Mitsubishi UFJ Lease to acquire Hitachi Capital in $2.8 bn share swap

Japan’s Mitsubishi UFJ Lease will buy smaller rival Hitachi Capital Corp in an all-share deal valued around 294 billion yen ($2.8 billion), based on Mitsubishi UFJ Lease’s closing price of 515 yen on Thursday.

Hitachi Capital has a market value of 319 billion yen based on Thursday’s close.
The merger ratio has been set at 1:5.10, ie, 5.10 shares of Mitsubishi UFJ Lease’s common stock will be allotted for one share of Hitachi Capital’s common stock.
As per the deal, Mitsubishi UFJ Lease would give 571 million shares to shareholders of Hitachi Capital and the two companies expect the new company to be set up in April.
The new integrated company will have 10 trillion yen of total assets, combined revenue of around 1.4 trillion yen ($13.3 billion),and over 100 billion yen ($950 million) of net profit. The two companies will have assets worth about 10 trillion yen ($95 billion), and almost 10,000 employees.
Since the capital and business alliance concluded in May 2016, Mitsubishi UFJ Lease and Hitachi Capital have been in collaboration, including jointly incorporating the Japan Infrastructure Initiative Company Limited in order to reinforce the overseas infrastructure investment business. During this time, the two also considered business integration as one of the options as they continued discussions. 
The move is prompted by various factors, including the mega-trends influencing domestic and international economies in the long-term, such as climate change, shortages of resource, independence from natural resources and fossil fuels, demographic changes, technological innovation, urbanisation, the shifting of the global economy, and global multi-polarisation, the companies stated.
The global expansion of the Covid-19 pandemic has led to a paradigm shift for the overall economy and society, which sharply accelerated changes in corporate activities, such as qualitative restructuring of supply chains, digitalisation to adapt to a data economy, and shifts from mass production and consumption to a circular economy, it added.
With the business integration, Mitsubishi UFJ Lease said it would operate in a manner that complements each other’s business, so that the new integrated company will be less susceptible to the external environment, while the enhanced capabilities would increase profitability via expanded investment activities.
The balance of assets of Mitsubishi UFJ Lease largely consists of corporate finance-based customer business, real estate and aviation. On the other hand, a large portion of the balance of assets of Hitachi Capital is sales finance such as account and vendor solutions, as well as Europe. 
As one of the largest global players and by utilising its expanding scale and built-up capital, the new integrated company will accurately identify and meet the changing needs of its customers in countries and regions across the world to develop into a company that can provide solutions to modern social issues, it added.