Japan’s Nidec targets Makino Milling in $1.6 billion unsolicited bid

By Kantaro Komiya and Rocky Swift

TOKYO (Reuters) -Japanese manufacturing big Nidec mentioned on Friday it deliberate to launch a 257 billion yen ($1.6 billion) bid for Makino Milling Machine, a shock unsolicited takeover provide in a rustic higher identified for agreed offers.

Nidec mentioned the goal’s board had not agreed to the provide of 11,000 yen per share, a 42% premium to Thursday’s closing share value, as Nidec had not proposed the bid to Makino earlier than the announcement.

Nidec, the world’s prime producer of precision motors, plans to clear regulatory processes by early April and launch the tender provide on April 4, even with out Makino’s consent, it mentioned in a press release.

Makino mentioned in a press release it was not made conscious of Nidec’s proposal previous to the announcement, and that it could conduct due diligence on the provide.

Makino’s shares surged by their every day restrict, closing 19% larger after going untraded throughout the session amid a glut of purchase orders. Nidec’s inventory jumped 4.1%.

“The deal seems to be like a uncommon win-win,” mentioned Mike Allen, an fairness analysis director for Tokyo-based Azabu Analysis. “The value-to-book ratio for Makino may be very low however return on fairness is persistently under 6%, so they should create synergies. Nidec can also be grime low-cost.”

“Insiders’ management of Makino may be very low, so this may simply work,” he added.

Kyoto-based Nidec, led by founder Shigenobu Nagamori, has backed Japanese tips issued final 12 months to advertise extra mergers and acquisitions and take away a long-held stigma round unsolicited bids.

A reform push by the Tokyo change has additionally sparked a slew of share buybacks, unwindings of cross-shareholdings and administration buyouts.

Nidec final 12 months acquired Takisawa Machine Instrument after making a 16.6 billion yen unsolicited takeover provide.

Nagamori instructed the Nikkei newspaper this month that Nidec was on the hunt for a buy as huge as 1 trillion yen and was eyeing three potential targets in Europe and the US.  

Makino can be Nidec’s largest acquisition so far, in keeping with LSEG knowledge, eclipsing its $1.2 billion takeover of France-based motor maker Leroy-Somer in 2016.

($1 = 157.7400 yen)