Trading house Takashima explores M&A targets in Japan - exec

Interview 21 November

Trading house Takashima explores M&A targets in Japan - exec

Takashima & Co [TYO:8007], a Tokyo-based supplier of building materials, electronic devices, and other industrial materials, is looking for M&A targets in two key strategic areas under a new three-year business plan revealed on 14 November 2022, Executive Officer Takahisa Tokumoto told Mergermarket. 

The two areas are what the company calls Base Expansion Focus Businesses and Future Investment Businesses. The former refers to high-profitable sectors that have further growth potential, said Tokumoto, who concurrently serves as General Manager of Strategic Planning & Management Department.

More specifically, this includes businesses related to large logistical warehouses for e-commerce and residential houses with anti-disaster and other sophisticated functions, according to the plan.

Electric vehicle-related logistical materials are also included in the category, Tokumokto said. For example, M&A could be an option to boost its capability to supply packing materials to transport motors for EVs, he explained.

Under the new middle-term business plan, dubbed as ‘Sustainability X’, the JPY 12.9bn (USD 91m) market cap company has expanded its budget for strategic investments including M&A from JPY 7bn to “more than JPY 10bn” for the five years from FY2021 through FY2025.

Takashima will particularly focus on three business solutions - energy-saving, weight-saving, and labor-saving solutions, in accordance with the plan.

Of the JPY 10bn, Takashima has already used JPY 3.7bn, said Tokumoto.

The second focus area, or the Future Investment Businesses, means sectors that have much growth potential although they are in low profitability for now, he noted.

The area includes solar power generation panels for self-consumption at business and industrial structures as well as EV-related products for residential houses, according to the corporate material.

Takashima would welcome target proposals from securities companies and investment banks, Tokumoto added.

“We are going to invest lots of money and human resources for these two areas,” Tokumoto said, noting “M&A can be an option there.”

The company would consider M&A to strengthen the firm’s existing business units or enter new sectors related to them. It would not consider entering unfamiliar business via M&A, Tokumoto added. 

Takashima meanwhile would not consider cross-border M&A deals either, partly given expected difficulties in the post-merger integration process, he said.

Having its own manufacturing plants of electronics components in Thailand and Vietnam, the company is steadily expanding operations in the regions, he added.

On 14 November 2022, Takashima announced the acquisitions of all the outstanding shares in two companies; Fukuoka-based New Energy Distribution System, which engages in the construction work for solar power panels and electric vehicles for residential houses, as well as Nagano-based Sinbou Edix, which produces environmental sanitation and anti-disaster goods. Both deal values were undisclosed.

For the first half of FY2022 ended on 30 September, the company posted JPY596m in operating profits, down 30.5% YoY on group sales of JPY 38.8bn, up 2.8% YoY.

Takashima had JPY 6.1bn in cash and deposits as of 30 September, according to the financial statement.

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