April 26, 2019 / 10:49 AM / a month ago

Japan activist Murakami advances in bid for lucrative crematorium business

TOKYO (Reuters) - Veteran Japanese activist shareholder Yoshiaki Murakami scored another success in his bid for a little-known printing company, Kosaido Co, after management said it would not oppose his offer for at least half of the firm.

Tokyo-based Kosaido emerged earlier this year as the unlikely battleground between Murakami, 59, and U.S. private equity giant Bain Capital, after both made competing bids for it - and its stake in a lucrative crematorium business.

The Bain-backed management buyout failed this month after it didn’t get enough support from shareholders at a revised 700 yen a share. Bain initially offered 610 yen a share but later sweetened that. Murakami’s Minami Aoyama Fudosan has offered 750 yen a share, an offer that runs until May 10 and values Kosaido at 18.7 billion yen ($167 million).

“We have not been able to determine whether our corporate value would be boosted by the fund linked to Murakami,” Kosaido said in a statement released after the market closed on Thursday.

“But we cannot recommend that shareholders reject the bid because the price is higher than that of Bain Capital.”

Kosaido has been undervalued by the market for too long, Minami Aoyama Fudosan said in a statement last month. The 70-year-old company prints newspapers and advertisements. But the key to the deal may be its 61 percent stake in a funeral hall and crematorium business, Tokyo Hakuzen.

Despite Tokyo’s massive population and the rapid aging of Japanese society, funeral companies have a hard time building new crematoriums given opposition from local communities. That means existing facilities tend to be lucrative.

Minami Aoyama Fudosan has also said the value of Tokyo Hakuzen is not fully reflected in Kosaido’s share price.

Minami Aoyama Fudosan and another Murakami fund, Reno, together own a 13.47 percent stake in Kosaido, according to Thursday’s release.

Shares of Kosaido closed at 763 yen a share on Friday, above Murakami’s offer price. The shares have doubled in value this year.

(This story corrects name of private equity firm to Bain Capital in paragraph 2)

Reporting by Junko Fujita; Editing by David Dolan and Muralikumar Anantharaman

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