Chilled & Frozen (C&F) Logistics Holdings [TYO:9099], a Tokyo, Japan-based cold chain logistics provider, is seeking white knight proposals against AZ-COM Maruwa Holdings’ [TYO:9090] unsolicited JPY 3,000 per share planned tender offer, according to four sources familiar with the situation.

Initial proposals of counteroffers are in the process of being collected this week, the first and second source noted. The JPY 77.7bn (USD 507m) market cap company has mandated QuestHub – which is known as a proxy advisory firm – as the financial advisor to run the selection process, the third source added.

The move comes after AZ-COM, a Saitama, Japan-based third-party logistics company, said on 21 March that it planned to fully acquire C&F via a tender offer set to launch in early May after the completion of antitrust procedures.

However, C&F is resisting the approach. It does not consider AZ-COM a preferred buyer due to a difference in corporate culture between the two companies, the first source said. The first source, a first sector expert, and an executive from C&F’s peer said that the founder-backed AZ-COM is known for its uncompromising sales style, and this would not integrate well with C&F’s corporate culture.

Given that AZ-COM has shown its intention to make C&F a fully owned subsidiary, most proposals coming from white knight candidates are believed to be in favour of privatizing of the company, the second source added.

C&F is likely to attract a number of strategic bidders from the logistics space, the first, second, fourth source said. A second industry expert echoed this view and said that this is a rare occasion of a cold chain logistics provider with a sizeable business being in play and there are many logistics companies that are hoping to enter this segment.

The second and fourth source noted that private equity firms are also showing an interest in the company.

Private equity firms such as KKR, which owns Logisteed, and Bain Capital, might be among those eyeing the asset, the second source added.

That said, the situation may better suit a strategic bidder because it would be difficult for some private equity firms to justify submitting competitive prices against a trade buyer that can pay more due to prospective synergies, the first source said.

Meanwhile, an executive from C&F’s peer pointed out that AZ-COM’s JPY 3000 p/s offer looks to be at a full price but they appear to have room to increase it. The possibility of a takeover battle may make some logistics companies reluctant to pursue the deal.

AZ-COM’s offer, which has a minimum acceptance level of 10.8m shares (49.89% stake), represents a 47.06% premium over the JPY 2,040 p/s closing price of C&F on 19 March.

AZ-COM’s JPY 3,000 per share offer values C&F at 8.74x EV/EBITDA. Mergermarket data shows precedent M&As in the logistics sector in Japan were done at a median of 12.4x EV/EBITDA.

Comparable peers including Alps Logistics [TYO:9055] and Sakai Moving Service [TYO:9039] are trading at a median of 6.33x EV/EBITDA. Prior to the bid, C&F was trading at 6.5x EV/EBITDA.

C&F and QuestHub declined to comment.

A spokesperson for AZ-COM said the company is not in a position to make comments on C&F’s specific actions but believes C&F will consider [the offer] in accordance with the Ministry of Economy, Trade and Industry’s (METI) Guidelines for Corporate Takeover. AZ-COM intends to build a new corporate culture together with C&F based on the spirit of equality, the spokesperson added.

C&F’s leading shareholders, as of March 2023, include The Master Trust Bank of Japan (trust account) (9.23%), followed by Maruha Nichiro Corporation (6.98%), Kyodo Milk Industry (6.06%), and The Norinchukin Bank (5.05%), according to the company’s website.

C&F closed at JPY 3,025 on 9 April.