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Alps Alpine pursuing sale of stake in logistics unit

Alps Logistics’ [TYO:9055] largest shareholder Alps Alpine [TYO:6770] is in the process of selling its entire 46.7% stake in the Yokohama-based logistics company, five sources familiar with the situation said.

Nomura Securities is advising Alps Alpine, the Tokyo-based electric components maker, three of the sources noted. SMBC Nikko is working for Alps Logistics, according to the two sources.

First-round bids were collected in January, the first, and second sources said. Strategics and private equity firms have submitted bids, the first and the fourth said.

Alps Logistics has a market capitalization of JPY 69.6bn (USD 461.6m) as of today (28 Feb).

The deal may make more sense to a strategic bidder given ‘the 2024 problem’ in the logistic space, said the sixth source in reference to a forthcoming tightening of regulation restricting overtime for truck drivers that is set to take effect in April 2024.

It’s a factor that would make a private equity bid difficult unless they are pursuing a rollup strategy, the sixth source added.

Alps Logistics has for years been considered a non-core asset for Alps Alpine, partly because many other electric component makers divested their dedicated logistic subsidiaries to streamline their portfolio and focus on their core businesses, an industry expert said.

Established in 1964, Alps Logistics has 5,844 employees, according to the company’s website. It is engaged in warehousing service, transport service, forwarding, purchasing service, packaging design service, procurement logistics, and others, according to its website.

The company has three business lines; electronic components logistics, material sales, and consumer products logistics, according to the company’s 22 May 2023 presentation material.

On a consolidated basis, 68.3% of its revenue in the year ended March 2023 came from clients other than Alps Alpine Group, according to the same documents. Alps Logistics is aiming to increase the non-group sales ratio to 70.6% in the year ending March 2024, the document said.

It is also expanding its logistics infrastructures, the document stated. The company is planning to increase the number of bases to 195 in the year ending March 2024, from 192 in the previous year, the document stated. It also plans to increase the number of trucks in regular operation to 3,504 from 3,470 in the same period, according to the document.

Alps Logistics closed at JPY 1,963 – a twelve-month high – today (28 February), up 0.26% from the previous trading day.

The company posted sales of JPY 89.5bn and operating profit of JPY 4.5bn for the nine months ended December 2023, according to its 30 January 2024 financial statement. This compared to JPY 93.2bn in sales and JPY 6.6bn in operating profit a year earlier.

For the fiscal year ending March 2024, Alps Logistics expects to post revenue of JPY 123bn, up 1.5% YoY, and operating income of JPY 6.7bn, down 16.7%, according to the same document.

Alps Alpine and Alps Logistics did not return a request for comments by the time of publication.

Nomura and SMBC Nikko declined to comment.