Japanese instant noodle maker Nissin yesterday announced a capital alliance with rival food company Myojo, in a move to block a takeover offer from a US investment fund and possibly trigger a bidding battle.
Nissin Food Products Co, maker of just-add-water Cup Noodle brand noodles, said it will launch a friendly tender offer to buy shares of Myojo Foods Co to help the smaller rival fend off a ¥29.82 billion (US$254.9 million) takeover threat from US private equity fund Steel Partners.
Under the capital alliance accord, Nissin Food will spend ¥12.7 billion to buy 33.4 percent of Myojo shares for ¥870 per share through a tender offer between Thursday and Dec. 14 for its smaller rival.
The bid price is higher than the ¥700 that Steel Partners Japan offered late last month.
Myojo turned to Nissin for the alliance after deciding that Steel Partners' takeover bid would not benefit its corporate value, Japan's fourth-largest instant noodle maker said.
In forming a capital alliance, Nissin is acting as a "white knight" for Myojo, while hoping to create products that appeal to a broader range of consumers both inside and outside the country, Nissin said.
Myojo shares closed up 13.3 percent at a daily upper limit of ¥861 yesterday on the Tokyo Stock Exchange's first section, while Nissin fell 1.1 percent to ¥3,440.
A move to thwart Steel Partners' hostile takeover attempt would reflect the opposition that much of corporate Japan still holds toward US-style mergers and management.
Steel Partners, headed by Warren Lichtenstein, made headlines in late 2003 when it launched openly hostile, but ultimately unsuccessful, takeover bids for two small companies.
The fund, which already holds a 23.1 percent stake in Myojo, aims to buy all remaining outstanding shares in its tender offer from Oct. 27 through Nov. 27.
Steel Partner's bid became hostile after its proposal to launch a management-buyout failed to convince Myojo executives.
Myojo has said the US fund only aims to obtain short-term profits and has no prospects for Myojo's management over the long term.