PRESS RELEASE: Portfolio managers of three GAM-managed special situations funds publish open letter on Yutaka Giken tender offer

Core Viewpoint - The portfolio managers of GAM-managed special situations funds are advocating for full transparency regarding the fairness analysis of the proposed tender offer by Samvardhana Motherson International (SAMIL) for Yutaka Giken, urging either the abandonment of the transaction or a significantly higher offer price to protect minority shareholders [1][2][4]. Summary by Relevant Sections Tender Offer Details - The tender offer premium for Yutaka Giken's shares is only 6.4%, significantly lower than the average premium of 28.7% observed in comparable transactions [3][8]. - The proposed offer price of ¥3,024 per share is viewed as inadequate, with the portfolio managers suggesting that a fair price should be at least 50-70% higher [19]. Valuation Concerns - The implied valuation from the tender offer is reported to be below Yutaka Giken's net cash of ¥42.2 billion, raising concerns about the fairness of the offer [3][12]. - The portfolio managers have highlighted that the tender offer price does not meet average premium levels seen in similar transactions, and no quantitative justification has been provided for the low premium [13][18]. Recommendations - The portfolio managers are calling for the publication of the fairness opinion and the underlying valuation work, including key assumptions used in discounted cash flow (DCF) analysis [7][14]. - They recommend reassessing the transaction to either withdraw it or secure a significantly higher price, noting that the current offer undervalues Yutaka Giken [4][19]. Market Reaction and Implications - Following the announcement of the tender offer, SAMIL's market capitalization increased significantly, suggesting that the acquisition is being viewed favorably by the market despite the low offer price [10]. - The transaction is seen as potentially damaging to the reputation of Japanese corporate governance, particularly regarding the treatment of minority shareholders [20]. Financial Metrics - Yutaka Giken's forecasted revenue for FY 3/26 is ¥162.0 billion, with an EBITDA margin of 9.5% [17]. - The tangible book value of Yutaka Giken is reported at ¥100.2 billion, indicating that the tender offer price represents a price-to-book ratio of 0.30x [17]. Conclusion - The portfolio managers express strong disappointment with the sale process, citing a lack of transparency and governance flaws, and emphasize the need for a fair valuation that reflects Yutaka Giken's intrinsic value [12][20].