Previously, we introduced the difference between stock transfer and business transfer over three issues. In this issue, we introduce two M&A deals by Japanese companies announced in May 2022.
1. Mitsui & Co., Ltd. and FP Corporation’s investment in a food container manufacturer
On 9 May 2022, Mitsui & Co., Ltd. (“Mitsui”) and FP Corporation (“FPCO”, headquartered in Fukuyama City, Hiroshima Prefecture), a major food container manufacturer, agreed to acquire all shares of Lee Soon Seng Plastic Industries (“LSSPI”), a manufacturer and seller of functional food containers mainly in South East Asia. According to Mitsui’s press release of the same date, the acquisition of the shares will be completed in the second quarter of the fiscal year ending March 2023 after obtaining all necessary permits and licenses, including approval through special resolution at the extraordinary general meeting of LSSIP’s shareholders (SCGM, a listed company), and total acquisition amount will be about JPY16billion. Mitsui will hold a 60% stake, and FPCO a 40% stake.
LSSIP is the largest manufacturer of functional food containers in Malaysia and has sales networks in Singapore, Australia and the Philippines, etc. The main business of SCGM, the 100% parent company of LSSIP, is LSSIP, whereas SCGM’s sales for fiscal year ending April 2021 were 246 million ringgit and EBITDA (earnings before interest, tax, depreciation and amortisation) was RM55 million.
According to Mitsui’s press release, demand for functional food containers is growing in South East Asia due to population growth, modernisation of retail formats with the spread of supermarkets and convenience stores, and the growth of the food delivery market. Therefore, the two companies will contribute to the further growth of LSSPI, introducing FPCO’s know-how to improve production efficiency and various production development technologies in order to develop eco-friendly products that ensure safe and trusted dietary lifestyles and meet market needs.
2. Investment by Japan Elevator Service Holdings Co., Ltd. in a facility management company
Japan Elevator Service Holdings Co., Ltd. (“JES”) is the largest independent lift maintenance service provider in the industry, listed on the Tokyo Stock Exchange Prime Market with a market capitalisation of approximately 140 billion yen. JES announced that it would acquire 80% of COFRETH’s shares, which operates a facility management business in Malaysia. Closing is scheduled for late June 2022.
COFRETH was established in 1986 and has been engaged in the facility management business for commercial and office facilities in Malaysia, mainly in Kuala Lumpur and Johor Bahru.
JES has local subsidiaries in Indonesia, India and Hong Kong, and in November 2021 acquired an independent Vietnamese company in the same business, and is actively developing its business overseas. In Malaysia, many elevators made by Japanese manufacturers can be seen, and COFRETH is also involved in energy-related and building greening-related businesses in addition to machinery and equipment maintenance. The acquisition of COFRETH as a subsidiary is likely to contribute to the diversification of JES’s business.