Japan's Nidec takes aim at Makino Milling with $1.6 bln unsolicited bid

Japanese manufacturing giant Nidec 6594 said on Friday it planned to launch a 257 billion yen ($1.6 billion) bid for Makino Milling Machine 6135, a surprise unsolicited takeover offer in a country better known for agreed deals.

Nidec said Makino's board had not agreed to the 11,000 yen per share offer, a 42% premium to Thursday's closing share price, as it had not proposed the bid before announcing it.

The world's top manufacturer of precision motors said it plans to clear regulatory processes by early April and launch the tender offer on April 4, even without Makino's consent.

Makino said in a statement it was not made aware of Kyoto-based Nidec's proposal before the announcement, and that it would release its opinion after examining the offer.

Shares in Makino surged by their daily limit, closing 19% higher, after going untraded during the session amid a glut of buy orders. Nidec's stock jumped 4.1%.

"The deal looks like a rare win-win," said Mike Allen, an equity research director for Tokyo-based Azabu Research.

"The price-to-book ratio for Makino is very low, but return on equity is consistently below 6%, so they need to create synergies. Nidec is also dirt cheap."

"Insiders' control of Makino is very low, so this can easily work," he added.

Nidec, led by founder Shigenobu Nagamori, backed Japanese guidelines issued last year to promote mergers and acquisitions and remove a long-held stigma around unsolicited bids.

A reform push by the Tokyo exchange has also sparked a slew of share buybacks, unwindings of cross-shareholdings and management buyouts.

Nidec last year acquired Takisawa Machine Tool after making a 16.6 billion yen unsolicited takeover offer.

Nagamori told the Nikkei newspaper this month that Nidec was on the hunt for a purchase as big as 1 trillion yen and was eyeing three potential targets in Europe and the United States.

Since it began in 1973 with just three workers, Nagamori has boosted Nidec's market value to nearly 3.4 trillion yen, larger than Olympus 7733 or Kyocera 6971, placing its products in everything from cars and smartphones to AI data centres.

Makino would be Nidec's largest acquisition to date, according to LSEG data, eclipsing its $1.2 billion takeover of France-based motor maker Leroy-Somer in 2016.

($1 = 157.7400 yen)