MBK Partners Plans to Launch a Tender Offer for Makino Milling Machine

• MBK Partners plans to launch a tender offer for Makino Milling Machine (6135 JP) at 11,751 yen per share by early December to take over the controlling ownership.

• The key long-term investment case for Makino is that it is one of the best companies in the world for making advanced machine tools that are increasingly becoming more sophisticated.

• One could make the argument that this may not the final offer and some investors may require slightly higher prices in order to make the deal final.

On 4 June, it was reported that MBK Partners plans to launch a tender offer for Makino Milling Machine Co (6135 JP) at 11,751 yen per share by early December to take over the controlling ownership of the company. Makino Milling Machine's share price is 11,650 won (as of 5 June) with a market cap of 290 billion yen (US$2 billion).

Makino has agreed with the bid from MBK Partners and recommended that all shareholders tender their shares in the offer. Back in December 2024, Nidec Corp (6594 JP) made an unsolicited bid for Makino at 11,000 yen per share. However, Nidec withdrew its tender offer in early May 2025 after Makino announced a takeover defense measure.

In this case, MBK Partners is acting as a white knight, providing a binding tender offer proposal. The total number of shares subject to the tender offer is 23.39 million shares, resulting in total tender offer amount of 274.8 billion yen (US$1.9 billion).

This tender offer will be carried out through MBK's subsidiary, MM Holdings. This public offering will be carried out through MBK's subsidiary, MM Holdings. MBK Partners recently obtained the status of exclusive preferred bidder in the Makino acquisition battle after competing with Carlyle and others. If the tender offer is successful, MBK will push for Makino's delisting. MBK will utilize its 6th blind fund worth 10 trillion won established last year for this tender offer.

MBK Partner's tender offer for Makino Milling Machine is slightly better than the one offered by Nidec Corp whose tender offer price of 11,000 yen for Makino was a 42% premium over its stock price at the time. In response to Nidec's hostile bid, Makino received alternative acquisition proposals from other entities, including MBK Partners and Nippon Sangyo Suishin Kiko Group (NSSK). These proposals were considered more favorable by Makino's management, leading the company to request Nidec to delay its tender offer.

MBK Partners Likely to Become More Active in M&A Markets Outside of Korea

In the next one to two years, there is a good chance that MBK Partners is likely to be more active in M&A markets such as Japan, Taiwan, China, and Southeast Asia, rather than in Korea. This is mainly because some lingering backlash against MBK due to the recent failed investment of Homeplus (second largest hypermarket/supermarket chain in Korea).

Despite having numerous solid investments in Korea this recent failed investment in Homeplus has been causing some headaches for MBK Partners. See our recent insight Is Homeplus Debacle a Key Negative Tipping Point for MBK? for further details. In addition, there has been some continued delays/ongoing lawsuits regarding its attempt to take over the control of Korea Zinc (010130 KS). So while MBK bides more time in Korea for a favorable investment climate, it is likely to deploy more capital in other Asian countries for tender offers and M&As.

Key Long-Term Investment Case for Makino Milling Machine

The key long-term investment case for Makino Milling Machine is that it is one of the best companies in the world for making advanced machine tools that are increasingly becoming more sophisticated and detailed, used in important industries aerospace, EVs, and medical industries. Major customers in these segments are willing to pay higher prices for more quality machine tools.

Although the valuation multiples of Makino has risen 60-70%+ based on EV/EBITDA, P/E, and P/B versus the historical valuations, the company's increasing importance in major industries such as aerospace, EVs, and medical sectors could result in continued sustained higher valuation multiples.

Shareholders of Makino Milling have been handsomely rewarded in the past year (Makino's share price is up 75% in the past one year). While investors continue to ponder on whether they should just accept MBK's most recent offer as final, one could make the argument that this may not the final offer and some investors may require slightly higher prices in order to make the deal final.