Sakura Bank said Friday that it will acquire a controlling stake in Minato Bank, a second-tier Kobe-based regional bank — the first takeover bid in the Japanese banking sector.
In the friendly takeover bid, Sakura Bank will purchase between 53 million and 142 million Minato shares for 240 yen per share between next week and July 24, the bank said.
The deal will see the Sakura group’s stake in Minato rise from the current 9.96 percent to up to 47.29 percent. Considering Sakura Bank’s planned merger with Sumitomo Bank in April, the combined stake of the Sakura and Sumitomo groups is estimated to reach a maximum of 50.27 percent.
Tokyo-based Sakura Bank is looking to raise its earning power by increasing its number of affiliate regional banks and by reviewing its nationwide business network. Minato is seeking to strengthen its management base by joining the Sakura Bank group.
At a Tokyo news conference, Sakura Bank President Akishige Okada said Minato’s affiliation with the Sakura Bank group is expected to help stabilize the regional financial system and improve financial services.
Okada added that the bank opted for a takeover bid rather than the traditional method of having new shares allocated because a takeover bid is the most fair and transparent way of increasing a stake in another company.
He also expressed confidence that the takeover bid would succeed.
“When Minato Bank was created (in April 1999 through the merger of two banks, the) banks received an equal amount of shares each,” he said. “But it seems to me these banks don’t have a compelling reason for maintaining their minority stake.”
Okada ruled out launching takeover bid for another regional bank in the future.
Minato President Keiichiro Yano also joined the press conference.
Sakura Bank plans to transfer the operations of 20 of its branches in Hyogo Prefecture to Minato by Jan. 9, 2001. Consequently, Minato will have 10 new business bases with the 10 other outlets to be integrated with Minato’s existing branches.
Minato was launched in April 1999, through the merger of Hanshin Bank and Midori Bank. Midori took over the bankrupt Hyogo Bank before merging with Hanshin.
The Sakura Bank group, which is already the largest shareholder of Midori, transferred four branches on Awajishima Island in Hyogo Prefecture to Midori from February to May.
Allocation of new shares to a third party has traditionally been the preferred means of strengthening the capital relationship between companies.
But with traditional cross-shareholding waning, banks are likely to attempt to control companies through takeover bids, which enable a bidder to swiftly acquire a considerable volume of shares from shareholders at one time, banking industry officials said.
Minato posted an unconsolidated net operating profit of 13.5 billion yen and a net profit of 2.84 billion yen in the year ended in March 2000. Its capital adequacy ratio was 8.72 percent.
Minato’s stock closed Thursday’s session at 230 yen on the Tokyo Stock Exchange.