Bain and Lone Star plan second-round bids to take Nikkon private

Nikkon Holdings, a Japanese logistics firm specialized in the automotive supply chain, is set to hold a second bidding round in September to take the company private, as per sources familiar with the matter. Investors Bain Capital and Lone Star Funds are reportedly evaluating proposals for the second round, following the initial round conducted in June.

The first round was triggered after Nikkon selected financial advisers and established a special committee of independent directors to assess the situation. Neither Bain nor Nikkon or Lone Star provided immediate comment on the matter. Despite the U.S. investment firms advancing to the next round and conducting thorough due diligence, Nikkon's share price surge could pose challenges for investors trying to recoup their investments.

The company's share price has risen more than 50% this year, driven by speculation about privatization, leading to a market capitalization of ¥665 billion ($4.2 billion).

Any take-private bid for Nikkon may now fall short of the company's valuation, complicating the bidding process and making it difficult for investors to justify tendering their shares. Similar situations have arisen in recent take-private deals, such as Mitsubishi Logisnext's acquisition by Japan Industrial Partners and KKR & Co., and Taiyo Holdings' sale to KKR, where stock prices were higher than market rates, prompting bidders to offer below the prevailing market price.

In Japan, there is a growing push for companies to enhance shareholder returns, with calls to sell off non-core assets. Nikkon has already announced plans to divest properties like facilities that are not expected to generate additional profits. Farallon Capital Management and Oasis Management are among the prominent shareholders in Nikkon, holding 23% and 17% of the company's shares, respectively.