A Japanese investment firm that failed to break a “poison pill” defense in its bid for a printing press company had no choice but to sell most of its stake at a loss or risk a battle that would have destroyed more value, its chief executive said.
Tokyo-listed Asia Development Capital Co last month sold 32 percent of Tokyo Kikai Seisakusho Ltd to a group of newspaper publishers led by the Yomiuri Shimbun, effectively ending its unsolicited bid for the 106-year-old company.
“We were bound to lose if we continued our fight with Tokyo Kikai’s management,” Asia Development president Anselm Wong told Reuters in an interview last week. “When Yomiuri offered to buy the stake, we felt we had no choice.”
Photo: Reuters
His comments follow an intense legal battle in corporate Japan over the past year that illustrates the high hurdles unsolicited bids still face in the country’s capital markets and potentially sets a precedent for similar bids.
Wong took the Yomiuri Shimbun up on its offer to buy the 32 percent stake, believing that he was unlikely to get support from the Yomiuri Shimbun and other newspapers if he rejected the offer, Wong said.
Without the support of Japan’s powerful broadsheets — the Yomiuri Shimbun is one of the world’s largest newspapers by circulation — Tokyo Kikai’s printing press business could face trouble, he said.
The newspaper told Reuters in a statement the sale talks had started at Asia Development’s request and not the Yomiuri Shimbun’s.
It said the confrontation between Tokyo Kikai and Asia Development was “clearly irreparable,” and the newspaper companies’ share acquisition was “the only option to normalize the situation and put Tokyo Kikai management on course for stability.”
A poison pill is a strategy designed to thwart hostile takeovers whereby other shareholders get new shares in the company, diluting the suitor’s stake.
The Japanese Supreme Court last year ruled against Asia Development, which had tried to stop Tokyo Kikai from issuing a poison pill defense.
As a result, Asia Development had to reduce its 40 percent stake to less than 33 percent or risk massive dilution. Ultimately, it sold far more to the Yomiuri Shimbun and the other newspapers.
The ￥2.2 billion (US$19 million) sale resulted in a one-time loss of ￥1.6 billion for Asia Development and left it with 8 percent in Tokyo Kikai.
The supreme court case was closely watched by investors as a gauge for the legal future of potential hostile bids.
As corporate governance has improved in the world’s third-largest economy, hostile bids — once taboo — have become a little more common.
Wong, a Malaysian who first moved to Japan as a student and speaks fluent Japanese, said he believed investment returns from the remaining 8 percent would eventually offset the ￥1.6 billion loss.
He said management had made Tokyo Kikai less attractive since the firm, previously profitable, posted a loss of ￥969 million in the nine months through December last year.
Asia Development previously called on Tokyo Kikai to step up its business helping the newspaper industry digitize and find new investment opportunities.
Tokyo Kikai said in a statement to Reuters that it would strive to increase corporate and shareholder value with commitments to support the newspaper industry and serve the public interest.
Shares of Tokyo Kikai are down about 30 percent this year after surging more than fourfold last year.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
RSS