Japanese firms’ appetite for British takeovers looks set to continue into 2017, as Sumitomo Rubber Industries agreed a £215m deal to buy Micheldever Tyre Services (MTS), the UK’s second largest car tyre distributor.
Micheldever, based in the picturesque Hampshire village of the same name, is owned by private equity group Graphite Capital, which has previously sold Maplin Electronics and Paperchase.
If Graphite’s latest sale goes through, it will mean the top two British tyre distributors are now in Japanese hands, after Kwik-Fit was sold to trading house Itochu for £637m in 2011. It will also provide further evidence of a growing appetite among Japanese investors for UK assets.
Japanese firms spent $33.7bn (£27.4bn) on 43 British firms last year, according to figures from financial markets analysis firm Dealogic. The lion’s share of last year’s spending was accounted for by SoftBank’s £24bn acquisition of smartphone chip maker ARM Holdings, unveiled in July.
But Japanese firms struck a series of less high-profile deals during 2016, both before and after the slump in the value of sterling triggered by the UK’s vote to leave the European Union.
The second largest deal of 2016 was Takeda Pharmaceuticals’ $790m acquisition of Cambridge-based Crescendo Biologics.
Sumitomo appears twice in the top five, after agreeing to spend $138m to buy the Dunlop sporting goods brand from Sports Direct, although that deal has yet to complete.
Earlier in the year, Japanese instant noodle firm Nissin built a stake of more than 19% in Premier Foods, the maker of Mr Kipling cakes and Oxo cubes.
A distribution deal between the two firms was among the factors that complicated a takeover bid for Premier Foods from US firm McCormick, the company behind Schwartz dried spices.
McCormick eventually walked away from the deal after Premier Foods held out for a higher offer.
Graphite Capital is understood to have been seeking a buyer for some time before Sumitomo expressed its interest.
The two sides have now struck a £215m deal, 3.7 times Graphite’s initial investment in 2006, with Sumitomo expected to continue the firm’s expansion, subject to the transaction winning regulatory approval from the European Union.
MTS has grown under Graphite’s ownership, increasing turnover from £150m to more than £320m and expanding its workforce from 600 people to 1,600.
MTS chief executive Duncan Wilkes said the deal would ensure the same management would continue to run the firm, which supplies about 6m tyres a year.
