Japan’s Isetan Mitsukoshi looks to take Isetan Singapore private

JAPAN’S Isetan Mitsukoshi is looking to take mainboard-listed Isetan Singapore : I15 0% private by fully acquiring all the shares it does not own, ending the departmental store operator’s four-decade run on the Singapore bourse.

The proposed privatisation will be achieved through a scheme of arrangement, with a consideration of S$7.20 for each target share, the company said on Monday (Apr 1).

This implies a 37.4 per cent premium over the counter’s highest closing market price of S$5.24 in the past five years. It also offers a 26.3 per cent premium over the highest intra-day traded price of S$5.70 over the same period.

The scheme consideration is 153.5 per cent higher than the company’s closing price of S$2.84 on Mar 28, the last trading day. The company called for a trading halt on Monday morning.

It is also 173.4 per cent, 171.1 per cent, 168.9 per cent and 152.4 per cent above Isetan Singapore’s volume-weighted average price for the one-month, three-month, six-month and 12-month periods, respectively.

Isetan Mitsukoshi believes the acquisition will be an opportunity for shareholders to fully exit their investment, otherwise difficult due to the low liquidity of Isetan Singapore’s shares.

There are also no other alternatives for shareholders to realise the value of their investment in their shares, Isetan Mitsukoshi said.

The company had attempted to unlock value for shareholders by attempting to divest its assets, particularly its strata title in Wisma Atria. The deal, announced in 2021, was unsuccessful.

“In addition, it is unlikely for there to be other competing offers for the company, given that the offeror holds more than 50 per cent of shares in the company,” the offeror noted.

Tokyo-listed Isetan Mitsukoshi is the holding company for Mitsukoshi and Isetan department stores. It owns a direct interest in 21.8 million shares, representing around 52.73 per cent of Isetan Singapore’s share capital.

The proposed acquisition and subsequent privatisation, which will result in Isetan Singapore becoming a wholly-owned subsidiary, will give Isetan Mitsukoshi greater flexibility in its overall business strategy for its international operations and greater operational efficiencies.

“Privatising the company will also bring the company in line with the offeror’s other international operations, which are all through unlisted entities,” it added.

For the six months ended Dec 31, 2023, Isetan Singapore sank into the red with a net loss of S$1.9 million, from a net profit of S$871,000 in the previous corresponding period. This translated to a loss per share of 4.59 Singapore cents. Revenue was down 3.5 per cent to S$43.2 million.

For the full year, revenue was down 3.8 per cent to S$84.3 million; net loss was S$1.2 million, from a net profit of S$1.3 million in the same period the year before.

The scheme will require in-principle approval from the Singapore Exchange for the scheme document and proposed delisting, along with a sanction of the scheme by the Singapore High Court.

It will also need majority approval, representing three-fourths in value of the shareholders present and voting at a scheme meeting to be convened at the direction of the court.