スライド 1 - Ross Asia Business Conference

Report
The Changing Japanese M&A Market
Presented By: Nobuhiko Masuto
18th Asia Business Conference
February 2, 2008
Growth in the Japanese M&A Market – What are the Drivers & Will it Last?
The Japanese M&A market has been growing tremendously in recent years and it is anticipated that this trend will
continue.
2500
2000
1500
In-In
In-Out
Out-In
1000
500
7
'0
6
'0
5
'0
4
'0
3
'0
2
'0
1
'0
0
'0
9
'9
8
'9
7
'9
6
'9
5
'9
4
'9
3
'9
2
'9
1
'9
0
0
'9
# of Deals
(07: Jan. – Sept.)
Source: Recof
2
Tremendous Growth Potential in the Japanese Market
Global M&A Market - % by Country
Other
36%
U.S.
47%
 Japanese M&A market is still immature
 Potential to expand 3-5 times current levels
Japan
6%
U.K.
11%
M&A Market Size vs. GDP
Japan 3.7%
U.K. 13.4%
U.S. 10.3%
Source: Thomson Financial, OECD
3
Changes in the Type of Deals Being Pursued
Late1990’s ~
Early 2000
Current
- M&A by healthy
corporate(larger deals)
- Distressed M&A
- Divestitures of
non-core businesses
- Group company
restructuring
- PE Fund driven M&A
- Cross-border deals
- Hostile M&A
- MBO/ De-listing
- Smaller distressed deals
- Non-core spin-offs
- Group restructuring
4
Background Drivers of Japan’s Changing M&A Market
 Shareholders with various investment measures – short-sighted investment efficiency requirement
 Limited growth expectation in every Japanese domestic market
 Fiercer global competition
 Restructured Japanese financial sector
 End of corporate governance by banks
 Establishment of more sophisticated M&A rules
5
Recent Trends in the Japanese M&A Market
Increase in:
M&A deals driven not only by PE funds but also by strategic corporate buyers → auction, consortium,
etc.
Strategic in-out cross-border deals - actively seeking market share, geographical expansion and IP overseas
Acquisitions of Japanese companies by foreign companies (out-in) – representing next step in
strengthening strategic alliances
Deals associated with sector consolidation (retailers, domestic airlines, etc.)
Divestitures of non-core businesses by large company groups
Public M&A deals from hostile actions of financial buyers (increased cross-shareholdings, but not going
back to the old days!)
Introduction of poison pills by public companies in every sector
MBO/ going private deals
Small private M&A deals for the purpose of business succession
Decrease in:
M&A deals for purposes of diversification of business lines
Large restructuring deals
6
Increasing Cross-Border M&A Deals
The number of acquisitions of Japan assets by foreign companies (“out in”) is increasing significantly. There was an
increase of 80.6% for the period 1/07-9/07 vs. the same period for the prior year.
500
450
400
350
300
In-Out
Out-In
250
200
150
100
50
7
'0
6
'0
5
'0
4
'0
3
'0
2
'0
1
'0
0
'0
9
'9
7
8
'9
'9
6
'9
5
'9
4
'9
3
'9
2
'9
1
'9
0
0
'9
# of Deals
(07: Jan. – Sept.)
Source: Recof
7
Cross-Border M&A Activity has Spanned All Industries
Every sector is seeing cross-border activity and the size of deals has also been significant with landmark deals, such as
Ricoh’s acquisition of IBM’s printing division and Citigroup’s acquisition of Nikko Securities, shown below.
Financial
Industry
IN-OUT
Services
Orix
-Houlihan
Pharma
Takeda
-Syrrx
Citigroup
OUT-IN
Automotive
Nidec
-Valeo
Ricoh
- IBM
Daimler
Roche
-Nikko
– Mitsubishi
Food
Telecom
Softbank- Vodafone
Fuso
Services
JT
- Gallaher
Retail
Autobacs
- Autofin
Vodafone
Bosch
Compass
Wal-Mart
-Nippon
-ZEXEL
-Chugai
Securities
Mfg.
-Seiyo Food
-Seiyu
Telecom
8
Top 10 Announced Japan Acquisitions of Foreign Assets (“In-Out”) (1/06-10/07)
Rank
Announce
1
2006/12/15
2
2006/1/23
3
2006/12/12
4
Buyer
Target
Deal Size
US$ million
Target Sector
Country
15,024
Agricultural Production
UK
JT
Gallaher Group PLC
TOSHIBA Corp.
Westinghouse Electric Co. LLC
5,400
Construction Contractors &
Eng. Svcs.
UK
Tokyo Electric Power Co, Inc. /
