The Prospect Japan Fund Limited
Recommended, all share, offer for Prospect Japan Fund Limited (LSE) by Prospect Co. Ltd (TSE:3528) via a scheme of arrangement under Guernsey Law
Japan / UK
Prospect Co., Ltd.
In November 2016, Strand Hanson was appointed by Prospect Co., Ltd. (“Prospect” or the “Company”) to act as Joint Financial Adviser and sole Rule 3 Adviser, alongside Mizuho Bank, Ltd. (Corporate Advisory department), an investment banking arm of Mizuho Financial Group in relation to the Company’s recommended all-share offer for the entire issued and to be issued share capital of The Prospect Japan Fund Limited (“TPJF”) under the provisions of the City Code on Takeovers and Mergers (the “Code”). This was the first ever all-Japanese equity offer for a UK listed, Code company, as, previously, it was thought to be highly difficult to combine the UK and Japanese jurisdictional and regulatory requirements, particularly with regard to settlement mechanics.
The recommended share-for-share offer was implemented by way of a scheme of arrangement under Guernsey Law (the “Scheme”) at a ratio of 2.5 New Prospect Shares in exchange for each TPJF Share, valuing the entire issued share capital of TPJF at approximately US$146.6m, a premium of approximately 68% to the middle market closing price of a TPJF Share prior to the start of the offer period and a premium of approximately 28.1% to TPJF’s last published NAV per share prior to the date of the announcement of the transaction.
The offer successfully completed on 27 July 2017, upon the Scheme becoming effective, with 88% of votes cast in favour at the requisite Court Meeting to approve the Scheme.
Strand Hanson led the transaction process, working closely with the Company, Baker McKenzie and Herbert Smith Freehills, to orchestrate the successful completion of what was a unique and complex multi-jurisdictional transaction.
In particular, the transaction included various pioneering elements, most notably the need to devise bespoke and unprecedented settlement and guarantee mechanics to enable the all-share offer to comply both with the relevant provisions of the Code, particularly the maximum 14 day settlement timetable, and all-Japanese legal and regulatory requirements.
In addition, a unique combination of legal undertakings and post offer intention statements (under the Code) were required to be constructed and implemented for the benefit of the new (ex TPJF) shareholders of Prospect, whereby certain information and participation rights are to be provided in English, in a protected form, for at least a five-year period post completion.
Strand Hanson is delighted to have jointly led such a precedent-setting M&A transaction, which once again demonstrated the innovative creative approach that the M&A team at Strand Hanson brings to challenging transactions.