Outlines deeply undervalued Offer and apparent disregard of fundamental safeguards designed to protect MCJ minority shareholders
Encourages shareholders not to tender
Maven Investment Partners Ltd. Hong Kong Branch (“Maven”), one of the largest minority shareholders of MCJ Co., Ltd (“MCJ” or the “Company”) with a stake close to 3%, published a letter today addressed to all shareholders of the Company concerning the unfair terms of the tender offer (“Offer”) by BCPE Meta Cayman, L.P. (“Bain”) for MCJ.
Maven confirms it has no intention of tendering into the Offer on current terms, which it views as an egregious disregard for fair M&A in Japan and an endeavor to squeeze out minority shareholders at a deep discount to fair value. Maven likewise encourages other shareholders not to tender.
In addition to the Offer falling unacceptably short of MCJ’s intrinsic value today of more than ¥2,800 per share in Maven’s assessment, the letter also explains Maven’s analysis of fundamental Offer process shortcomings. These include a flawed Special Committee appraisal, major conflict concerns surrounding the independent financial adviser to the Board, the absence of any fairness opinion, alternative valuations or market checks, and a price discovery negotiation with Bain that has all the hallmarks of a superficial box-ticking exercise.
Maven’s letter can be read here in full:
To all shareholders of MCJ Co., Ltd.
We are writing to you on behalf of Maven Investment Partners Ltd, Hong Kong Branch (“we”, “us” or “our”). As one of the largest minority shareholders of MCJ Co., Ltd. (“MCJ” or the “Company”) with a stake close to 3%, we have been carefully reviewing the terms of the proposed tender offer by BCPE Meta Cayman, L.P. (the “Offeror” or “Bain”) for the Company (the “Offer”).
Based on our discussions with many other minority shareholders of MCJ, we know that a significant number are deeply concerned and extremely disappointed by the apparent disregard of fundamental corporate governance safeguards that are designed to protect MCJ’s minority shareholders in precisely this type of PE-sponsored management buyout. In our opinion, this has underpinned – and resulted in the Company’s Board of Directors (the “Board”) and Special Committee (the “Special Committee”) supporting – a deeply unfair Offer price for the Company’s minority shareholders. In sum, the current Offer represents, in our view, an egregious disregard for fair M&A in Japan and an unfair endeavor to squeeze out minority shareholders at a deep discount to fair value.
As things stand, despite raising these concerns with the Board and Special Committee privately, we are yet to receive any response - a troubling indifference to our concerns that only serves to reaffirm our doubts about the integrity of the process and alleged fairness measures, as well as the pressing need for the Company’s minority shareholders to take matters into their own hands to ensure that this wholly inadequate Offer does not succeed at the current Offer price. With that in mind, we do not intend to tender our shares into the Offer at current terms, and we encourage others not to tender.
1. Significant undervaluation
At ¥2,200, the proposed Offer price in our view falls woefully short of fair value for minority shareholders and is not commensurate with the quality of the Mouse brand or the strength of the Company’s balance sheet. The currently proposed Offer price seemingly ignores:
(i) MCJ’s leading market share in built-to-order PCs in Japan with enduring brand loyalty;
(ii) its uniquely integrated end-to-end value chain in Japan, including distribution partnerships with global brands and chipmakers such as Microsoft and Intel; and
(iii) the strength of the Company’s balance sheet, which boasts over ¥53BN of cash on hand, and annual free cash flow generation of over ¥13BN over coming years (based on the conservative forecasts of Mizuho Securities Co., Ltd. (“Mizuho Securities”)).
Notwithstanding MCJ’s operating profit margin of nearly 10%, which is more than twice the average of its regional peers, the ¥2,200 Offer price implies a discounted 7x forward EV/EBITDA (again based on Mizuho Securities’ conservative forecasts). By contrast, comparable regional peers are trading at 9x to 10x forward EV/EBITDA, implying a 30% upside to the current Offer price at a bare minimum. Based on our extensive analysis, with the benefit of international and local professional advisors, we firmly believe that the intrinsic value of MCJ today exceeds ¥2,800 per share.