Marubeni Corp.
Mirant Asia Pacific Ltd.
3,420
Electric, Gas Water & Sanitary
Services
US
2006/2/27
Nippon Sheet Glass Co. Ltd.
Pilkington PLC
3,042
Stone, Clay & Glass
UK
5
2006/11/2
Nomura Holdings, Inc.
Instinet LLC
1,200
Brokerage, Investment &
Mgmt. Consulting
US
6
2006/10/4
Daikin Industries Ltd.
OYL Industries Bhd.
1,129
Industrial & Farm Equipment &
Machinery
MY
7
2006/12/5
Bridgestone Corp.
Bandag, Inc.
990
Automotive Products &
Accessories
US
8
2007/7/5
Fast Retailing Co., Ltd.
Barneys New York, Inc.
950
Retail
US
9
2006/12/19
Nomura Holdings, Inc.
Fortress Investment Group
(Hedge Funds)
888
Brokerage, Investment &
Mgmt. Consulting
US
10
2006/5/18
Daikin Industries Ltd.
OYL Industries Bhd.
825
Industrial & Farm Equipment &
Machinery
MY
Source: Factset
9
Top 10 Announced Foreign Acquisitions of Japanese Assets (“Out-In”) (1/06-10/07)
Rank
Announce
Buyer
Target
Deal Size
US$ million
Buyer Sector
Country
1
2007/3/6
Citigroup, Inc.
Nikko Cordial Corp.
7,702
Banking & Finance
US
2
2007/10/2
Citigroup, Inc.
Nikko Cordial Corp.
4,710
Banking & Finance
US
3
2007/4/13
Morgan Stanley
Hotels owned by ANA
2,358
Brokerage, Investment &
Mgmt. Consulting
US
4
2007/2/15
Steel Partners LLC
Sapporo Holdings Ltd.
1,282
Brokerage, Investment &
Mgmt. Consulting
US
5
2006/2/2
Vivendi SA
Universal Studios, Inc.
1,154
Printing & Publishing
FR
6
2007/2/19
Volvo AB
Nissan Diesel Motor Co., Ltd.
1,083
Autos & Trucks
SE
7
2006/10/4
The Shaw Group, Inc.
Westinghouse Acquisition
1,080
Construction Contractors &
Eng. Svcs.
US
8
2006/12/21
Air Liquide SA
Japan Air Gases Ltd.
777
Chemicals, Paints &
Coatings
FR
9
2007/3/1
Delek Group Ltd.
RoadChef Motorways Ltd.
734
Oil & Gas
IL
10
2007/8/24
MBK Partners Ltd.
Yayoi Co., Ltd.
613
Brokerage, Investment &
Mgmt. Consulting
KR
Source: Factset
10
Buyout Fund Environment
Japanese M&A Market
Corporate Restructuring Needs
Financing M&A Deals
(Bank/ Fund)
Stay
Capacity of Management
Supply
11
Buyout Deals by PE Funds in Japan
 The Japanese buyout market has been dramatically expanding. There are has been an increase in the number of PE funds
focusing upon Japanese corporations and the size of the deals has been large.
 However, the level of its popularity is still lower than that in the Western countries and there is more room for expansion
with more flexibility of investment criteria.
 With the increase in investments by PE funds, secondary M&A activities by through portfolio companies are increasing.
(No. of Deals)Number of Buyout Deal Investment by PE Fund
400
350
300
2
OUT-OUT
OUT-IN
IN-IN
Number of Sale by PE Fund
70
2
250
96
97
60
50
200
2
OUT-IN
IN-OUT
IN-IN
8
40
150
261
49
100
198
50
0
(No. of Deals)
2
1998
3
8
7
13
1999
2000
12
11
25
29
2001
2002
30
10
0
2004
56
20
98
2003
3
4
2005
1
3
2
2000
2001
2002
23
1
2
7
2003
2004
2005
Source: MARR 2/2006
12
Role of PE Funds in Japan
 Japanese corporate have gained an understanding of how PE fund can contribute to corporate growth.
Enhancement of Corporate
Governance
 Increase efficiency of management
through sending directors/ auditors
 May strengthen management by
sending CEO/ CFO
 Drive management improvement
through external governance
 Support improvement of internal
control systems
Introduction of Advanced
Corporate Finance Methods
 Plan business restructuring and M&A
and give execution support
 Review and try to achieve optimum
capitalization (e.g. repackage debt)
 Provide financial advice on
securitization of unutilized assets, etc.
Business Support
 Support business / strategic planning
 Bring business alliance ideas by fully
utilizing fund network
 Create synergies with other portfolio
companies
 Other senior advisors of fund provide
advice on various operational/ business
issues
Increased Value through
Unleashing Potential
IPO in 3~5 years
or
Sale to future strategic partner/ other fund
13
Likely Targets of PE Funds

