Tokyo Stock Exchange-listed Japanese online printing services provider, Raksul Inc, assisted by TMI Associates, has approved a take-private tender offer for its common shares in a USD770 million Goldman Sachs-sponsored management buyout (MBO).
Shuya Ogawa, the lead TMI partner responsible for advising Raksul, told Asia Business Law Journal that TMI, besides providing overall legal transactional advice necessary for the Raksul board of directors’ decision making, also assisted in the operation of the special committee.
For ensuring careful deliberation in decision making by Raksul regarding the transaction and eliminating arbitrariness and the risk of conflicts of interest in the company board of directors’ decision-making process, and ensuring its fairness, Raksul established a special committee that consists of three members who are all outside directors of Raksul.
Ogawa said that this year the rules governing MBO transactions in Japan were amended such that the special committee’s determination in the form of a written recommendation was now disclosed in full as part of the transaction disclosure materials. He added that, accordingly, the special committee’s conclusions were best understood by reference to that recommendation.
Nomura Institute of Capital Markets Research defines an MBO in Japan as “a type of corporate acquisition where the management of the company (or section of a company) being acquired (the target company) finances all or part of the acquisition and becomes the company’s owners (shareholders).
“Upon this, TMI substantively supported the special committee in forming its judgment with respect to the advisability of the transaction, the fairness of the transaction terms, the fairness of the transaction process, and whether the transaction was fair to the general shareholders,” said Ogawa.
The tender offer is conducted by R1 Inc, a wholly owned subsidiary of R2 Inc, which itself is a wholly owned subsidiary of R3 Inc, in which GK Nogizaka Holdings, R Partners Inc and West Street Asia Equity Partners have direct stakes. Nogizaka Holdings and R Partners are established under Japanese law by The Goldman Sachs Group Inc.
On 11 December this year, GS SPC (GK Nogizaka Holdings, R Partners and West Street Asia Equity Partners) executed a tender offer agreement with Raksul’s founders, Yo Nagami and Yasukane Matsumoto, a notice issued by Raksul on the MBO’s implementation and recommendation to tender showed.
Ogawa further noted that the support to the special committee included ensuring meaningful opportunities for Q&A discussion with the tender offeror, and for substantive review of the business plans underlying the valuation analyses, and obtaining independent share valuation reports from both KPMG and Plutus Consulting.
The process also involved assisting in the operation of 13 meetings of the special committee and the realisation of seven rounds of negotiations on transaction terms, and eliminating coercive effects through appropriate disclosure and the establishment of proper tender offer terms.
“Through these measures, we substantively assisted the special committee in ultimately forming the conclusion that the transaction was fair to the general shareholders,” said Ogawa.
The tender offer period, which started on 12 December this year, will last until 4 February next year, after which Raksul will be taken private.
