Private equity firm seeks ruling on takeover price

TOKYO • TIHT Investment Holdings, a private equity firm partly owned by Temasek Holdings, has asked the Tokyo District Court to review the price Nippon Life Insurance paid to buy its stake in another Japanese insurer, claiming that it was too low.

TIHT was forced to sell its shares in Mitsui Life Insurance when Nippon Life made the takeover last December. The process for setting the price ignored embedded value, or EV, a measure used to gauge the worth of life insurers that combines the present value of future profits with adjusted net assets, Mr Kin Chan, chairman of TIH, the majority owner of TIHT, said in an interview last month.

Mitsui Life should have been valued at 1,746 yen (S$22) a share, more than three times the acquisition price, according to a summary of papers filed to the court on April 1 by lawyers representing TIHT. Nippon Life acquired 92.16 per cent of the voting rights of Mitsui Life in a tender offer on Dec 29 at 560 yen a common share, the document showed.

The deal was valued at about 334 billion yen, according to data compiled by Bloomberg. Osaka- based Nippon Life, Japan's biggest life insurer, and its competitors have been making acquisitions, particularly abroad, as they contend with a shrinking and ageing population at home.

A 2014 revision to Japan's Companies Act enables a shareholder holding more than 90 per cent of a company to forcibly purchase the remaining stock. It also provides an avenue for sellers to protest in court if they disagree over pricing. TIHT owned 7.64 per cent of Mitsui Life as of March 31 last year.

TIHT claims that despite Mitsui Life itself disclosing EV as "an effective indicator of corporate value", the takeover price was set below that amount.

Spokesmen for Nippon Life and Mitsui Life declined to comment on the case. Neither Nippon Life nor Mitsui Life are publicly traded.

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A version of this article appeared in the print edition of The Straits Times on April 12, 2016, with the headline 'Private equity firm seeks ruling on takeover price'. Print Edition | Subscribe