Jim Grant discusses a profitable Japanese company he bought for less than net current asset value in 1998.
Whopper made a great point that Grant's annualized return on his purchase of Sankyo Rikagaku was likely satisfactory. I was focused on the Japanese execs' complete disregard for shareholders, but it seems like shareholders may have benefited along with all competing constituencies. However, I wanted to see how good of a deal management got when it purchased the company for .9x book value. Here are some quick numbers based on Sankyo's results from 2006-2008:
(calculated using tangible assets minus cash)
Book value is 10,443,140 * .9 = 9,398,826 purchase price. Sankyo had tangible equity of 7,609,706 in 2008. Let's say it earns 10% on tangible book, or 760,971. Management bought the company for 12.4x earnings. This is not outrageously low like I thought it might be.
(Note: the company was bought out in mid-2009, but I only have numbers through March 2008 so the analysis is not perfect.)
From a quick Google search (http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C392J4570):