Japan’s Eneos And Goldman To Launch Tender Offer In $4.2B Nippo Deal – – Daily Cryptocurrency and FX News

Japan Eneos gas station

Shrugging off opposition from activist Oasis Management to a deal that values all of Nippo at more than $4 billion, Japan’s Eneos Holdings (5020.T) and Goldman Sachs (GS.N) on November 11, 2021 moved ahead with a tender offer for the 43% the refiner does not already own in road builder Nippo Corp (1881.T),

Nippo’s board had agreed to the bid. Eneos and Goldman will start a tender for shares on Friday that will run to December 24, as highlighted in its official statement.

Hong Kong-based Oasis, which has a 4.5% stake in Nippo, says the price, valuing Nippo at about 476.4 billion yen ($4.2 billion), is too low and earlier this week said it had received assurances from Eneos, Japan’s biggest refiner, and Nippo that they were open to alternative bids.

Speaking at an earnings conference, Eneos President Katsuyuki Ota addressed that assertion on Thursday shortly before Nippo issued its statement. Eneos and Goldman’s plan to take Nippo private was first announced in September 2021. Ota Said:

“Some shareholders have suggested that the … price should be higher and we are communicating with them, but in the end, it is up to the independent committee of Nippo and the board committee to decide.”

Oasis says that for a company with a pile of cash, securities, and real estate worth more than $2 billion alone just like Nippo, the offer price of 4,000 yen ($35.37) apiece for its shares undervalues it.

It said earlier that a fair value is more like 5,600 yen per share, 28% higher than the Eneos-Goldman offer. Before their announcement in September, the offer from Eneos and Goldman was at a 29% premium to Nippo’s average price over the month.

Against a wider market gain of 0.6%, Eneos slumped 2.5% while Nippo shares fell 1.1% to 4,075 yen on Thursday. Ota added:

“Nippo’s share price is now about 4,000 yen, but before we started discussing this deal, it was around 3,000 yen and at the beginning of the year it was around 2,500 yen. So, we did proper due diligence and referred to other examples of (takeover) premiums. I’m sure there will be many opinions, so we will communicate with them, but we think it is a reasonable proposal.”

As long as the tender is successful, the complicated series of transactions would see Eneos owning 50.1% of Nippo and Goldman the rest, with Goldman’s stake potentially later rising to 75% through preference shares and options.

Seth Fischer, founder and chief investment officer of Oasis told Reuters by email:

“The buyers are entitled to launch their tender offer. The onus is on Nippo’s Special Committee to speak to all interested bidders, as they have assured us they will.”

Previously, Oasis aired complaints about majority shareholders in Japan steamrolling minority interests, echoing comments from minority investors in Japan over the years.

Goldman Sachs

Additionally, Ota said on Thursday that the bidders had received approval from overseas anti-trust regulators.

Eneos said that as rising prices of oil allowed it to book hefty valuation gains and demand for fuel slowly returned from the slumps of the pandemic, its first-half earnings rose nearly six times to 211 billion yen ($1.9 billion).

The 114-year old Tokyo-based company, Nippo, which has turned making roads out of tar and gravel into a high-tech business, said its profit nearly halved to 7.6 billion yen.

($1 = 113.0900 yen)


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