance condition. 
• The first stage is designed to facilitate KKR’s acquisition of 3D and Farallon shares, which have tendered and will not withdraw their tenders without KKR’s consent.
• By securing 3D/Farallon’s shares, KKR has effectively blocked a Bain tender offer. Bain could launch a partial offer but it would be constrained by the tradeable share ratio criteria.   

• M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH. 
• There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
• There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily. 

• A Canadian company, Alimentation Couche-Tard, has made an unsolicited offer to acquire Japan’s Seven & I Holdings, the owner of the popular 7-11 convenience store chain, marking Japan’s largest foreign-led takeover attempt.
• This proposed takeover could signal a shift in Japan’s traditional resistance to foreign acquisitions, opening up opportunities for more global mergers and acquisitions in the country.
• The deal would create a global giant in the convenience store industry and represents a significant change in Japan’s deal-making and corporate culture.

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• Elan Corp (6099 JP) announced a partial tender offer and capital and business agreement with M3 Inc (2413 JP). M3 aims to make Elan a consolidated subsidiary.  
• The offer is for a minimum of 30.4 million (50.10% ownership ratio) and a maximum of 33.3 million shares (55.00% ownership ratio) at JPY1,040, 24.0% premium to the undisturbed price.
• Irrevocable from tendering shareholders will satisfy the minimum acceptance condition. The offer is unremarkable, suggesting a final proration materially above the minimum of 56.07%.

• Japanese eyewear manufacturer and retailer, Intermestic (262A JP) has filed for an IPO on the Tokyo Stock Exchange and is planning to raise proceeds of $112m.
• The company operates stores both domestically and internationally, and the company’s financials show strong improvement during the last few years.
• Intermestic has not yet announced the terms for its IPO, and in this insight, we have discussed the company’s business models, outlook and financials.

• Intermestic (262A JP) is looking to raise US$110m in its Japan IPO. Intermestic is an eyewear manufacturer of eyeglasses and eyeglass accessories in Japan.
• Utilizing a specialty store retailer of private label apparel (SPA) model, the firm aims to provide a one-stop shop whereby manufacturing and retailing of its products are handled in-house.
• In this note, we look at the firm’s past performance.

• In FY03/24, revenue was JPY1.2bn (+7.6% YoY), operating loss was JPY604mn (vs operating loss of JPY557mn in FY03/23), recurring loss was JPY601mn (vs recurring loss of JPY547mn in FY03/23), and net loss attributable to owners of the parent was JPY643mn (vs net loss of JPY550mn in FY03/23). In the Laser Device business, revenue from DFB lasers for semiconductor wafer inspection equipment and micromachining equipment grew, as did revenue from prototypes for mass production using quantum dot lasers.
• In the Visual Information Display business, sales of RETISSA MEOCHECK to medical institutions expanded. On the profit front, the operating loss increased due to inventory write-downs of JPY28mn in the Laser Device business and JPY57mn in the Visual Information Device business.
• For FY03/25, the company forecasts revenue of JPY1.2bn (-0.2% YoY), operating loss of JPY589mn (vs operating loss of JPY604mn in FY03/24), recurring loss of JPY592mn (vs recurring loss of JPY601mn in FY03/24), and net loss attributable to owners of the parent of JPY596mn (vs net loss of JPY643mn in FY03/24). The company anticipates a tenth consecutive year of operating profit in its Laser Device business thanks to growing adoption.

• Growth Inflection: Goldwin’s mid-term plan targets ¥190 billion in sales, driven by The North Face’s expansion and a transformation of the Goldwin brand globally.
• Profitability: Shifting from wholesale to direct-to-consumer, Goldwin has achieved significant margin growth, expanding operating margins to 19%, with further gains expected.
• Strong Capital Position: Goldwin’s robust balance sheet and anticipated ¥100 billion free cash flow support shareholder returns, alongside a proven management track record of delivering on growth objectives.

• Rather than “companies with advanced disclosure have higher ratios of female managers,” companies with high ratios of female managers are willing to disclose their ratios to show their progress.
• Women’s tenure in the company is shorter than men’s, which is one of the reasons for the low ratio of women in management positions.
• Changing from the “traditional division of labor in households” to a mindset in which men and women are equally responsible for household tasks is essential to solving the root problem.