Last month we reported on on an interloper disrupting the cosy PE-backed MBO of signage industry darling Roland DG. That 'interloper' was Brother Industries, a mighty big cheese compared to Roland DG. Brother can see a fast track into major wide format market share - especially in the USA and Europe but Roland DG's majority shareholder is the very equity company that is looking to back the MBO and guess what - it's second time around for Taiyo and Roland. Andy McCourt investigates.

 RolandDG corporate profile mainRoland DG is being courted by two passionate suitors

Taiyo LogoTaiyo Pacific Partners sounds very Japanese and has a nice Kanji logo and indeed - it has very strong credentials in Japanese business dealings but it's headquartered near Seattle in Washington state, USA and is a 'Delaware company.' These are very smart people and know Asia business intimately, especially in Japan and India.

The 'big Kahuna' there is Mr Brian Heywood and they don't come out of Harvard any smarter than he. Fluent in oral and written RolandDG brian k heywoodBrian K Heywood - Taiyo Co-ChairmanJapanese - culture too - he has a long history with both Roland Corporation ( keyboards, musical instruments, Boss pedals, amps etc) and Roland DG (wide format, dental, 3D) - which was once a subsidiary of Roland Corporation. Ten years ago in 2014, Mr Heywood and Taiyo facilitated the LBO (leveraged buy-out) of Roland Corp - which is how Roland DG became independent as it was excluded in the deal with its own sale to management. Maybe this is a second bite at the cherry?

Taiyo still holds about 34.4% of Roland Corp stock and 19.4% of Roland DG stock, with Heywood sitting on both boards. The latest move by Taiyo is all about privatising Roland DG, de-listing from the Tokyo bourse and building on its already strong market position, in a market sector that is performing better than the overcrowded musical instrument scene. Taiyo is well-backed having sold a majority slice to the family behind the Nintendo gaming business - the Yamauchi family.

The latest move in what is looking more like an auction of Roland DG is that Taiyo (through its bidding company XYZ) has upped its offer to buy out shares in Roland DG to JPY5,370,  trumping Brother's offer of JPY5,200 by 170 Yen per share but on-market trading has now soared to around JPY 5,490 per share, so both are shy of what the market is valuing Roland DG shares at!

Meantime, Brother is playing it cool and saying it will begin its tender offer on May 15th - no doubt at an increased price to its already tabled JPY5,200 - otherwise who would sell to them at 290 Yen below what they can get on the bourse?

Taiyo and Mr Heywood have not ruled out doing business with Brother but are waiting to see how seriously they want Roland DG - and what their plan is to add value to the compamy if they gain control.

Either way, Roland DG shareholders are on a winner and it's looking like a game of:  "I'll see your bet and raise you another... whatever." Until someone folds?

Andy McCourt


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