When we last wrote (see https://senjincap.com/kakaku-bidding-war-escalates-further/), EQT had just moved to ¥3,680 and Bain/LY had countered at ¥3,597, or ¥3,720 with KDDI’s cooperation. Since then, the contest has changed character: it is no longer about price, but about time and thresholds.
EQT has raised its offer twice more – to ¥3,681 on 29 September and ¥3,682 on 14 October. Neither increase was meant to persuade anyone. Under Japanese rules, amending an offer’s terms extends it by ten business days, so each yen buys EQT another two weeks. The offer now closes on 28 October, 115 business days after it opened. We may see more one-yen bumps.
EQT needs the time because it does not yet have the shares it needs. Its formal minimum acceptance is only 17.51%, but delisting Kakaku requires a share consolidation, and that requires a two-thirds special resolution at a shareholders’ meeting. Even with Digital Garage and KDDI’s 38%, EQT needs tenders of roughly another 29% to get there. Oasis, with 19.5%, can effectively block that – and despite repeated talks, and EQT sitting above its stated ¥3,640 floor, it has not tendered.
Keeping the offer alive keeps KDDI locked in
The extensions serve a second purpose. KDDI can only walk away from its EQT arrangement for a rival bid at least 2% higher – currently ¥3,756. Bain’s ¥3,720 falls short, so while EQT’s offer remains live, Bain’s best price is effectively off the table. KDDI, which dissolved its capital alliance with Kakaku on 28 September, appears to want a clean exit but is contractually stuck. Bain/LY has all its regulatory clearances and is waiting.
Likely outcome
Something has to give. The most likely resolution is EQT paying up – through ¥3,720 – to bring Oasis in and secure its two-thirds, at a cost of a few billion yen on a ¥700bn+ deal. The alternative is Bain clearing ¥3,756 to free KDDI, which would trigger yet another round. Either way, we expect a final price in the high ¥3,700s – another win for Oasis and all the other minority shareholders!
