MEDIROM Healthcare Technologies Announces Acquisition of Japan Gene Medicine Corporation

Core Viewpoint - MEDIROM Healthcare Technologies Inc. plans to acquire a majority stake (70%) in Japan Gene Medicine Corporation, with an option to acquire the remaining 30% in the future, aiming to expand its presence in the healthcare technology sector in Japan [1][2]. Transaction Overview - The acquisition involves a share transfer agreement to acquire 70% of Japan Gene Medicine from an individual shareholder, with a legally binding memorandum for the option to acquire the remaining shares [1][2]. - The total transfer consideration is set at 2 billion yen, based on an enterprise value calculated using a multiplier of six times the adjusted EBITDA [8][18]. Market Context - Prenatal genetic testing services are underutilized in Japan, with only 7.2% of pregnant women using such services in 2016, indicating significant growth potential in this market [2]. - The demographic trends in Japan, such as an increasing childbearing age and declining birthrate, suggest a rising demand for genetic testing and analysis services [15]. Strategic Fit - The acquisition aligns with the company's strategic objective to become a holistic healthcare provider, enhancing its portfolio that includes health tech solutions like the "Lav®" training app and the "MOTHER Bracelet®" [2][16]. - Japan Gene Medicine's target demographic aligns with the company's wellness salon business, Re.Ra.Ku®, allowing for expanded service offerings and improved customer experience [16]. Financial Structure - The transaction will be financed through the company's own funds and borrowings, with a special purpose company established to facilitate the share transfer [5][19]. - The closing of the share transfer is contingent upon several conditions, including revised subcontracting agreements and financing commitments [19].