* Tentative IPO price range at 1,600-1800 yen
* Earlier estimate was 2,300 yen
* Japan stocks down 12 pct so far this year
(Adds Seibu comment and details on banks, Cerberus, other
By Ritsuko Ando
TOKYO, April 9 Japanese railway and property
conglomerate Seibu Holdings slashed the estimated price of its
initial public offering by as much as a third on Wednesday,
leading its top shareholder Cerberus to forego an exit from an
often fraught relationship.
The scaled-back expectations for what would have been one of
Japan's biggest IPOs this year comes as confidence in the
economy wavers, weakening demand for Japanese stocks, which are
currently the worst performers in developed markets.
Stock offerings by smartphone screen maker Japan Display
and battery maker Hitachi Maxell have also
faltered in their market debuts in recent weeks.
"Japan's market has been falling since the start of the
year, with real estate shares and real estate investment trusts
in a decline. The initial 2,300 yen price was just too high,"
said Yasuo Sakuma, portfolio manager at Bayview Asset
"My impression is that pricing for large deals such as this
one is becoming difficult," he said.
Seibu said it was dropping the tentative price of its IPO by
as much as 30 percent to 1,600-1,800 yen per share from the
initial estimate of 2,300 it announced in March.
It also plans to cut the number of shares offered to 27.8
million from an earlier 80.9 million as Cerberus chose to not
sell any of its 35.5 percent stake in the IPO. Cerberus had
previously planned to sell a 15.5 percent stake.
The lowered price estimate, which values the company at
547-616 billion yen compared to an earlier 787 billion, comes as
investor confidence in Prime Minister Shinzo Abe's economic
stimulus policies fades.
Japan's benchmark Nikkei share index has fallen
around 12 percent so far this year after a 57 percent rally in
2013. The U.S. S&P 500 is flat so far this year, while
the STOXX Europe 600 is up 1.7 percent.
People familiar with the Seibu IPO, who asked not to be
named because of the confidential nature of discussions, said
underwriters had opted for a lower price after investors balked
at the earlier estimate.
U.S. private equity firm Cerberus found the new price
unacceptable and opted to wait for a market recovery, they said.
Other sources familiar with recent negotiations said
Cerberus had indicated it would not participate if the offer
price was below 2,000 yen. Cerberus declined to comment on
The official IPO price is due to be announced on April 14,
with the shares expected to list on the Tokyo Stock Exchange on
Other shareholders including Citigroup Capital Partners, UBS
Securities, Norinchukin Bank and the Development Bank of Japan
are taking part in the offering as planned, Seibu said.
The failure of the IPO to offer an exit to Cerberus is the
latest twist in a relationship that has become a symbol of
tensions between Japanese management teams and foreign
Cerberus led a bailout of Seibu in 2006 following a scandal
involving falsified shareholder records which led to its
delisting. The U.S. private equity company was said to have paid
an average of around 1,000 yen for each Seibu share at that
time, although the fund has never confirmed the price.
Earlier this year, Cerberus and Seibu appeared to have set
aside differences after a difficult 2013 during which they
clashed over when the company should be listed and at what
price. The battle included a failed attempt by the U.S. fund to
take control of the Japanese company's board.
Seibu earned public sympathy when Cerberus suggested selling
the company's popular Seibu Lions baseball team and to shut down
unprofitable local rail lines.
Seibu said in a filing on Wednesday that Cerberus was now
supportive of the company's business plans and had no plans to
intervene in management or increase its stake further.
"They have shown a high regard for our management and
business, and have been greatly cooperative with the listing," a
Seibu spokesman said.
(Additional reporting by Tomo Uetake and Taro Fuse; editing by
Dominic Lau and Tom Pfeiffer)