Blackstone, Bain are said among bidders for Fuji Media real estate unit

[TOKYO] Investment firms including Blackstone and Bain Capital have advanced to the second round of bidding for the real estate unit of Fuji Media, sources familiar with the matter said, in what’s likely to be Japan’s biggest-ever property deal.

Japan’s Seibu and Canada’s BGO have also been shortlisted for the next phase to buy Sankei Building, the sources said, asking not to be identified because the deliberations are private. Their planned bids are around one trillion yen (S$8 billion), the sources said.

The second round is scheduled to finish in mid-September, during which time the finalists will conduct due diligence, including assessing the value of the real estate assets, they said.

Shares of Fuji Media, a television broadcaster, jumped 4.8 per cent in Tokyo on Thursday (Jun 25), after climbing 10 per cent at one point during the session. That beat the 1.3 per cent advance in the Topix index. Fuji Media’s stock has gained 31 per cent in the past 12 months, giving it a market value of US$4.2 billion.

Tokyo’s real estate market has seen large transactions recently, with some deals exceeding 400 billion yen by investors such as KKR and Blackstone, but the potential one trillion yen price tag suggests this sale may eclipse them as Japan’s largest.

The proposed sale reflects pressure that the Tokyo Stock Exchange and the government are putting on companies to improve corporate governance via measures such as selling off non-core assets.

A spokesperson for Fuji Media said that the company was not the source of the report and could not comment on it. Seibu and Bain representatives declined to comment on individual deals. Spokespeople for Blackstone and BGO did not immediately respond to requests for comment.

Sankei Building operates a wide range of real estate-related businesses through its subsidiaries, including office buildings, hotels, condominiums and rental apartments, logistics facilities, and nursing care properties.

That’s such a broad combination that the final buyer of the firm will likely form partnerships with real estate developers who have expertise in the various business areas, the sources said.

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Some bidders may consider teaming up with other companies, including firms that did not participate in the first round, the sources added.

Fuji Media’s proposed sale came after shareholders, including the family of well-known investor Yoshiaki Murakami and Dalton Investments, called for a spinoff of Fuji Media’s real estate arm, in addition to better shareholder returns and more accountability. BLOOMBERG