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Kao Corp, buyout firms join forces to take over Kanebo

Kao Corp, Japan's largest manufacturer of household products, and three buyout firms plan to pursue a takeover of Kanebo Cosmetics Inc, said people involved in the bid. The Japanese government, which bailed out Tokyo-based Kanebo last year, values the company at about ¥400 billion (US$3.5 billion).

Unison Capital Inc, Advantage Partners Inc and MKS Partners Ltd may back Kao's latest offer for Kanebo, said the people, who declined to be identified before the companies made their announcement official. L'Oreal SA, the world's biggest cosmetics company, Johnson & Johnson and Japanese cosmetics maker Kose Corp may make competing bids, they said.

Buying Kanebo would almost quadruple Kao's cosmetics sales and help Tokyo-based Kao challenge Japan's market leader, Shiseido Co. The government is selling 86 percent of Kanebo Cosmetics and a stake in its former parent, Kanebo Ltd.

"The home-products business is facing saturation so acquisitions are the best way to expand and cut costs. Kao's marketing network may help attract financial sponsors," said Satoru Aoyama, an analyst in Tokyo at Fitch Ratings.

Kanebo Cosmetics was sold last year to Industrial Revitalization Corp of Japan for ¥366 billion after parent Kanebo Ltd posted five years of losses. Kao and Unison Capital submitted separate bids for Kanebo before the government saved the company from going bankrupt.

In the latest round of bidding, Johnson & Johnson has submitted an offer, said Manabu Hirano, director of human resources and administration in Japan for the world's largest maker of medical devices.
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