Japan’s King of Deals Is Preparing to Pounce Once Valuations Dip
(Bloomberg) -- Minebea Mitsumi Inc. Chief Executive Officer Yoshihisa Kainuma is preparing to resume acquisitions once the coronavirus pandemic is done gutting corporate finances and valuations.
The former M&A lawyer, known in Japan as the “king of deals,” told Bloomberg News he’s waiting out the current market turmoil before restarting his acquisitions machine, focusing on distressed companies. Many firms are struggling with the economic uncertainty brought on by Covid-19 and some will fail, Kainuma said in an interview last week. Banks and creditors will soon start assessing the health of firms, presenting opportunities, he added.
“We should slow down and hold off from making any deals right now because the Covid-19 confusion and economic uncertainties have made sound valuations of companies almost impossible,” he said from his offices in Tokyo. “It would all depend on the Covid-19 situation, but if it gets prolonged, we’ll see companies taking a hit from it, and I expect banks would soon start doing triage -- you know, which ones to save and which ones not to.”
“That would be the time to carry out the best possible deals,” he said.
Kainuma has built his career off a series of well-timed deals that propelled Minebea up the technology ladder. The company has grown over decades from a small ball-bearing manufacturer on the outskirts of Japan’s capital to a key player at the heart of the global tech production chain, supplying the likes of Nintendo Co. and LG Electronics Inc.
“Meeting with key players at targeted companies in person is very important so that you can directly convey passion and vision over the dinner table,” he added.
Minebea itself is grappling with the fallout of the pandemic. Kainuma said orders from auto, aircraft and home appliance makers have decreased, while those from game console, smartphone and medical equipment manufacturers have risen. Its shares have slid 13% since the start of the year, outpacing losses on the benchmark TOPIX. But Kainuma said Minebea’s wide portfolio helps it build a longer-term “conglomerate premium” and offers a financial cushion during an era of economic turbulence.
Kainuma, a Harvard Law School graduate, has led the company on 19 M&A cases since he took the helm in 2009. His signature acquisitions include Nintendo supplier Mitsumi Electric Co. in 2017 and car component maker U-Shin Ltd. in 2019.
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