Yagi Corporation Announces Management Buyout
On July 19, Yagi Corporation, a textile manufacturf office uniforms, announced a management buyout (MBO) to take the company private. All outstanding Yagi shares will be acquired for about Y5.2 billion. The buyback period will extend from July 20 to August 22 at a purchase price of Y659 per share, representing a 54% premium to the average quote of the past month. If the buyout is completed as expected, the shares will cease trading at the end of September.

The news follows the completion of Skylark last week. About a month ago, MergerMarket.com noted that MBOs and private equity deals now account for about 15% of all Japanese M&A activity. Japanese managers increasingly view MBOs as a way to radically transform their companies without worrying about shareholder approval. Stopping hostile takeovers is another motive.

Asked to describe the qualities of the ideal MBO candidate, Kenji Kimura, co-COO of Nomura International and former global head of Nomura's M&A team, said:

A company must have a stable cash-flow base. A decisive executive with leadership quality at the top is another requirement. A target company should also be the one with huge value-up potential that could be turned around with some kind of a short-term push.

Interestingly, the June 16 article cites three potential candidates for MBOs. Two were Ezaki Glico, a confectionery manufacturer, and Sonton Food Industry. The third was Yagi.