Japanese manufacturing giant Nidec announced on Friday its intention to make an unsolicited bid worth 257 billion yen ($1.6 billion) for Makino Milling Machine, a surprise move in a country typically associated with agreed mergers and acquisitions.
Nidec revealed that Makino’s board had not yet agreed to the offer of 11,000 yen per share, which represents a 42% premium over Thursday’s closing price, as the bid had not been proposed to Makino before the public announcement.
The world’s leading precision motor manufacturer, Nidec, plans to navigate regulatory processes by early April and proceed with the tender offer on April 4, even without Makino’s approval, according to a statement.
Makino responded, saying it was unaware of Nidec’s proposal prior to the announcement and would conduct due diligence on the offer.
Following the announcement, Makino’s shares surged to the daily limit, closing 19% higher after being suspended due to a surge in buy orders. Nidec’s stock also rose by 4.1%.
Mike Allen, an equity research director at Tokyo-based Azabu Research, commented, “The deal looks like a rare win-win. Makino’s price-to-book ratio is low, but its return on equity is consistently below 6%, so synergies are needed. Nidec is also very undervalued.”
He added, “Makino’s insider control is minimal, so this could easily succeed.”
Nidec, based in Kyoto and led by founder Shigenobu Nagamori, has supported recent Japanese guidelines aimed at encouraging more mergers and acquisitions, as well as reducing the stigma around unsolicited bids.
A reform push by the Tokyo Stock Exchange has also led to an increase in share buybacks, cross-shareholding unwindings, and management buyouts.
In 2023, Nidec acquired Takisawa Machine Tool through a 16.6 billion yen unsolicited bid.
Nagamori told the Nikkei newspaper this month that Nidec was seeking acquisitions as large as 1 trillion yen and had identified three potential targets in Europe and the United States.
If successful, Makino would become Nidec’s largest acquisition to date, surpassing its $1.2 billion purchase of France-based motor maker Leroy-Somer in 2016, according to LSEG data.
