Sompo Japan aims to raise its 3.5% stake in Message to 51% or higher. An initial tender offer will kick off Monday to acquire 34.69% of outstanding shares for 2,500 yen apiece from Message's founder, his wife and his asset management company.
The second stage of the takeover will begin Jan. 29. Sompo Japan will offer ordinary shareholders 3,500 yen a share, or a roughly 49% premium on Thursday's closing price. Depending on the results of the second stage, the insurer will likely pay 30 billion yen to 40 billion yen for the acquisition.
Message will become a consolidated subsidiary of Sompo Japan in March. It will be renamed Sompo Care Message in June or later. The care provider will stay on the Tokyo Stock Exchange's Jasdaq market. Sompo Japan is expected to appoint three of the company's 10 board members.
Message's sales rose 6% to 78.9 billion yen for the year ended March 31, while operating profit surged 10% to 7.3 billion yen. Sompo Japan acquired care provider Watami no Kaigo this October and renamed it Sompo Care Next in December. The two nursing home operators' sales totaled 114.3 billion yen for fiscal 2014. Sompo Japan will thus likely rise to second place in Japan's eldercare market, ahead of Benesse Holdings' 87.3 billion yen nursing care business. Nichii Gakkan will remain on top for now.
Sompo Japan anticipates strong growth in the eldercare industry and looks to make the business a core source of profit, alongside domestic insurance and overseas operations.
Message has been working to revamp operations and rehabilitate its image in recent months. News emerged in September of fatal falls by residents of a nursing home run by a subsidiary, while November brought a government reprimand for that and other violations. Sompo Japan intends to expand risk and personnel management measures to help address these issues. The insurer also looks to make operations at the company more efficient by applying information technology.