Kantaro Komiya and Rocky Swift
TOKYO (Reuters) – Japanese manufacturing giant Nidec said on Friday it plans to launch a 257 billion yen ($1.6 billion) bid for Makino Milling Machine, a surprise unsolicited takeover bid in a country better known for deal deals.
Nidec said Makino’s board of directors did not agree to the 11,000 yen per share offer, which is 42% higher than the stock’s closing price on Thursday, because it did not propose the offer before announcing it.
The world’s largest precision motor maker said it plans to clear up regulatory processes by early April and launch the offering on April 4, even without Makin’s consent.
Makino said in a statement that it was not aware of Kyoto-based Nidec’s proposal before the announcement and that it would issue its opinion after examining the offer.
Shares of Makin rose by their daily limit, closing 19% higher, after not trading during the session amid a glut of buy orders. Nidec’s share jumped 4.1 percent.
“The deal looks like a rare gain,” said Mike Allen, director of equity research at Tokyo-based Azabu Research.
“The price-to-book ratio for Makino is very low, but the return on equity is consistently below 6%, so they have to create synergies. Nidec is also very cheap.”
“Insider control over Makino is very low, so this can easily work,” he added.
Nidec, led by founder Shigenobu Nagamori, supported Japanese guidelines issued last year to promote mergers and acquisitions and remove the long-standing stigma surrounding unsolicited bids.
The push for reform by the Tokyo Stock Exchange has also prompted a series of share buybacks, unwinding of cross-shareholdings and management buyouts.
Nidec bought Takisawa Machine Tool last year after making an unsolicited 16.6 billion yen takeover bid.
Nagamori told newspapers this month that Nidec was looking for a buyout worth as much as ¥1 trillion and was eyeing three potential targets in Europe and the United States.
Since starting in 1973 with just three workers, Nagamori has grown Nidec’s market value to nearly 3.4 trillion yen, more than Olympus or Kyocera, by placing its products in everything from cars and smartphones to AI data centers.
Makino would be Nidec’s biggest acquisition to date, according to LSEG data, eclipsing its $1.2 billion takeover of French engine maker Leroy-Somer in 2016.
($1 = 157.7400 yen)