Asset Driven

Large net cash (large distributable dividend)

Large surplus on B/S

Large unrealized assets

Share Price Driven

Low PBR

Small market capitalization

Other

Low ratio of stable shareholders

Complicated cross shareholdings in group
capital structure

Fragmented sector

Remedy

Effective use of cash (CAPEX/ M&A)

Effective use of assets

Optimizing enterprise value

Pro-active IR (investor relations)

Recapitalization of group companies
14
Case Study: Acquisition of Japanese Subsidiary by PE Fund (Carlyle)
Situation Overview
 GCA, based on its knowledge of Shionogi & Co. Ltd. (“Shionogi”)
operations, recommended that Shionogi consider divesting its Qualicaps
Group, which manufactured hard capsules used in the pharmaceutical and
health and nutrition industries.
 GCA identified Carlyle Japan Partners (“Carlyle”) as a potential buyer.
Carlyle requested that GCA serve as its lead financial advisor in the
prospective transaction.
 While Carlyle presented a potential exclusive offer to Shionogi, in order to
meet its fiduciary responsibilities, Shionogi proceeded the transaction with a
competitive bid process.
Acquiring
Advised The Carlyle Group
August, 2005
 Successfully executed the first transaction where a major Japanese
pharmaceutical company spun-off operations to a foreign private equity fund
among other strategic buyers.
 GCA devised several unique structures that would enable Carlyle to have a
competitive advantage in the bidding process.
15
Case Study: Cross-Border Joint Venture US-Japan (Ricoh/ IBM)
Situation Overview
 Ricoh’s corporate strategy included becoming a leading global provider of output and
print solutions.
 IBM’s strategy included putting a greater focus on software and services, while the
hardware business was seen to have an important strategic role.
Formation of Joint Venture between
 As IBM’s Printing Systems Division was well-integrated into the businesses in over 100
countries, the division had to be carved out before being sold to the third party.
and
Results
 By forming the joint venture between IBM and Ricoh instead of outright sale of the
division to Ricoh, it becomes essential for both parties to establish a cooperative
relationship for the success of the joint venture.
Advised Ricoh
 Ricoh initially acquired 51 percent of the joint venture, called the InfoPrint Solutions
Company, with Ricoh progressively acquiring the remaining 49 percent over the next
three years as the joint venture evolves into a fully owned subsidiary of Ricoh. Final
consideration will be determined at the end of the three-year period based upon the joint
venture’s performance.
Pre-transaction
Carve-outs
At closing
IBM
IBM
Ricoh
June 2007
At the end of JV period
cash
IBM
Ricoh
cash
IBM
51%
Country
A
B
: printer business
・・・
X
US
A B ・・・ X
A
・・・ X
remaining
stake
JV
JV
A B ・・・ X
A B ・・・ X
16
Case Study: Corporate Hostile M&A Battle (Oji Paper VS Hokuetsu Paper)
An landmark hostile M&A battle involving a large Japanese corporate in
an industry facing extreme consolidation.

Is a hostile TOB by corporate achievable?

Appropriateness and effectiveness of defense measure


TOB Price By
Oji Paper
813 yen
800 yen
Timing of introduction to poison pill
Judgment of independent committee

Fight on banning issuance of warrant

Opinion of independent committee

Policy difference by type of shareholder

Does shareholders tender their shares to TOB?

