Swiss Asset Manager GAM Opposes Takeover of Honda Unit by India’s Motherson
Samvardhana Motherson said in late August that it planned to acquire an 81% stake in Yutaka Giken
Swiss asset manager GAM Holding GAM 3.86%increase; green up pointing triangle is opposing a planned takeover of a Honda subsidiary by Indian auto-parts maker Samvardhana Motherson International, saying the deal significantly undervalues the Japanese company.
GAM Chief Executive Albert Saporta said the asset manager sent a letter to the president of auto-parts maker Yutaka Giken, urging the Honda unit to either abandon the transaction or seek a significantly higher price.
Samvardhana Motherson said in late August that it planned to acquire an 81% stake in Yutaka Giken for about 27 billion yen, equivalent to $172.4 million.
As part of the deal, Samvardhana Motherson plans to start a tender offer to buy Yutaka shares for 3,024 yen each from minority shareholders, valuing the company at about 45 billion yen.
Hamamatsu-based Yutaka is a profitable, cash-rich company and makes parts used in exhaust systems, drive systems, brake discs and heat-management devices. It had about 104 billion yen in net assets as of the end of September, with equity at 61% of assets.
Saporta said that the tender offer price should be at least 50%-70% higher than the current offered price and that the deal is a big step backward for Japan’s recent efforts to improve corporate governance.
Saporta said that GAM funds held shares in Yutaka Giken since before Samvardhana Motherson announced its tender offer plan and that GAM isn’t opposed to the sale of Yutaka Giken itself. He said the acquisition of Yutaka could enable Samvardhana Motherson to realize significant synergies and additional revenue opportunities.
Yutaka, Motherson and Honda didn’t immediately respond to requests for comments.
A number of Japanese companies in recent years have taken full control of listed units and affiliates or sold them as the Japanese government has pressed them for higher capital efficiency and better corporate governance. That created waves of acquisitions in Japan by domestic and foreign investors.