OSAKA (Kyodo) Hankyu Holdings Inc. will soon decide formally to purchase all Hanshin Electric Railway Co. shares held by an investment fund led by financier Yoshiaki Murakami, possibly leading to a merger of the two railways, sources at Hankyu said Tuesday.
Assuming the purchase goes ahead, Hankyu Holdings will tender an offer for the Hanshin shares as soon as it strikes a deal with the Murakami Fund on the price, the sources said.
Hankyu Holdings owns Hankyu Corp., which competes with Hanshin in the Kansai region centering on Osaka.
The Murakami Fund is Hanshin’s biggest shareholder, holding a 45.73 percent stake as of late February.
Fearing the Murakami Fund could exercise its dominant voting rights to take over the railway at a general shareholders’ meeting in June, Hanshin has been encouraging other firms to buy its shares from the fund.
A Hanshin official confirmed on condition of anonymity that the company has been in talks with Hankyu over the stock purchase. Having Hankyu purchase the Hanshin shares from the fund is “a good, conceivable” solution, the official said.
Hankyu Holdings released a statement that it has “just launched a study on reinforcing the competitiveness of our business through enhanced cooperation with Hanshin” but cautioned it has not made a decision on whether to buy the Hanshin shares.
One stumbling block to the deal, which could result in a realignment of railways in the Kansai region, is haggling between Hankyu and the Murakami Fund over the purchase price. The fund is believed to be seeking a higher price for the shares than the railway has offered.
Another issue for Hankyu is raising capital for the purchase. If the company buys all of the Hanshin shares held by the fund at market value, the deal would cost about 200 billion yen.
Hankyu was founded in 1907 and Hanshin in 1899. The two railways have long been rivals, with both running lines between Osaka and Kobe.