Makino Faces 18.1 Billion Dollar Hostile Bid, CG.US in Talks

Private equity giant CG.US is in talks with Japanese industrial gear supplier Makino Milling Machine regarding a potential acquisition, according to four informed sources. This move comes as a response to Nidec Corporation's hostile takeover bid of 18.1 billion dollars. The discussions are part of an escalating battle to privatize the machine tool manufacturer, with Nidec offering 1.1 million yen per share, valuing Makino at 257 billion yen. Makino's board approved a "poison pill" defense strategy last week to counter the takeover attempt.

Three sources revealed that, in addition to CG.US, MBK Partners and the Japan-based NSSK Group had shown interest in acquiring Makino. However, NSSK has since withdrawn from the bidding process. The heightened competition underscores the intensifying merger and acquisition landscape in Japan, where unsolicited bids like Nidec's are relatively rare. Nidec has filed for an injunction to block the "poison pill" strategy, which involves issuing free stock warrants to existing shareholders to dilute Nidec's stake and impede the acquisition.

Makino has advised its shareholders not to tender their shares to Nidec, citing ongoing negotiations with potential white knight bidders. The transaction is unfolding amid Japan's proactive stance on promoting mergers and acquisitions. The Ministry of Economy, Trade, and Industry issued guidelines in 2023 aimed at curbing takeover defense tactics, emphasizing the need to consider credible offers appropriately. The guidelines also state that poison pill measures are justified if a takeover threatens the company's value and the interests of shareholders. The proposed stock issuance will be put to a vote at Makino's annual shareholder meeting in June.

Takamitsu Araki, Nidec's chief M&A officer, commented, "Makino's response is typical of Japanese companies when targeted by acquirers. Our ultimate goal is to enhance corporate value and create jobs. Our approach is entirely strategic."