Meaning of TOB price and price for 3rd party allotment (new issue)

Strategic buyer/ white knight as defense measure

Accountability to local community and employees of Hokuetsu

More……
Premium
Purchase Price by
Nihon Paper
Synergy
635 yen
607 yen
Market Price
@ 7/21
Price for 3rd Party
Allotment to
Mitsubishi Corp.
Stand-alone
Value
17
Case Study: Citigroup Acquired Nikko Cordial through TOB and Subsequently Squeeze out
Situation Overview
 Nikko Cordial Securities, Inc. (“Nikko”), one of the largest Japanese brokerage houses
in terms of revenue, faced a sharp stock decline and threat of delisting after it
announced earnings for the past two fiscal years would be restated due to
"inappropriate accounting."
 Citigroup, Nikko’s partner in an 8-year old investment banking venture, in an attempt
to avoid a crisis of confidence and protect the value of its stakeholders, proposed a
Tender Offer in the amount of 1,350 yen per share. Citigroup executed TOB for 1,700
yen per share through its wholly owned subsidiary, Citigroup Japan Holdings, and
successfully completed it with more than 50% voting rights in March 2007.
 Since then, Citigroup bought more shares in Nikko through Citigroup Japan Holding
from the stock market up until 68%, whereby they obtained enough voting rights for
merger on its own.
 Subsequently, in October 2007, Citigroup announced that it would bring Nikko into a
wholly-owned subsidiary through a triangular share exchange transaction, resulting in
Nikko being de-listed from the Tokyo Stock Exchange. (1st transaction using a triangle
merger method lifted in May 2007)
 Citigroup Japan Holdings is scheduled to be listed on the Tokyo Stock Exchange and
the Japanese shareholders who would receive the Citigroup shares through the triangle
share exchange transaction can trade in the market.
Squeeze Out Transaction Scheme
100%
subsidiary
Citigroup
(U.S.)
by
Advised Nikko Cordial Corporation
March, 2007
Squeeze out through Triangular Share
Exchange
by
Citigroup
Japan
Holdings
Nikko
shares
Distribute
Citi shares
TOB of the Common Stock of
100%
subsidiary
Advised Nikko Cordial Corporation
January 2008
SHs
Nikko
(Japan)
18
Increased Opportunities to Invest in Japanese Corporations

Increased number of out-in cross-border M&A transactions

More remarkable/sizable out-in cross-border M&A deals

Accelerated changes in the general mindset of Japanese corporate management
 There is no longer a negative image associated with selling/spinning off a company
 More focused business plans based upon competitiveness and resource allocation
 Reduction in rejection of the idea of doing a transaction with foreigners
 More favorable to partner with strong foreign companies than to be controlled by a foreign financial buyer

Substantially decrease in cross-shareholdings and quiet and non-economical shareholders

Increase in foreign shareholder ratio in Japanese public company

More westernized corporate governance, accountable disclosure system, transparent accounting system and new M&A
rule – triangle merger

Japanese M&A financing market still in good condition
19
Key Approach to M&A in Japan
 Hostile approach should be avoided
 Strategic partnership on core business should be emphasized – “strategically focused”
 Ideally, a substantial local presence should be established as a first step – “be patient”
 Continue analyzing and communicating with target companies to determine the best timing for approach
20
Desirable M&A for Japanese Companies

How do Japanese companies currently view M&A?
 Tool to achieve “Selection & Focus” policy for improvement of ROI
 Method for obtaining required resources (e.g. operational assets and human resources) required for growth
 Method to provide investors with good exit

Always target a win-win scenario between seller and buyer (Value for seller <FMV < Value for buyer)

Furthermore, structure M&A as substantially beneficial for shareholders of both companies and employees and
all the other stakeholders of target companies, ideally including its customers and vendors

