LIM Advisors Statement on NichiiGakkan Tender Offer Completion

TOKYO–(BUSINESS WIRE)–LIM Advisors Limited (�LIM Advisors” or “We”), which represents investment funds that collectively own shares of NichiiGakkan Co., Ltd. (“NichiiGakkan” or the “Company”) (TSE: 9792), today expressed dissatisfaction at the completion of the tender offer for the common stock of NichiiGakkan by K.K. BCJ-44 (“Tender Offer”).

We have previously stated that we believed that the original Tender Offer price of ¥1,500 per share and the revised Tender Offer price of ¥1,670 per share substantially undervalued the Company. This view was reinforced by the statement yesterday by a leading private equity firm, Baring Private Equity Asia (“BPEA”), regarding their proposal to certain members of NichiiGakkan’s founding family to support a tender offer at ¥2,000 per share, a substantial 20% premium to the Tender Offer price. An article in yesterday’s Nikkei Business (“Article”) which broke news of BPEA’s interest in NichiiGakkan also claimed that BPEA had approached certain members of NichiiGakkan’s founding family three times during July.

We are of the view that the Board of Directors of the Company (the “Board”) and the Special Committee had a responsibility to secure a fair outcome for all shareholders. In this case, the Board recommended a sale of shares at what we believe to be a low price in a transaction where some shareholders have been provided an opportunity to reinvest in the business post privatization while others have not. The governance process surrounding the Board’s recommendation of the Tender Offer has appeared weak as the recommendations of METI’s Fair M&A Guidelines¹ (the “Guidelines”) did not appear to have been followed and the appearance of potential inherent conflicts of interest in the management buyout did not seem to have been adequately resolved.

LIM Advisors continues to demand that the Company provide additional information to the market about the facts surrounding the possible proposal by BPEA and any other potential proposals that the Company may have been informed about. We are disappointed that the Tender Offer was not extended so that the facts around potential alternative proposals could emerge to allow investors and the Board to adequately consider all potential proposals prior to the end of the Tender Offer period.

Regardless of this disappointing outcome, LIM Advisors remains committed to investing in Japan. While there is further progress to be made in respect of corporate governance standards, we believe in Japanese businesses, their corporate value, their ingenuity and the integrity of the Japanese people.

About LIM Advisors

LIM Advisors is a multi-strategy investment manager with over 24 years of experience in equity and credit investments across the Asia-Pacific region. LIM Advisors was founded in 1995 and has its headquarters in Hong Kong with offices in Tokyo and London. LIM Advisors has been investing in Japan for over 20 years and opened its Tokyo office in 2002.

¹ Fair M&A Guidelines – Enhancing Corporate Value and Securing Shareholders’ Interests issued on 28 June 2019 by Japan’s Ministry of Economy, Trade and Industry (“METI”)

Contacts

Please contact the following with any questions or enquiries regarding the matters set out in this statement.

LIM ADVISORS LIMITED

Hajime Matsuura

Email: info@limadvisors.com
Tel: +852-2533-0900