In this briefing:
1. ND Software (3794 JP) TOB for an MBO – Fireworks a Possibility
Today, ND Software (3794 JP) announced a Management Buy Out (MBO) sponsored by both the existing president, who owns 20%, and J-Will Partners to take the company private at ¥1700/share, which is a 28.7% premium to last trade and comes out to be roughly 7.2x trailing 12-month EV/EBITDA.
The deal comes with a 66.7% minimum threshold for completion, after which there will be a two-step squeeze-out, as is the norm in deals like this.
J-Will Partners was founded about 15 years ago and has since done 170 deals for more than ¥350 billion. The fund manager specializes in “small-mid-sized companies” (which means small companies like this one) in 2nd-4th tier cities in Japan. The specialty is helping revive or grow small regional Japanese companies to better serve a larger customer base, compete with their urban and overseas rivals, and grow their local economy. For that, the deals are often funded by regional financial institutions and businesses.
Terms & Schedule
Terms & Schedule of J-Will Partners MBO on ND Software | |
| Tender Offer Price | JPY 1,700 |
| Tender Offer Start Date | 8 February 2019 |
| Tender Offer Close Date | 25 March 2019 |
| Tender Offer Settlement Date | 29 March 2019 |
| Tender Agent | SMBC Securities |
| Maximum Shares To Buy | 17,632,501 shares (100%) |
| MINIMUM Shares To Buy | 11,755,000 shares (66.67%) |
| Irrevocable Undertakings | 5,512,800 shares (31.26%) |
With irrevocables of 31% and shareholders I would deem friendly to management holding another 20+% at a minimum, on the surface this looks like it shouldn’t be overly difficult to get done…
BUT…
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