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Taisho Pharmaceutical Initiates Japan’s Largest Management Buyout to Focus on Global Online Sales

Taisho Pharmaceutical's management offers a landmark $4.75 billion buyout to steer towards global online sales amidst a sluggish domestic market
t 4581.TSE Mid and Small Cap 2000
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Taisho Pharmaceutical Holdings made a pivotal announcement on Friday, unveiling a groundbreaking proposal for a management-led buyout, steering the company toward a strategic shift focused on online and international sales of its core over-the-counter drugs. The move comes in response to a challenging domestic market environment.

Executive Vice President Shigeru Uehara, a significant stakeholder with the Uehara family holding approximately 40% of the drugmaker’s stock, is leading the charge. His company proposes a generous offer of 8,620 yen per share, presenting a premium of over 50% from Friday’s closing price. This bid, totaling 710 billion yen ($4.75 billion) for all common stock, sets a record as Japan’s largest-ever management buyout.

Taisho Pharmaceutical expressed endorsement for the offer, urging shareholders to consider the proposition favorably. The Uehara family, along with affiliated entities holding Taisho shares, has committed to reinvesting a portion or the entirety of the proceeds from their stock sales into the acquiring company.

As Japan’s largest over-the-counter medication company, Taisho holds a prominent position with products like the Pabron cold remedy and the Lipovitan energy drink line. However, the sluggish growth of Japan’s OTC market, coupled with challenges in the domestic market, prompts Taisho to strategize for a future emphasizing online sales infrastructure and the acquisition of globally marketable brands. The company anticipates a 45% drop in net profit for the fiscal year ending in March, attributed to ongoing challenges in its prescription pharmaceutical business, which has witnessed a decline in annual sales from over 100 billion yen in fiscal 2011 to 37.7 billion yen in fiscal 2022.

The decision to go private reflects Taisho’s assessment that the benefits of being publicly listed no longer outweigh the associated costs. The company believes that delisting will unlock resources that can be redirected toward advertising and enhancing the value of its product portfolio. Having been listed on the TSE’s former first section in 2011 before transitioning to the new Standard market in the reorganization last year, Taisho Pharmaceutical is poised for a strategic transformation through this historic management buyout.

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