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LIXIL announces losses of YEN 33.2 billion (US$ 265 million) due to Joyou AG’s insolvency filing

LIXIL (“Link to good living”) acquired approx. 70% of German listed Chinese subsidiary Joyou AG via the GROHE acquisition

Joyou AG files for bankruptcy

On January 21, 2014, LIXIL had acquired 87.5% of the German bath fixtures company GROHE Group (“Pure Freude am Wasser”).

The GROHE Group owns 72.3% of Joyou AG, thus Joyou AG became a LIXIL subsidiary in January 2014. Joyou AG had an IPO at the Frankfurter Stock Exchange in 2010.

Joyou AG recently filed for bankruptcy, and on June 3, 2015, LIXIL announced a restatement of accounts and projections, reducing income statements.

LIXIL announced income reductions due to the Joyou AG bankruptcy filing:

  • FY 2013 (ending March 31, 2014) net income reduced by: YEN 23.8 billion (US$ 191 million)
  • FY 2014 (ending March 31, 2015) net income reduced by: YEN 9.4 billion (US$ 76 million)
  • FY 2015 (ending March 31, 2016) net income reduced by: YEN 33 billion (US$ 26.5 million)
  • Total net income reductions (net losses): YEN 66.2 billion (US$ 532 million)

LIXIL plans to increase international business to half of its sales, and these losses represent a setback for LIXIL’s globalization plans – one of Japan’s new companies striving to overcome Japan’s “Galapagos effect”.

LIXIL

Lixil Corporation (“Link to Good Living”), TSE-Code 5938, manufactures building materials and housing equipment and operates home and home building centers.

LIXIL was formed on April 1, 2011 by the merger of:

  • Tostem Corporation
  • Inax Corporation
  • Shin Nikkei Company, Ltd.
  • Toyo Exterior Co., Ltd.
  • Sun Wave Corporation

and has been growing aggressively through acquisitions with the target to achieve 50% sales internationally outside Japan. In particular, jointly with the Development Bank of Japan (DBJ) LIXIL acquired a 87.5% stake in the German GROHE Group in 2013, the American Standard Brands (ABS), and the Permasteelisa Group of Italy.

To become global leaders in building materials and housing equipment, LIXIL has recently acquired:

  • American Standard Brands (ABS), in August 2013 for US$ 542 million
  • American Standard Asia Pacific, in August 2009
  • Permasteelisa Group of Italy in 2011
  • Shanghai Meite Curtain Wall System in 2011
  • LG-TOSTEM, strategic alliance formed in 2010
  • Haier-LIXIL, strategic alliance formed in 2011
  • jointly with the Development Bank of Japan (DBJ) LIXIL acquired a 87.5% stake in the German GROHE Group in 2013, which includes the Joyou AG

Copyright (c) 2015 Eurotechnology Japan KK All Rights Reserved

Categories
Japanese investments in EU M&A

LIXIL and Development Bank of Japan (DBJ) together acquire 87.5% of GROHE Group

LIXIL (“Link to Good Living”) pursues strategy to become global leader in building materials and housing equipment industry

LIXIL acquires 87.5% of German GROHE Group (“Pure Freude an Wasser”), valuing GROHE at € 3.06 billion

Lixil Corporation follows the strategy to become the global leader in building materials and housing equipment, and on January 21, 2014, together with the Development Bank of Japan, acquired 87.5% of the German GROHE Group. The shares were acquired from Glacier Luxembourg One Sarl, which is indirectly owned by TPG Capital (formerly Texas Pacific Group) and DLJ Merchant Banking Partners (“DLJ MBP”), an affiliate of Credit Suisse and traces its roots to Donaldson, Lufkin & Jenrette.

The acquisition deal structure is quite complex. Voting rights are split 50%/50% between Lixil and Development Bank of Japan (DBJ), Lixil uses YEN 160 billion of non-recourse loans. Lixil has a call option on DBJ share ownership, allowing Lixil to acquire all of Grohe.

  • Lixil’s advisors:
    • Financial advisors: SMBC Nikko Securities, BNP Paribas, Development Bank of Japan (DBJ), Moelis
    • Legal advisors: Linklaters, Mori Hamada & Matsumoto, Nagashima Ohno & Tsunematsu
  • Grohe’s advisors:
    • Financial advisors: Acxit Capital Management, Goldman Sachs, Credit Suisse, Morgan Stanley
    • Legal advisors: Clifford Chance, Nishimura & Asahi, Weil Gotshal & Manges

Lixil Corporation

Lixil Corporation (“Link to Good Living”), TSE-Code 5938, manufactures building materials and housing equipment and operates home and home building centers. To become global leaders in these fields, LIXIL has recently acquired:

  • American Standard, in August 2013 for US$ 542 million
  • American Standard Asia Pacific, in August 2009
  • Permasteelisa Group, in 2011
  • Shanghai Meite Curtain Wall System in 2011
  • LG-TOSTEM, strategic alliance formed in 2010
  • Haier-LIXIL, strategic alliance formed in 2011

LIXIL was formed on April 1, 2011 by the merger of:

  • Tostem Corporation
  • Inax Corporation
  • Shin Nikkei Company, Ltd.
  • Toyo Exterior Co., Ltd.
  • Sun Wave Corporation

and has been growing aggressively through acquisitions with the target to achieve 50% sales internationally outside Japan.

Copyright (c) 2014 Eurotechnology Japan KK All Rights Reserved