Continuous strategic approach and message to top management of target company based on the clear view and
strong commitment to realize proposed synergy
21
GCA Group Overview
22
Organization
GCA Holding Corporation (“Holdings”) enables both the M&A Advisory Group and
the Investment Group to better serve both clients and investors.
Under the management principle of For Client's Best Interest, Holdings lets its
affiliated companies provide the best quality M&A solutions more effectively.
GCA was established in 2004 in response to the recognized need in the Japanese
marketplace for conflict-free, unbiased M&A advisory services.
GCA ranks consistently on league tables and earned the #1 spot for Japan related
transactions in Q12007.
GCA America, a wholly owned subsidiary of GCA, was established in 2007 in
response to the demand for cross-border M&A services by GCA clients. GCA America
has offices in both New York and San Francisco.
Mezzanine Corporation (“MCo”) is the first independent, full-fledged mezzanine fund in
Japan
MCo, with raised capital of JPY68.7billion, was established to identify investment
opportunities that yield superior returns. MCo’s competitive advantage lies in its
strong deal sourcing network and superior structuring capabilities.
Due Diligence Corporation (“DCo”) is an independent M&A due diligence company
While other institutions, such as large accounting firms, are often unable to meet the
needs of their clients due to conflicts, DCo is able to respond to client requests quickly
and offer superior highly confidential due diligence services. In order to fully meet
and exceed client expectations and ensure client success, DCo offers value-added
services throughout the process and after the close of the transaction.
23
Position in the Japanese Market
Despite having been founded in 2004, the high demand for GCA’s services allows GCA to consistently ranks high on the
league tables due to strong demand for independent M&A Advisory Services.
Any Japanese involvement Completed
1/1/2006 - 12/31/2006
Any Japanese
Japaneseinvolvement
involvementAnnounced
Announced
1/1/2007
1/1/2007–- 6/30/2007
12/31/2007
1/1/2007 - 12/31/2007
1/1/2006 - 12/31/2006
Financial Advisor
Citigroup
Transaction
Value US$m Rank
38,239.1
1
Mkt.
Share
29.6%
No.
Deals
27
Goldman Sachs & Co
37,141.6
2
28.8%
25
Nomura
36,364.2
3
28.2%
122
UBS
34,662.9
4
26.9%
22
Financial Advisor
Nomura
Transaction
Value US$m Rank
34,468.8
1
Mkt.
Share
22.4%
No.
Deals
155
Citigroup
23,032.6
2
15.0%
96
GCA
21,966.5
3
14.3%
25
Merrill Lynch
21,133.8
4
13.7%
20
18,965.2
5
12.3%
31
Daiwa Securities SMBC
31,616.5
5
24.5%
114
Goldman Sachs & Co
Mizuho Financial Group
26,284.5
6
20.4%
101
Mitsubishi UFJ Financial Group
18,394.1
6
12.0%
113
Merrill Lynch
20,801.2
7
16.1%
18
Morgan Stanley
17,502.7
7
11.4%
29
Deutshce Bank AG
18,146.4
8
14.1%
4
Mizuho Financial Group
16,020.8
8
10.4%
101
KPMG FAS
16,558.6
9
12.8%
34
Daiwa Securities SMBC
15,077.4
9
9.8%
130
JP Morgan
11,691.4
10
9.1%
8
JP Morgan
14,032.3
10
9.1%
23
Morgan Stanley
10,815.5
11
8.4%
14
KPMG Corporate Finance
11,265.4
11
7.3%
42
Rothschild
9,077.2
12
7.0%
5
Lehman Brothers
10,887.5
12
7.1%
15
Mitsubishi UFJ Financial Group
7,787.2
13
6.0%
139
UBS
10,320.3
13
6.7%
28
GCA
6,807.8
14
5.3%
14
Credit Suisse
6,301.9
14
4.1%
7
Deutshce Bank AG
5,611.7
15
3.7%
17
Credit Suisse
Source: Thomson Financial
6,713.9
15
5.2%
7
Source: Thomson Financial
24
GCA Business Lines
 GCA offers both investment banking as well as transaction related financial advisory services. GCA’s goal is to meet all of its clients
transaction needs.
M&A Advisory
Financial Advisory Services
Capital Markets Advisory
Mergers/Acquisitions
M&A Strategic Alternatives Assessment
M&A Financing
Divestitures
M&A/IPO Analysis
Capital Structure Assessment
Joint Ventures and Strategic
Alliances
Valuation
Capital Sourcing
Going Private Transactions
Management Buy Outs
Leveraged Buyouts
Cross-Border Transactions
Due Diligence
 Senior debt
Tax Planning
 Subordinated debt
Fairness Opinions
 Preferred stock
Investor Relations Planning
DIP Financing
Post Merger Integration
