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TOKYO, June 11 (Reuters) - Bain Capital's tender offer "substantially" undervalued Japanese nursing home operator Nichiigakkan Co and appeared to take "advantage of COVID-19 related weakness in the share price", investment fund LIM Advisors said in a letter to management.
The 1,500 per share offer price recommended by NiichiGakkan's board last month in a management buyout was below estimated fair value of 2,400 yen per share, Hong Kong-based LIM wrote in the letter dated June 3.
Founder family members, management, and representatives of Bain Capital are affiliated with the offer, creating the potential for conflicts of interest, the letter read.
Additionally, the timing of the offer "appears to be taking advantage of COVID-19 related weakness in the share price at the expense of minority investors."
This is not the first time Bain's bid to buy a Japanese company was hampered by a third party. Last year, the U.S.-based buyout fund tried to take over printing company Kosaido Co only to be blocked by a Japanese activist fund led by Yoshiaki Murakami, which said Bain's offer was too low.
Nichiigakkan shares closed 1,591 yen in Tokyo on Thursday, slightly above the offer price. (Reporting by Rocky Swift and Junko Fujita; Editing by Simon Cameron-Moore)