Nomura to Lead $870 mln Buyout of Japan Bearings Maker

Nomura to Lead $870 mln Buyout of Japan Bearings Maker Nomura Holdings Inc. said its investment arm would lead a tender offer for ball bearings maker Tsubaki Nakashima for up to $870 million in Japan's fifth-biggest management buyout. Nomura, Japan's largest brokerage, said Nomura Principal Finance, Tsubaki Nakashima's management and employees would pay 2,100 yen per share -- a 12.7 percent premium to the company's closing share price on Monday. The Nomura-led group aims to acquire at least 67.25 percent of voting rights in Tsubaki Nakashima for 70.3 billion yen ($580 million), but it will buy all of the shares tendered, which could boost the deal to 105.4 billion yen ($869 million). Before the announcement, shares in Tsubaki Nakashima closed down 0.3 percent at 1,863 yen. The offer price values the stock at 28.5 times earnings forecast for the year to March. That compares with rival NSK at 17.7 and NTN Corp. at 18.7 times. Tsubaki Nakashima, based in the ancient capital of Nara, said going private would allow it to make big investments to quickly expand its production bases in China and Southeast Asia without having to get the approval of a large base of shareholders. "Competition is getting tougher and tougher, and we have to invest in new areas more aggressively," Tsubaki Nakashima President Takanori Kondo told a news conference in Osaka. "That means we would have to take bigger risks than before, and we've judged it would not be right to ask investors to shoulder the risks." Kondo also cited a risk of being taken over as one of the reasons for the buyout. Management buyout offers (MBOs) have become increasingly popular in Japan with the value of such transactions rising to $6.6 billion on 57 deals in 2006 from $4.6 billion on 41 deals in 2005, according to financial data providers Dealogic. Nomura also led a $3.2 billion buyout of restaurant chain Skylark Co. in 2006. That is the country's biggest MBO deal recorded by Dealogic since it began monitoring deals in 2000. The Tsubaki Nakashima buyout is likely to rank behind last year's $930 million buyout of Toshiba Ceramics Co. , the fourth-biggest deal, led by private equity firms Carlyle Group [CYL.UL] and Unison Capital. Both the management and employees of Tsubaki Nakashima agreed to the buyout. Tsubaki Nakashima shares will be delisted from the Tokyo Stock Exchange if the deal succeeds, and the bourse put the stock on administrative watch as of Monday. The offer will run from Jan. 23 to Feb. 21. After acquiring more than two-thirds of Tsubaki Nakashima, the Nomura-led group will offer a share swap to make it a wholly owned unit. The group also aims to acquire all equity warrants. Tsubaki Nakashima was founded in 1939 and is strong in manufacturing ball bearings for automobiles. Unlike most other car parts makers, it is not affiliated with any one auto group. Japan Trustee Services Bank is the biggest shareholder with a 9.8 percent stake, followed by the Master Trust Bank of Japan and other financial institutions. (Additional reporting by Yumi Horie in Osaka and Nathan Layne in Tokyo)