Kobayashi Pharmaceutical Co. is in advanced talks for a buyout exceeding ¥500 billion ($3.2 billion), led by CVC Capital Partners and Nippon Sangyo Suishin Kiko Ltd., to take the company private. The Japanese health products firm, embroiled in a red yeast supplement contamination scandal linked to suspected deaths, has seen its shares decline roughly 13% since early 2024. Founding family members are expected to participate in the transaction, which would value the company at a significant premium to its current ¥460 billion market capitalization.

Other Japanese pharmaceutical firms, including Hisamitsu Pharmaceutical and Taisho Pharmaceutical Holdings, have recently pursued similar privatizations to avoid shareholder pressure. Kobayashi's largest shareholder, Hong Kong-based activist investor Oasis Management, holding 14.4%, is closely watching the developments. If successful, the deal would allow the company to revamp quality controls and address rising raw-material costs.

In 2024, Kobayashi recalled red yeast supplements contaminated with puberulic acid following reports of illness. The company booked a ¥12.7 billion charge related to the recalls, with over 500 people eligible for health-damage compensation. Akihiro Kobayashi, an 11.9% family shareholder, stepped down as president.

The firm plans to invest ¥30 billion over three years in research and development to strengthen quality controls and restore consumer trust amid ongoing governance scrutiny.