Sumitomo Mitsui Financial Group Inc. said Thursday it has acquired 300 shares in takeover target UFJ Holdings Inc., opening the door to counter a merger offer from a rival Japanese bank.
UFJ and Mitsubishi Tokyo Financial Group Inc. already have an agreement, announced in August, to merge their operations by October 2005. However, SMFG has also been keen to acquire UFJ, and has continued to lobby for it despite having been spurned earlier.
With the 300 shares in UFJ, SMFG will be able to make counter proposals at UFJ’s shareholders meeting expected next June, when UFJ and MTFG plan to seek shareholder approval for their merger proposal.
SMFG spokesman Takashi Morita confirmed that the 300 UFJ shares were purchased but refused to give other details. UFJ and MTFG said they had no comment on SMFG’s stock purchase.
SMFG officials have repeatedly said their bid is a more attractive offer for UFJ shareholders.
In its merger proposal to UFJ, SMFG has offered a one-for-one stock exchange, which puts a big premium on UFJ shares. It extended a deadline for a reply from late last month to June next year.
Last month, UFJ accepted a 700 billion yen cash infusion from MTFG that includes a condition making it harder for an outside suitor to step in, although it doesn’t rule it out entirely if a rival is able to convince UFJ shareholders.
UFJ, which is losing money and is struggling with a list of troubled borrowers, badly needed that cash to stay in business as a bank.
The unfolding battle over UFJ is unprecedented here because Japanese banking has long been orchestrated by the government during the decades of modernization after the nation’s defeat in World War II.
Mergers among banks surfaced only recently amid a long slowdown in the world’s second-largest economy that burdened many domestic banks with bad debts.
UFJ, SMFG and MTFG are among the “Big Four” financial groups formed in recent years through mergers of smaller banks.
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