CVC, NSSK weigh $3.2bn Kobayashi Pharmaceutical take-private

PE firm CVC Capital Partners and Japanese investment firm Nippon Sangyo Suishin Kiko (NSSK) are considering a bid of more than JPY500bn ($3.2bn) to take Japanese healthcare products company Kobayashi Pharmaceutical private, according to a report by Bloomberg citing unnamed people familiar with the matter.

Kobayashi said on Friday that it had received a preliminary, non-binding joint proposal from affiliates of CVC and NSSK regarding a potential acquisition of its shares. The company said no decision had been made and that discussions remained ongoing.

Kobayashi’s founding family could also participate in the proposed transaction, according to the people. The company and family members have engaged financial advisers and investment banks as they assess the potential offer.

Kobayashi’s shares have remained below their pre-scandal level since the company became embroiled in a controversy over supplements containing red yeast in early 2024. The stock was trading around 13% below its level before the incident, while the company had a market capitalisation of approximately ¥460bn at Thursday’s close.

A successful transaction would therefore represent a premium for shareholders, although the size of any premium has yet to be determined.

Kobayashi’s largest shareholder is Hong Kong-based activist investor Oasis Management, which owns a 14.4% stake, according to Bloomberg-compiled data. The fund has previously pushed for governance changes at the company through shareholder proposals and litigation, making its position an important factor in any potential take-private process.

Kobayashi itself owns 4.8% of its shares, while Akihiro Kobayashi, a member of the founding family, holds an 11.9% stake. Akihiro Kobayashi stepped down as president in 2024 following the supplement controversy.

The red yeast issue emerged after Kobayashi began receiving reports of illnesses associated with nutritional supplements containing the ingredient. The company subsequently recalled the products, some of which were found to contain puberulic acid.

Kobayashi has said its investigation has not established that any death was directly caused by its supplements, while Japanese health authorities separately identified a limited number of deaths involving suspected exposure to contaminated products and kidney damage.

The company recorded a ¥12.7bn charge related to the recalls and associated costs, while more than 500 people were deemed eligible for compensation for health damage.

CVC, NSSK and Kobayashi had reportedly not provided further comment on the potential transaction at the time of reporting.