Transaction Type
Distressed M&A
Corporate Restructuring
Take Over Bid Defense
Restructuring 4%
MBO 3%
Other
7%
Hostile Takeover
Defense 10%
Buyside
41%
Corporate
Valuation
14%
Structuring
5%
Sellside
16%
25
GCA Representative Transactions
Mitsubishi Material Regarding
restructuring of Mitsubishi Material’s
two subsidiaries
Purchasing for subsidiary’s shares
by Citigroup(Triangular merger)
Divestiture and sale of nursing home
business of
Acquisition of
Arrangement of third party allotment
of
to
by
to Kenwood Corporation and
SPARX International
Advised Mitsubishi Shindoh Co.,Ltd.
& Sambo Copper Alloy Co., Ltd..
Advised Nikko Cordial Group
Advised Green Tokyo Co., Ltd.
Advised Alfresa Holdings Corporation
October, 2007
October, 2007
August, 2007
August, 2007
Formation of Joint Venture between
Business merger between
and
Formation of Joint Venture between
Provided valuation and merger ratio
calculation report for the merger
between
Advised Kenwood Corporation
July, 2007
Valuation for sales of resort business
from Daiwa House Industry Co., Ltd.
to Daiwa Resort Co., Ltd.
and
Acquisition by
of
Advised Itochu Corporation
June, 2007
TOB of the Common Stock of
by
and
Advised Ricoh
Advised ORIX Corporation
Advised Kato Works Co., Ltd
Advised Shinko Securities
Advised Daiwa House Co., Ltd.
Advised Nikko Cordial Corporation
June, 2007
June, 2007
May, 2007
In Progress
Mar, 2007
Mar, 2007
Equity and business alliance
between
Business tie-up and TOB to
Asamizu Corporation
Selling LPG business under Civil
Rehabilitation Law to
MBO & Going Private by
managements of OMRON
ENTERTAINMENT
Share acquisition of
and
by
Implementing defense practice
on hostile takeover
Advised Asamizu Corporation
Advised FURYU HD, a SPC
for the MBO
Advised Miyano Machinery
Advised Mercian
Advised Tokyu
Advised Matsuzakaya
February, 2007
February, 2007
January, 2007
December, 2006
December, 2006
December, 2006
Share acquisition of
Capital participation to
Acquisition of
Management integration between
TRN Corporation by
Acquiring
Acquiring
by
by
and
HANSHIN ELECTRIC EAILWAY
Advised Hurxley Co., Ltd.
Advised J:com
Advised Itochu Enex
Advised Kasco Corporation
Advised Fusen-usagi Corporation
Advised Hankyu Holdings
Oct, 2006
September, 2006
September, 2006
Sep, 2006
Jun, 2006
June, 2006
26
GCA Representative Transactions
To be made a wholly-owned
subsidiary of
To be made a wholly-owned
subsidiary of
Acquiring
Selling a stake in
KYOSHIN Co.,
Group reorganization of listed three
group companies to wholly-owned
subsidiaries of Daiwa House
Acquiring
to parent company
Advised Fujinon
Advised Nitto Denko
Advised Panasonic
Advised Itochu Corp.
Advised Daiwa’s subsidiaries
Advised Itochu Corp.
June, 2006
June, 2006
April, 2006
March, 2006
March, 2006
February, 2006
Sale of Keiyu share`s by former
management team of Keiyu Co.
Acquiring capital in
Selling a stake in
to Vivendi Universal
Advised Panasonic
February, 2006
Advised Keiyu`s former
management team
Acquisition of oil business of Kokura
Enterprise Co., Ltd.
Acquisition of Calsonic
Communication Co., Ltd.
by
小倉興産株式会社
カルソニックコミュニケーション
Acquiring
Advised Itochu Corp.
Advised The Carlyle Group
Advised Itochu Enex Co., Ltd
Advised Calsonic Kansei Co., Ltd.
Dec, 2005
December, 2005
August, 2005
Jul, 2005
Jul, 2005
Acquisition of Computer City Co., Ltd.
by
Management integration between
Arrangement of third party allotment
of
Acquiring capital in
MBO & Going Private by the
management of World Co., Ltd
and
Revitalized by
Shares in
株式会社コンピュータシティ
Advised Panasonic
Advised World’s management
Advised Infocom Corporation
Advised Takara
Advised Takara Co., Ltd.
Advised All Nippon Airways
July, 2005
Jun, 2005
May, 2005
May, 2005
April, 2005
March, 2005
27
GCA / Savvian Merger Announced
On November 1, GCA and Savvian announced a merger of equals transaction with the intention to form a
premier global strategic advisory firm
 Will maintain listing on the Tokyo Stock Exchange
 Well-capitalized balance sheet
 Pro forma market capitalization of almost ¥200 billion
Strategic step by both firms to leverage each company’s strengths and capitalize on the anticipated increase in
