Houlihan Lokey Is Said in Advanced Talks to Buy Japan’s GCA
(Bloomberg) -- Boutique investment bank Houlihan Lokey Inc. is in advanced talks to buy Japanese rival GCA Corp. for about $500 million to $600 million, according to people familiar with the matter.
A deal could be announced within weeks if talks are successful, said the people, who asked not to be identified because the matter is private. Discussions could still fall apart, the people added.
A representative for Houlihan Lokey declined to comment, while GCA couldn’t immediately be reached for comment.
The companies are discussing a purchase price of 1,350 yen ($12.33) to 1,400 yen per share, one of the people said. That would be a premium of about 30% from GCA’s last traded price of 1,051 yen per share on Monday. The stock climbed 43% this year -- outpacing Japan’s benchmark index’s 5.3% gain -- giving GCA a market value of 47 billion yen ($429 million).
GCA is a global investment bank with more than 450 employees in 24 offices across North America, Asia and Europe, its website shows. It is headquartered in Tokyo, where the stock is traded.
The deal would bulk up Houlihan Lokey, which tends to focus on advising small and mid-cap companies in technology investment banking, traditionally one of the busiest sectors for deals.
It would also represent the largest deal so far for Los Angeles-based Houlihan Lokey, which surpassed Lazard Ltd. in 2020 as the biggest U.S. boutique advisory firm by market valuation. Shares of Houlihan Lokey, which went public in 2015, closed Friday at $89.10, giving it a market value of $6.1 billion.
The acquisition would add to a growing trend of consolidation among boutique banks, as smaller players merge to compete more effectively against Wall Street giants like Goldman Sachs Group Inc.. Larger banks have been more aggressively pursuing middle-market opportunities in the past few years.
Last week, Lazard Chief Executive Officer Ken Jacobs said he expects a record level of deal flow to continue unabated, with “unprecedented levels of activity” as interest rates remain low.
In June, GCA advised private equity firms Clayton Dubilier & Rice and KKR & Co. on their $5.3 billion agreement to acquire Cloudera Inc. It’s also advised buyout firms such as CVC Capital Partners, Francisco Partners and technology companies like Panasonic Corp., its website shows.
GCA was founded in 2004 and is itself the product of several mergers. In 2007, it acquired San Francisco-based investment firm Savvian for about $780 million in a stock deal and then merged with Altium in 2016.
Houlihan Lokey was founded in California in 1972 by Richard Houlihan and O. Kit Lokey. In the near-half century that has followed, it has expanded globally and now has more than 20 offices spread across the U.S., Europe and Asia Pacific.
Houlihan Lokey has been moving into new areas, including advising on private equity fundraisings and technology banking, through a series of takeovers in the past few years. It also boosted its presence in Europe by purchasing Spain’s Fidentiis Capital, British boutiques McQueen Ltd. and Quayle Munro Ltd., and Gruppo Banca Leonardo SpA’s investment banking operations in several countries.
News of the deal was first reported by the Nikkei.
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