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Toho Launches Tender Offer for Tokyo Rakutenchi, Aiming for Wholly-Owned Subsidiary Status

Toho initiates a tender offer for Tokyo Rakutenchi at a 57% premium, seeking complete ownership and delisting
Japan
t 9602.TSE Mid and Small Cap 2000 Entertainment 100
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Toho, a prominent player in the film industry, has unveiled plans to conduct a tender offer (TOB) for Tokyo Rakutenchi, a Tokyo Prime Market-listed entity engaged in movie theater and real estate ventures. The TOB, spanning from December 7, 2023, to January 24, 2024, proposes the acquisition of shares at a rate of 6,720 yen per share.

As Toho presently stands as the largest shareholder and equity method affiliate of Tokyo Rakutenchi, holding 23.07% of the total stock, including stakes from affiliated companies like Toho Costume, TOHO Cinemas, and Toho Towa, the objective is to transition Tokyo Rakutenchi into a wholly-owned subsidiary and subsequently delist the company. The management of Tokyo Rakutenchi has expressed its support for the TOB initiative.

The purchase price of 6,720 yen represents a substantial 57% premium over the closing price on December 6, 2023. If the planned tender offer successfully acquires all targeted shares, the total transaction value is estimated to be around 23.2 billion yen.

Hankyu Hanshin Holdings, the second-largest shareholder, possessing a 19.31% stake, is pivotal in this TOB. Despite not participating in the TOB, Tokyo Rakutenchi intends to buy back the shares from Hankyu Hanshin Holdings post the TOB establishment, a move that has garnered approval from the latter.

Established in 1937 by Ichizo Kobayashi, also the founder of Toho, Tokyo Rakutenchi shares historical ties with its sister company. With overlapping businesses in movie performances and real estate management, the synergy aims to enhance efficiency and profitability. While Tokyo Rakutenchi maintained stability, its low growth expectations prompted the move to align with Toho for renewed prospects, given Toho’s dynamic growth image.

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