April 16, 2025 | Industrials | Asia | Active
On 28-Mar-25, Japanese medical equipment manufacturer Topcon announced a management buyout backed by KKR and Japan’s JIC Capital (“JICC”), the private equity arm of the government-backed Japan Investment Corp’s (JIC), which focuses on investments in digital transformation. The offer price of JPY 3,300 per share implies a 3.5% one-day takeover premium and an 87.9% premium over Topcon’s undisturbed share price on 9-Dec-24, when media reports first surfaced that the company had entered a sale process with the private equity firms. While Topcon’s board has recommended the offer, the decision was not unanimous; Director Takayuki Yamazaki opposed the deal due to having insufficient time to assess its impact on corporate value. Once launched, the tender offer is expected to be subject to a 50.1% minimum acceptance condition, a threshold designed to enable a two-thirds majority at an EGM, thus facilitating a two-step acquisition. The target’s largest shareholder, ValueAct (14.62%), has expressed support for the offer, but the sometimes-activist fund has not revealed any specific arrangements with the bidders to tender or co-invest. For completeness, Topcon’s President and CEO, Takashi Eto (0.07%), will tender his full stake and reinvest part of the proceeds into the acquiring entity, while continuing to lead the company. If KKR acquires at least 90% of Topcon shares through the offer, it expects to initiate a squeeze-out. If it falls short of that but meets the minimum acceptance level, it will pursue a share consolidation, requiring two-thirds approval at an EGM expected around end-October 2025 (assuming a July launch of the tender offer). The offer is also conditional on antitrust approvals from Japan, the US, the EU, Vietnam, Morocco, Taiwan, Turkey, Albania, Egypt, Germany, Ukraine, the UAE, Brazil, Australia, and Austria, as well as foreign investment clearances from Japan, the US, Australia, Austria, Belgium, France, Germany, Italy, Spain, Canada, and the UK. Due to Topcon’s involvement in aerospace and defence – sectors designated under Japan’s Foreign Exchange and Foreign Trade Act – prior notification and clearance are required under this Act. Other closing conditions include the absence of legal impediments, compliance with the target’s representations and warranties, and no MAC. Regulatory and recommendation conditions may ...
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