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Private equity group Fortress has agreed a $100mn deal to buy Japan’s oldest and most eccentric hot springs resort: a Hawaiian-themed hotel, golf and waterslide complex just 50km from the stricken Fukushima nuclear plant.
To gain ownership of the 431-room Spa Resort Hawaiians, Fortress has launched an agreed tender offer for Joban Kosan, the Tokyo-listed company originally founded as the operator of Japan’s largest coal mine. In a statement to the Tokyo Stock Exchange on Monday afternoon, Joban Kosan said its board had agreed to recommend the offer.
The resort is by far the company’s largest asset and stages regular performances of Polynesian dancing it describes as “packed with pulsating power and primal thrills”. It has been a favourite destination of Japanese families since the 1960s and pioneered a once huge domestic industry for elaborate hotel resorts.
The site includes the world’s largest onsen — a natural hot spring — with a 1,000 sq metre complex of naturally hot baths exploiting the water released from more than 140 years of mining activity. The 2006 film Hula Girls, which dramatised the resort’s gritty origins, won best film at the Japan Academy Awards that year and remains a beloved national parable of success against the odds.
The hotel sits in Fukushima prefecture, roughly 200km north of Tokyo. The nearest town, Iwaki, was once a thriving mining community but fell on hard times in the 1960s when oil began to replace coal as Japan’s primary energy source.
A plan to resurrect the town’s fortunes centred on training the wives and daughters of unemployed coal miners to perform in hula-dancing troupes, performances that would eventually draw more than 1mn visitors a year to the hotel.
Following the 2011 earthquake and tsunami in Tohoku, which caused a meltdown at the Fukushima nuclear plant, the Hawaiians reopened to guests just 204 days after the disaster, underscoring its reputation for resilience.
The Fortress bid comes with plans to invest a further $70mn to help enhance the resort’s appeal to couples and non-family groups. Plans include the construction of a child-free section of the hot spring and an upgrade of other spa facilities.
The deal is part of what analysts and M&A bankers predict will be a rapid acceleration of foreign takeover attempts targeting Japanese companies, as governance standards and shareholder-friendly practices improve.
Major shareholders of Joban Kosan include private construction companies involved in the original building of the resort, as well as regional banks and suppliers, most of whom, according to people familiar with the situation, support the sale to Fortress.
Fortress, which is majority-owned by Abu Dhabi’s Mubadala investment arm, is already a heavy investor in Japan’s hospitality industry and has more than 160 hotels under management. It is currently benefiting from the country experiencing an unprecedented tourism boom and record numbers of foreign arrivals. It also owns Accordia Golf, one of Japan’s largest golf course operators.
The investment group, which manages roughly $49bn, launched its Japanese business in 2009. The business at the time was focused on distressed asset sales in the wake of the global financial crisis. It has kept its property turnaround capabilities at its core even as its franchise expanded.
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