Longreach launches offer for Sanyo Logistics

The North Asia-focused firm has agreed to pay Sanyo Electric around $115m for its 58% stake in the logistics company. It would be the first in a series of transactions allowing Longreach to delist the company.

Tokyo-based private equity firm Longreach Group has tendered an offer to acquire Sanyo Electric’s 58.01 percent stake in Sanyo Electric Logistics.

The transaction has a value of around ¥10.5 billion ($115 million; €94 million) and is the first of a series of transactions Longreach will make to eventually acquire full ownership of the company, according to a statement from the firm.

The deal will see Longreach-backed holding company LS Holdings pay ¥1,750 per common share to buy the JASDAQ-listed firm – a figure representing a 13.49 percent premium over the company’s 24 May closing price and a 20.7 percent premium over the average closing price for the prior three-month period. The Longreach statement also noted that the total acquisition offer is subject to a minimum threshold, requiring a little over 7.6 million outstanding shares be tendered in order to go ahead. 
 
In a separate announcement, Sanyo Electric Logistics and Sanyo Electric concluded a memorandum of understanding where they agreed to continue existing business relations for a specified period of time after the conclusion of the tender offer. Under the terms, Sanyo Electric Logistics will continue to use the Sanyo Electric brand and other business resources under existing terms of use. In addition, Sanyo Electric will reinvest part of the proceeds it receives to maintain a 5 percent minority stake in LS Holdings after the closing of the transaction.

Sanyo Electric Logistics was started in 1971 to transport, hold and handle cargo for Sanyo Electric Group. It later expanded its logistics activities beyond the Sanyo Group. Sanyo, which was bought by Panasonic Group in late 2009, is divesting the non-core logistics company as part of a streamlining exercise to “concentrate management resources”. Following the completion of the deal, Sanyo Electric Logistics plans to further expand its third party logistics business, while still serving Sanyo Group.

Longreach is investing out of its first fund which closed in 2006 at $800 million, according to a spokeswoman. Former Longreach holdings include Mcdonald's Japan and submarine cable manufacturer OCC. Current portfolio companies include mobile content provider Cybird Holdings and Taiwan's Entie Commercial Bank.