Taking Daikyo private by tender offer (2018)

Between pure investment and absorption

The heart of this decision lies in the fact that an asset held as a “pure investment” in a corporate rescue was not sold off at the exit but folded into the company as an operating business. Since beginning its support in 2005, ORIX had positioned Daikyo as something to be recovered within five years and had denied any intention of combining. Thirteen years later, Daikyo had changed from a development-heavy company into one earning from management and brokerage, and ORIX’s own property business had widened into facility operation and asset management. With the distance between them closed, the decision can be read as dissolving the half-measure of a listed subsidiary in order to buy speed of decision-making. A relationship that began as pure investment turned, over time, into a business necessity — the process is visible here.

That said, absorption need not mean the end of the relationship. Compressing the book value of property while warning that the market was running hot, and taking the company private in that posture, suggests a care not to let assets swell. A company that had kept looking for the exit as a pure investor now takes the same asset in as a core business — in ORIX’s style of management, where assets are made to turn, the two stances may not contradict each other. How far the integrated operation of a full-line property group can absorb a shrinking housing market and swings in conditions is left to the running of it after the acquisition.