cross-border merger activity between Japan, the United States and Europe
 Access to leading companies in Japan, the United States and Europe
 Technical M&A know-how in Japan, the United States and Europe
 Unique cross-border transaction experience
Continued trusted advisor approach for client’s best interest
 Long-term approach to relationships
 Serve as strategic advisor
 Deliver the best professionals and creativity
 Operate without conflicts of interest
 Always put the client’s interests first
28
Savvian Advisors Overview
Savvian has a unique set of skills and industry knowledge
Bulge Bracket
Transaction Expertise
 Senior Team with Unparalleled
Transaction Experience
 Highest Quality Client Service
 Broad Network Including
Fortune 500 Relationships
 M&A Advisory and Capital
Raising Expertise
Growth Sector
Focus
 Growth Company Focus
 Sector Expertise / Domain Knowledge
 Relationships with entrepreneurs
 Relationships with VC and PE firms
 Private Capital Access
 Late Stage Private through Public
Company Orientation
29
Savvian Advisors Overview
Closed / Announced Cross Border Transactions
Acquired by
Divestiture of Cell
Phone Distribution
Business
Merger with
Acquired by
Acquired by
Acquired by
We advised the seller
Pending
We advised the seller
October 2007
We advised INTAC
October 2007
We advised the seller
July 2007
We advised the seller
July 2007
We advised the seller
May 2007
Divestiture of
Cleanroom Integrated
Solutions Business
Acquired by
We advised the seller
April 2007
Acquired by
We advised the seller
August 2005
Acquired by
Sale of Semiconductor
Automatic Test Equipment
Assets to
Acquisition of
We advised the seller
April 2007
We advised the seller
March 2007
We advised the buyer
November 2006
We advised the seller
October 2006
We advised the seller
March 2006
Strategic IP
License with
Acquired by
Acquired by
Acquired by
Acquisition of
We advised the seller
November 2005
We advised the seller
April 2005
We advised the seller
December 2004
We advised the buyer
March 2004
January 2005
* Flag icon on left represents Savvian Advisors, LLC client
Acquired by
30
GCA/ Savvian Integration - Increase in EPS
Proforma EPS (assuming integration would be made as of March 2007)
GCA
2/2008 (Forecast)
+
Savvian
12/2007 (Forecast)
=
Combined
2/2008 (Forecast)
Sales (Mil. Yen)
7,109
6,217
13,326
Net Income (Mil. Yen)
1,791
1,691
3,482
184,920
151,299
336,219
9,686
11,178
10,358
Number of issued shares
EPS (Yen)
EPS increase 9,686 → 10,358 (7%)
Note: GCA 2/2008 forecast = Fund Consolidated base.
Exchange-rate : Yen115/US$
31
Selected Biographies
Nick Masuto, GCA America President [NY]
[email protected]
212-551-1447
Mr. Masuto is President & CEO of GCA America Corporation, a wholly-owned U.S. subsidiary of GCA Co. Ltd. and is currently based in New
York. For over 20 years, Mr. Masuto has been involved in a wide range of corporate finance activities including investment banking, private
equity and structured financing in Japan, the U.S. and Europe. He has extensive experience in advising on M&A, IPO, private placement and
LBO financing transactions and also has principal experience in equity and mezzanine investments. He has led the origination and execution of
both cross-border M&A transactions as well as Japanese domestic deals.
Recently, Mr. Masuto represented All Nippon Airways in its investment in Skynet Asia Airways, the management team of Omron Entertainment
Inc. in its MBO, and Matsuzakaya (a major Japanese department store) in its corporate defense actions against a hostile takeover by an activist
fund. He has also led many successful large scale cross-border M&A transactions including TDK Co. Ltd.’s acquisition of Silicon Systems (a
U.S. semiconductor manufacturer acquired through TOB), Sumitomo Heavy Industries’ acquisition of Lumonics (a Canadian laser technology
company acquired through TOB), a Japanese trading company’s acquisition of Argo-Tech (a U.S. aircraft pump manufacturer through a
consortium with Vester Capital) and Nippon Paint’s shareholding realignment with its U.S. joint venture partner.
