Orix Drops Out of Yayoi Race

Japan’s Orix Corp. has dropped out of the race to buy private equity-backed software developer Yayoi, Reuters wrote Tuesday. Orix, along with Bain Capital and Advantage Partners, had advanced to the final round of bidding for Yayoi, in a deal worth about $800 million. MBK Partners is the seller. MBK acquired Yayoi in 2007 for 71 billion yen, or about 17 times EBITDA, Reuters reported.

(Reuters) – Japan’s Orix Corp has dropped out of the race to buy software developer Yayoi, a source familiar with the matter told Reuters on Tuesday, which could be a blow to MBK Partners’ plan to sell the business.

Orix, along with Bain Capital and Advantage Partners, had advanced to the final round of bidding for Yayoi, in a deal worth about $800 million. Orix was the frontrunner to win the auction, sources previously told Reuters.

A separate source told Reuters that Advantage Partners had also quit the process. It was unclear if MBK was still negotiating with Bain.

Differences over valuation could have led Orix to walk away from the deal, the source added.

The withdrawals are a setback in the private equity firm’s effort to exit the investment.

Pan-Asia fund MBK acquired Yayoi in 2007 for 71 billion yen, or about 17 times earnings before interest, tax, depreciation and amortisation (EBITDA), at the height of the leveraged buyout boom.

MBK’s launched the sale of Yayoi soon after Australian software maker MYOB was acquired by Bain Capital in August last year for $1.2 billion. Bain won the deal paying around 11.3 times EBITDA.

Yayoi had an EBITDA of around 5 billion yen ($65 million), and a bid of 12.5 times would take the value north of $800 million. The yen’s recent strength means that MBK could still effectively make a profit even if Yayoi is sold for less than it hopes, the sources previously said.

An Orix spokesman declined to comment, while MBK could not be reached immediately. (Reporting by Denny Thomas; Additional reporting by Junko Fujita, Wakako Sato, Stephen Aldred; Editing by Michael Flaherty and Muralikumar Anantharaman).