Hisamitsu Pharmaceutical, maker of Salonpas pain-relief patches, announced a ¥457 billion ($2.9 billion) management buyout to go private, signaling a wave of similar deals among Japanese drugmakers. Shares surged 19%, the biggest gain in over 47 years. The move aims for greater flexibility amid short-term investor scrutiny and government-mandated price cuts.
Hisamitsu Pharmaceutical announced on January 7 a plan to go private through a management buyout led by an entity controlled by Chief Executive Officer Kazuhide Nakatomi, a member of the founding family. The deal is valued at about ¥457 billion ($2.9 billion), with an offer of ¥6,082 per share representing a roughly 35% premium to the unaffected closing price on Monday.
The day before the announcement, shares rose 16% following a Bloomberg report on the potential deal. On the announcement day, the stock hit the daily limit, closing 19% higher—the biggest gain since August 1978. The tender offer will run from January 7 to February 19, with funding to come from loans by Sumitomo Mitsui Banking and Mitsubishi UFJ Financial Group.
This development exemplifies a broader flight from public markets among Japanese drugmakers. Facing dual pressures from short-term investor scrutiny and government-forced price cuts, companies are delisting to gain management flexibility for cost-cutting, portfolio reshaping, and long-term investments. Over the past two years, Mitsubishi Tanabe Pharma and Taisho Pharmaceutical Holdings have also gone private. Activist investor Dalton Investments has urged Aska Pharmaceutical Holdings to consider similar steps.
Analysts expect Hisamitsu's move to trigger more buyouts, potentially accelerating changes in the sector.