Prior to joining GCA, Mr. Maputo worked at Ripplewood Japan where he was responsible for origination and execution of buyout transactions.
He was also heavily involved in post-acquisition management through his management roles in Ripplewood portfolio companies. Prior to
joining Ripplewood, Mr. Masuto worked as an investment banker for Daiwa Securities and Sumitomo Bank (currently known as Sumitomo
Mitsui Banking Corporation) Tokyo. During his career, he had the opportunity to establish Japan Equity Capital Inc., a private equity firm
sponsored by Daiwa Securities SMBC, Sumitomo Corporation and GE Capital. Additionally, with Sumitomo, he spent over 8 years in London,
focusing upon cross-border M&A transactions between Europe and Japan/U.S. and structured finance transactions for U.K. and Swiss blue-chip
companies and municipals. He also spent time in the U.S., having been seconded to Robertson Stephens & Co. in San Francisco where he
focused on the technology sector investment banking.
He is a visiting instructor at Kobe University’s business school and often is a speaker at M&A and private equity related seminars. He holds the
Authorized Sales Representative and Internal Administrator certification issued by the Japanese Securities Dealers Association (“JSDA”) and
the Financial Services Authority (“FSA”) in the U.K.
Mr. Masuto completed his Masters in Finance degree at the London Business School, University of London, and received his undergraduate
degree from Keio University, where he majored in Law.
32
Selected Biographies
Tracy Gopal, Director [SF]
[email protected]
415-205-0721
Ms. Gopal has been providing transaction advisory services to clients for over 9 years and currently focuses upon origination and execution of
cross-border transactions. She assists Japanese companies in identifying and purchasing assets in the United States and assists Japanese
companies, US companies and private equity firms in purchasing or divesting Japanese assets. Ms. Gopal also has significant experience in
financial restructuring, having worked with a significant number of distressed clients both in and out of court. She has represented both debtors
and creditors and has special expertise in valuing distressed companies.
Ms. Gopal advised the secured creditors in the Refco Inc. bankruptcy, which was the at the time of the filing, the 4th largest bankruptcy in U.S.
history. She has advised numerous management teams prior to and throughout the chapter 11 process, including Borden Chemicals and Plastics,
WestPoint Stevens, Hawaiian Airlines, and the Polymer Group. She has prepared valuation testimony and fairness opinions for several clients
which cannot be disclosed.
Prior to joining GCA, Ms. Gopal worked for Giuliani Capital Advisors, formerly the Ernst & Young Corporate Finance practice. While at Ernst
& Young, she was seconded to the Tokyo Asia Pacific Solutions Group in Tokyo, advising a major bank in Japan on the valuation of nonperforming loans. She began her career with Arthur Anderson in the area of international trade and customs.
Teruyasu Kushima, Associate Director [NY]
[email protected]
212-551-1448
 Mr. Kushima joined GCA in 2005 and is now an Associate Director at the New York Branch of GCA America Corporation. He frequently
advises Japanese companies in connection with their cross-border transactions and provides services including origination, structuring and
valuation.
 Prior to joining GCA, he was an Assistant Director with Japan Bank for International Cooperation (JBIC) where his practices included various
cross-border structured finance and project finance for large transportation and energy projects in Eastern Europe, Russia and Latin America.
During his career at JBIC (formerly Export Import Bank of Japan) he was seconded to Paris-based Organization for Economic Co-operation and
Development (OECD) where he worked as a consultant to their Trade Directorate. He received his B.A in Economics from Keio University. He
is fluent in English and French.
33

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