By Yusaku Yano / Yomiuri Shimbun Staff Writer
Major Japanese mail-order company Japanet Holdings Co. is seeking to acquire a 100% stake in Twinbird Corp., a home appliance manufacturer listed on the Tokyo Stock Exchange's Standard Market.
The move is part of Japanet's efforts to control its entire business chain — from development to production and sales — a growing trend in Japan's home appliance industry.
This has gotten the attention of the market. On Friday, Japanet announced it would make a tender offer for Twinbird, which boosted the home appliance maker's shares to the daily trading limit on Monday.
Japanet said its offer will be conditioned on approval from Twinbird's management. The tender process is scheduled to start in late October for a price of 800 yen per share. On Monday, Twinbird's share price closed at 471 yen, up 80 yen from the previous trading day. The stock price is expected to trend toward 800 yen.
As the market for home appliances shrinks, moves to control the entire business process are spreading among manufacturers, who want to ensure their own survival. In April, electronics retailer Nojima Corp. announced the acquisition of Hitachi Ltd.'s home appliance business. Two months later, two more electronics retailers — Yamada Holdings Co. and Edion Corp. — announced a merger to improve their ability to develop original products.
Japanet is apparently following the industry trend. The mail-order company has been expanding into areas such as the travel industry and professional sports — it owns the soccer club V-Varen Nagasaki and the basketball team Nagasaki Velca — but home appliance sales still account for most of its revenue.
However, it is uncertain whether Japanet's takeover bid will succeed, as the company has said it will withdraw the bid if Twinbird's management does not approve it. According to Japanet, it indicated its plans to fully acquire Twinbird in February. But in March, it received a reply stating, "We cannot accept a proposal that presupposes a change in our capital structure."
Twinbird said it is now examining the details of the offer, mainly through a special committee composed primarily of outside directors. It aims to make an announcement as soon as a decision is reached.
Aiming for synergy
Japanet hopes the acquisition will create synergy by integrating production and sales. Based in Sasebo, Nagasaki Prefecture, in southern Japan, the company has a customer base of about 9 million, with sales made through television, radio, online retail and other sales channels.
Twinbird is located in the Tsubame-Sanjo region in Niigata Prefecture, central Japan, an area famous for its metalwork. The company has a competitive edge thanks to its technology, shown in hit products like its high-end, fully automatic coffee maker.
Japanet aims to combine its assets — such as customer data, sales history and customer feedback from call centers — with Twinbird's development and manufacturing technologies.
"We will be able to introduce products that have a high probability of success to the market more efficiently" through the acquisition, Japanet said. It said a buyout would also benefit Twinbird by helping the company differentiate from rivals, expand sales channels and improve factory utilization rates.
Twinbird has posted net losses for two consecutive fiscal years due to growing competition from low-cost overseas home appliances and other factors.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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