February 19, 2024 | Consumer Discretionary | Asia | Ended

Lawson / KDDI: Deal Insight

On 6-Feb-24, Japan’s second-largest mobile carrier, KDDI, entered into a partnership agreement with Mitsubishi (8058 JP) to jointly control Lawson, Japan’s third-largest convenience store chain. Mitsubishi, which currently owns 50.06% of Lawson, will maintain its shareholding, while KDDI seeks to offer minority shareholders JPY 10,360 cash per share. Lawson’s board has revised the dividend forecast for its fiscal year and has decided to not distribute further dividends. The takeover offer will ultimately lead to 50% pro forma stakes for each of KDDI and Mitsubishi. KDDI’s current ownership of Lawson stands at only 2.1%, and through the public tender offer’s 20.0% one-day takeover premium, it hopes to achieve a 14.43% minimum acceptance condition, a number that would enable KDDI and Mitsubishi to jointly hold at least two-thirds of Lawson (given the 50.06% at Mitsubishi plus 2.11% at KDDI). If two-thirds is achieved, the offerors will then pursue a two-step consolidation to ultimately buy out minorities. In addition to the minimum acceptance condition, antitrust clearances are needed from regulators in Japan, China, South Korea, and the EU. The parties indicated that they have begun advance preparations and will consult with relevant authorities from the date of announcement. As is customary with Japanese tender offers, the acceptance period will only be launched after the companies secure all regulatory approvals and fulfil other customary conditions. Lawson’s board is obliged to provide a unanimous opinion in favour of the offer, with the consent of all disinterested directors, and this opinion must remain consistent. Accordingly, on 6-Feb-24, Lawson’s board expressed its support for the offer and indicated its intention to recommend that shareholders tender their shares. The board will reaffirm its opinion when the acceptance period commences. According to the preliminary timeline, the companies anticipate launching the tender offer “in or around” April 2024, with a subsequent squeeze-out expected to be completed by ...

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