TOKYO, Aug. 21 /Xinhua-PRNewswire-FirstCall/ -- Prospect Asset Management Inc. today announced its strong support of the planned January 2009 merger of two Japanese condominium developers, namely, Azel Corporation (Stock Code: 1872 TSE and OSE First Section; Tadashi Furue, Representative Director & President) and Gro-Bels Co., Ltd. (Stock Code: 3528; TSE Second Section; Shinichi Hisanaga, Representative Director & President). Prospect holds approximately 44.76% of the equity shares of Azel and 38.48% of the equity shares of Gro-Bels.
Background of the Deal
Executives of Azel and Gro-Bels held in-depth discussions and concluded that powerful synergies could be achieved through a merger, specifically: 1) Strengthening of the value chain in the condominium business spanning land acquisition, planning and design, construction, sales, and after-sales service; 2) Complementation of each company's business areas and products; 3) Cost reduction through utilization of each company's construction know-how; 4) Synergy through a stronger presence in the condominium management market; and 5) Enhanced efficiencies through business integration.
In the process of the merger, Gro-Bels will be absorbed by Azel and will cease to be listed on the stock market. Shares in Gro-Bels will be exchanged for ordinary shares in Azel.
Prospect Chairman Curtis Freeze commented that "As a long term investor in Japan's real estate sector, we believe underlying real estate asset values and the mid to long term outlooks are generally sound, but that short term factors strongly argue in favor of synergistic M&A. Based on published reports, we understand that investment funds, regulators, stock exchange officials, investment bankers, and investors are reaching a consensus that consolidation in the Japanese real estate sector will optimize value for all shareholders."
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