LDH looks to unload Livedoor Web portal unit

Bloomberg

LDH Corp., the Internet company that paid ¥30.6 billion in dividends this year to Morgan Stanley and other investors, plans to sell its Livedoor Co. Web portal unit, sources said.

LDH plans to hire Citigroup Inc. to advise on the sale of Livedoor, including its blog and online matchmaking sites, according to the sources, who requested anonymity because the talks are private. The company will begin an auction for Livedoor as early as next month, they said.

The sale may free up cash for additional dividends to investors, including Morgan Stanley, LDH’s biggest shareholder, Goldman Sachs Group Inc. and Deutsche Bank AG. The three companies received a combined ¥30.6 billion of dividends from LDH this year.

Morgan Stanley invested in Livedoor after the company was delisted in April 2006 as prosecutors charged its founder, Takafumi Horie, with fraud. Horie faces a 30-month prison sentence.

“We are considering various options to improve Livedoor’s operations, which include an initial public offering and a sale,” said Kiyotaka Mura, LDH’s investor relations manager. “Nothing has been decided.

Morgan Stanley spokesman Natsuo Nishio declined to comment, as did Yumiko Iuchi, a spokeswoman at Citigroup Global Markets Japan Inc.

Morgan Stanley owned 1.9 million LDH shares, or an 18 percent stake, as of March 31.

Hybrid Capital Second, an investment unit of New York-based Morgan Stanley, bought 1.34 million shares in LDH from Usen Corp. CEO Yasuhide Uno in 2007, according to a Usen statement at the time. The price wasn’t disclosed. Uno bought the stake from Fuji Television Network Inc. in 2006 for a total of ¥9.5 billion.

Horie has appealed to the Supreme Court the 30-month prison sentence he received in 2007 for securities fraud.

His rise and fall captured the public’s attention as the University of Tokyo dropout rode the surging share price of Livedoor to become a billionaire and bid for control of the nation’s biggest broadcaster. He also ran for public office and was later convicted of faking the company’s profits.

Nippon Life Insurance Co., banks and more than 1,800 individual investors have filed lawsuits against LDH seeking compensation for losses stemming from Horie’s securities law violations.

Livedoor employs 360 people. Its Web portal site has about 22 million users and about 3 million people use its blog site. The company’s revenue rose to ¥2.5 billion in the three months ended June 30 from ¥2.1 billion a year earlier.