In today’s briefing:
- Roland DG (6789 JP): Brother (6448 JP)’s Unexpected Competing Hostile Offer
- Roland DG (6789) – Brother (6448) Launches Hostile Overbid to Taiyo MBO – You Love To See It
- Will Parent Company Valuations Remain Undervalued Until the Parent-Subsidiary Listing Is Dissolved?
- Duskin (4665): Q3 FY03/24 Update
- J Trust (8508): Full-Year FY12/23 Update
Roland DG (6789 JP): Brother (6448 JP)’s Unexpected Competing Hostile Offer
- Brother Industries (6448 JP) has disclosed an unexpected competing hostile offer for Roland DG Corp (6789 JP) at JPY5,200 per share, a marginal 3.3% premium to the Taiyo-sponsored MBO (JPY5,035).
- Unlike the Taiyo offer, the Brother offer is pre-conditioned on regulatory approvals and has a proposed start date of mid-May. The Board is evaluating the Brother offer.
- The Board’s three options with declining probability are to ask Taiyo for a bump, continue to recommend an unchanged Taiyo offer or recommend the Brother offer.
Roland DG (6789) – Brother (6448) Launches Hostile Overbid to Taiyo MBO – You Love To See It
- A month ago, Engagement Investor Taiyo Pacific Partners launched an MBO on Roland DG Corp (6789 JP) after having done a takeover of their former sub years ago.
- I said it was too cheap. Machinery company Brother Industries (6448 JP) has decided the same, and has announced a hostile/unsolicited overbid 3.3% higher. Tender to start in May. Fun!!!
- This will almost certainly get bid even higher as people would expect the MBO bidders won’t simply give up. More below.
Will Parent Company Valuations Remain Undervalued Until the Parent-Subsidiary Listing Is Dissolved?
- It’s true that the difference in profit margins between a listed subsidiary that focuses on specific business and a parent company that has different businesses is the difference in valuations.
- It will be difficult for a parent company to reverse the valuations of its subsidiaries until the parent company dissolves the parent-subsidiary listing and increases its own profit margins.
- With respect to corporate governance practices, companies with no major shareholders are included with relatively higher corporate governance scores, but this isn’t as significant difference as it tends to be.
Duskin (4665): Q3 FY03/24 Update
- Duskin Co Ltd (4665 JP) operates a Dust Control business where it rents mops and mats to residential and commercial customers through franchisees.
- In FY03/23, Duskin posted revenue of JPY170.5bn, operating profit of JPY8.6bn, recurring profit of JPY11.4bn, and net income attributable to owners of the parent of JPY7.2bn.
- Duskin Co., Ltd. announced the cancellation of a portion of its treasury stock.
J Trust (8508): Full-Year FY12/23 Update
- J Trust Co Ltd (8508 JP) is a financial services group operating banking and finance businesses in Asia.
- In FY12/23, the company reported full-year consolidated operating revenue of JPY114.3bn, operating profit of JPY8.1bn, pre-tax profit of JPY9.8bn, and profit attributable to owners of parent of JPY16.3bn.
- On February 13, 2024, J Trust Co., Ltd. announced it has resolved on matters concerning the repurchase and cancellation of own shares.
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