2. Lack of independent external advisors to the Special Committee
A demonstrably robust independent appraisal of the Offer required the Special Committee to obtain independent legal and financial advice. This is an essential feature of any credible special committee process and one specifically foreshadowed in the METI Fair M&A Guidelines1 (“METI Guidelines”), which explicitly highlight the importance of independent professional advice and potential structural conflicts associated with advice obtained by a board which is liable to prioritise the interests of the acquiring party. Such a risk was always going to be heightened in a management buyout scenario with a Special Committee unable to independently stress-test the strategic narrative and other information fed to it by the Offeror or the Board-selected financial adviser. The fact that the Special Committee operated in such circumstances without any independent professional advice is a glaring and troubling omission that serves to undermine the integrity of the Special Committee’s supposedly independent appraisal of the Offer.
3. Conflicted financial adviser
Mizuho Securities, the independent financial adviser and valuation agent appointed by the Board to evaluate the Offer, stands to be paid a contingency fee linked to the successful completion of the Offer. Moreover, a related group company, Mizuho Bank, is financing the Offer. This raises a pressing question: why did the Board, supported by the Special Committee, select Mizuho Securities when multiple other firms and financial institutions without any of the same conflicts were available to take this appointment? The apparent conflict raises the question of whether Mizuho Securities was appointed to critically appraise or facilitate the Offer. The fact that Mizuho Securities relied on unjustifiably conservative assumptions to underpin its DCF analysis – notably, a discount rate range 2-3% too high and exit multiples that were too low based on our analysis for a company with a high-quality brand, operating profit growth and strong free cash flow generation – only serves to reinforce our concerns.
4. No fairness opinion
Equally troubling is the absence of any fairness opinion to support the Offer price. The Company’s stated justification appears to be that it gave adequate consideration to the interests of MCJ’s minority shareholders. This is a hollow assertion lacking in credibility, particularly when looked at in the context of the other fundamental shortcomings outlined in this letter, which leaves minority shareholders without the benefit of a critically important fairness measure designed to mitigate structural conflicts of interest and information asymmetries in management buyouts.
5. Inadequate price negotiation
The Board noticeably failed to extract an appropriate uplift to the Offer price initially presented in a “negotiation” which has all the hallmarks of a superficial box-ticking exercise. In particular, faced with Bain’s refusal on 3 February 2026 to accommodate the Special Committee’s request to increase the proposed price at that point of ¥2,200 in the interests of the Company’s minority shareholders, the Special Committee seemingly capitulated the following day and accepted a price it considered inadequate (and one dissenting member has asserted was inadequate, which is a highly unusual occurrence for the Japanese market) without explanation. In the absence of obtaining independent financial or legal advice or any fairness opinion, such a rapid change in position was inappropriate and belies the idea that the Offer price was the best price achievable through a proper arms-length and robust negotiation. The only appropriate course of action in circumstances where a further price increase cannot be secured from the Offeror is, in our view, for the Board and Special Committee to recommend against shareholders tendering into the Offer.
6. No market checks
Moreover, without any active market checks or alternative valuations, the Board and Special Committee were left without the benefit of essential pricing benchmarks, whether for negotiation leverage or to ensure fairness ultimately for minority shareholders. Such checks were even more indispensable for safeguarding the integrity of the deal with a controlling shareholder rolling into the buy-out, thereby seriously weakening or eliminating in practice any competitive market tension for, or competing strategic interest in, the Company that could otherwise have helped to establish a market benchmark.
Such a catalogue of shortcomings is inexcusable and, in our view, calls into question the manner in which the members of the Board and Special Committee conducted discussions with the Offeror and ultimately came to support a deal which disregards corporate governance norms and represents poor value for minority shareholders.
We reiterate our urgent call on the Board and Special Committee to uphold their duties to, and prevent an unfair and egregious outcome for, minority shareholders, by immediately withdrawing their recommendation for shareholders to tender into the Offer unless and until the Offer price is increased to a level that is fair and reasonable from the perspective of minority shareholders.
Each shareholder has a decisive role in determining the outcome of this transaction and protecting their own interests and the interests of minority shareholders as a whole by rejecting the Offer and not tendering unless the terms are improved to reflect fair value for minority shareholders.
Sincerely,
Manuel Schlabbers
Portfolio Manager and Head of Trading APAC
Joon Ho Choi
Portfolio Manager
About Maven Investments
Maven is a market-leading proprietary trading and investment firm, allocating internal capital between discretionary, systematic and market-making strategies. The firm was established over a decade ago and, with offices today in the United States, Europe and Asia, has developed into a leading market participant across multiple geographies and asset classes.
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1The “Fair M&A Guidelines – Enhancing Corporate Value and Securing Shareholders’ Interests” published by the Ministry of Economy, Trade and Industry on 28 June 2019. |
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