Carlyle Group buys Japanese with Daiei


Deals have been hard to find for venture capitalists like the Carlyle Group in Japan, where companies fear turmoil from a sale

By staff and wire reports

TOKYO, Japan -- Japanese supermarket chain Daiei said Tuesday it is selling its security service to the Carlyle Group for 3.56 billion yen ($27.2 million).

It is the first big deal in Japan for the U.S. based Carlyle Group, a prominent venture capital company.

Carlyle had already said it would buy a stake in Daiei's security unit. The deal is structured as a management buyout.

It is taking on a 90 percent stake in the unit, called A.S.S. KK. It is also taking on debt, boosting the total of Carlyle's investment considerably.

The Nihon Keizai Shimbun newspaper reported on Tuesday that the total deal, estimated at 10 billion yen ($76.3 million), would help Daiei reduce its total liabilities of 2.3 trillion yen ($17.5 billion).

Shares in Daiei closed up 1.35 percent at 75 yen, on a day the benchmark Nikkei index fell 2.3 percent.

Japan a tough place to find deals

The buyout of A.S.S., which transports cash receipts for the restaurants that Daiei owns, would give Carlyle a foothold in Japan's budding security business.

The company also transports cash and provides guards for shops and small businesses.

Daiei will retain a five percent stake in Tokyo-based A.S.S., while A.S.S.'s management will hold the rest of the stake.

Carlyle last year made a small investment in private ADSL (asymmetric digital subscriber line) venture eAccess Ltd.

Washington-based Carlyle has more than $12.5 billion to invest. But it has been slow buying into Japan.

The private equity group now reportedly plans to invest more than 200 billion yen ($1.5 billion) in Japan over the next two to three years.

Japanese companies have in the past resisted selling out to overseas funds, fearing the sales would mean layoffs and management changes.

A.S.S. has 2,400 employees and posted sales of 15.4 billion yen in the year through February 2001. Insiders say Carlyle has proposed leaving management in place.

Reuters contributed to this report.