Murakami-backed fund plans Japanese bid battle with Carlyle

TOKYO (Reuters) – A Japanese fund backed by veteran investor Yoshiaki Murakami plans to make an 18 billion yen ($173 million) bid for energy and environment firm Japan Asia Group (JAG), topping a management buyout offer backed by Carlyle Group.

FILE PHOTO: The logo of the Carlyle Group is displayed at the company’s office in Tokyo, Japan October 17, 2018. REUTERS/Issei Kato

City Index Eleventh said on Thursday it would offer 840 yen per share for JAG, a 40% premium to Carlyle’s offer of 600 yen.

Global buyout fund Carlyle teamed up with JAG’s chairman and CEO Tetsuo Yamashita in November to launch the management buyout that values JAG at 16.4 billion yen and is worth 37 billion yen in total, including two other JAG businesses.

JAG shares have more than doubled since Nov. 4, the day before that announcement, reaching 785 yen on Thursday.

JAG was not immediately available to comment on City Index Eleventh’s proposal. Carlyle declined to comment.

Earlier on Thursday, JAG said Carlyle had extended its bid for a second time to Jan. 28 as its shares were trading above Carlyle’s offer.

JAG is the latest company to become a battleground between Murakami’s fund and a global private equity firm, following Bain Capital’s failed bid for a printing firm in 2019.

City Index Eleventh, which with other parties already has a 19.05% stake in JAG, had described Carlyle’s bid as “unfairly” cheap and asked it to raise the offer price, but was rebuffed.

“We have terminated talks with Carlyle and decided to launch our own bid at 840 yen, which represents per share capital for JAG,” said City Index Eleventh.

The activist fund did not say when it would launch the bid.

U.S. buyout fund Bain Capital failed in 2019 in its bid to buy a small printing firm Kosaido Co after a fund backed by Murakami said Bain’s offer undervalued the company.

($1 = 104.0800 yen)

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