Bain to Take Japan’s Trancom Private in $670M Deal

Japanese logistics operator Trancom plans to go private in a management-led buyout after endorsing a tender offer from private equity major Bain Capital valuing the company at JPY 95.8 million ($670 million).

The board of directors at Tokyo-listed Trancom, whose network includes 57 logistics centres and 51 information centres across Japan, recommended acceptance of Bain’s offer of JPY 10,300 a share at a Tuesday meeting, according to stock filings. The bid represents a 41 percent premium to Tuesday’s closing share price.

Funds managed by Boston-based Bain have entered into tender agreements with chairman Atsunori Takebe, director and chief advisor Masahisa Shimizu, the Nippon Active Value Fund and Dalton Investments. Together, the tendering shareholders hold 1,908,600 of the company’s 9,388,841 outstanding shares.

Separately, Bain entered a non-tender agreement with a Takebe-controlled vehicle, AICOH Co, which holds the largest block of 2,694,000 shares. The chairman will continue to be involved in management and will reinvest as a major shareholder of the unlisted company post-privatisation, Trancom said.

Lucky Seven

Founded in 1959 by Junzo Takebe, Trancom provides services for customers who build and operate logistics centres and also matches freight with trucks on long-haul routes.

To help carry out plans that include an overseas expansion of the business, Trancom contacted Bain in May to learn about the management support provided to the private equity firm’s portfolio companies.

On 31 July, Bain made an initial proposal for a tender offer of JPY 9,000 a share, representing a more than 32 percent premium to the previous day’s closing price. A Trancom committee rejected that offer and five incrementally higher bids made between August and September, before accepting the seventh offer of JPY 10,300 on 13 September.

Bain holds $185 billion in assets under management worldwide. Since opening its Tokyo office in 2006, the firm has invested in 34 companies in Japan.

Unlocking Value

Bain has been eyeing value-add opportunities across a range of property sectors to tap growing interest among Japanese corporates to unlock value from real estate assets on their balance sheets, according to Man Kinoshita, a Bain partner on the Japan special situations team.

“For corporates, they always have a lot of office assets, and manufacturing is going to be combined into data centres or logistics,” Kinoshita said at last week’s Mingtiandi Singapore Forum. “They also have a lot of residential or retail assets on their balance sheet. So whatever the asset class, we are flexible to deploy capital, as long as we can make some kind of a value-add opportunity from those assets held by Japanese corporates.”

Kinoshita pointed to abundant bank lending as helping to finance real estate deals in the country. The executive disclosed that Bain Capital had invested in a luxury hotel earlier this month, with the acquisition having been financed with a “very attractive” loan from a Japanese mega-bank.