Fiscal bailout for COVID-crushed Tokyo Dome

Article posted by Coliseum, December 30^th, 2020

Image: Tokyo Dome

Tokyo-based real estate developer Mitsui Fudosan Company has emerged as a savior for the pandemic-crushed Tokyo Dome (Japan). Mitsui Fudosan will acquire Tokyo Dome with Japanese media company Yomiuri Shimbun Group.

Recently, the property developer informed that it will acquire Tokyo Dome Corp. through a 120.52 billion yen ($1.16 billion) tender offer to help the operator of a major indoor ballpark in Japan fend off growing pressure from the Hong Kong-based Oasis Management Company. The Oasis Management Company is putting the heat on for a management change to help boost business opportunities. Hence, Mitsui Fudosan’s tender offer to acquire the Tokyo Dome Corp. could not have come at a more opportune moment.

The two companies will operate Tokyo Dome and its surrounding facilities to develop new amusement facilities to be known as the ‘Ball Park’. The two parties will leverage their expertise in attracting and redeveloping tenants.

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The Mitsui Fudosan Company Limited is a major real estate developer in Japan. Mitsui Fudosan is one of the core companies of Mitsui Group.

Tokyo Dome, one of Japan’s largest stadiums with a maximum capacity of 55,000, is located at Bunkyo, Tokyo, in Japan. It is the home ground of the professional baseball team, Yomiuri Giants, and was earlier known as ‘The Big Egg’ because of its oval-shaped flexible membrane roof. It is also used for other sporting events and concerts.

Oasis Management Company is a private investment management company that focuses on short- and long-term projects – mainly in Asia.

Tokyo Dome, which also runs an amusement park and a hotel next to the stadium, offered a takeover bid to Mitsui after it faced calls from activist investor Oasis Management Company for removal of Tokyo Dome Corp. President Tsutomu Nagaoka and two Directors, with the objective of improving revenue for the baseball stadium and hotel operator’s business. The change of guard offer was nixed by Tokyo Dome.

Mitsui Fudosan came as a knight in shining armor offering 1,300 yen per Tokyo Dome share, or a 44.93 percent premium on the closing price in the friendly tender offer which would last till January 18^th, 2021. Mitsui Fudosan will try to rehabilitate the popular leisure spot in the capital.

Shares of Mitsui Fudosan rose 2 percent in Tokyo soon after and Tokyo Dome remained untraded and bid at its daily upper limit of yen 1,047 per share on a glut of buy orders. Shares of Tokyo Dome had dropped 17 percent this year, giving it a market value of about yen 86 billion.

Tokyo Dome has been hit on the financial front due to event cancellations and postponements amid the COVID-19 curse, with the Japanese Government limiting the number of spectators at big sporting and other events.

The company reported a net loss of 9.82 billion yen in the first half of this business year from February to July, which compares with a 4.69 billion yen profit a year earlier.

A takeover would be “somewhat positive” for Mitsui Fudosan, Masashi Miki, an analyst at financial services company Citigroup Inc., observed.

“The deal would allow it to acquire prime City center real estate and would also lead to return on equity (ROE), given the scale of the acquisition,” Miki added.

The Japanese property developer said it will first make Tokyo Dome a wholly owned subsidiary company and transfer 20 percent of the company’s stake to the Yomiuri Shimbun Holdings.

Mitsui Fudosan, known for operating commercial complexes such as outlet malls, hopes to use its expertise and create synergies in an endeavor to redevelop the popular leisure space in the capital.

Mitsui Fudosan sees the amusement facilities as a new pillar of growth. The company has been working on developing complex facilities in recent years. But the coronavirus pandemic has dealt a blow to many amusement operators due to canceled events. It is possible that more companies will follow Mitsui Fudosan in supporting struggling developers.

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