OSAKA (Kyodo) Hankyu Holdings Inc. will launch a public tender offer Tuesday for Hanshin Electric Railway Co. stock even though it did not reach an agreement on the share price with Hanshin’s largest shareholder, the Murakami fund.
The holding company of the Hankyu Corp. railway, which operates in the Kansai region, said Monday it is offering 930 yen per share of Hanshin, its rival railway in the area, for 21 days until June 19. Hankyu’s board approved the tender offer at an extraordinary meeting Monday.
Hankyu said, however, that unless it can get a stake in Hanshin of more than 45 percent, the equivalent of 189.74 million shares, it will not buy any stock. At the offered price, a 45 percent stake would cost 176.4 billion yen.
Hankyu said in a joint statement with Hanshin that it will buy all shares offered above the 45 percent cutoff. There are 421.65 million outstanding shares, which are worth 392.1 billion yen at the offering price.
Hanshin said its board of directors expressed support for Hankyu’s offer at their meeting earlier in the day.
The statement says the two firms’ boards also had approved the integration plan they mapped out in April.
If Hankyu succeeds in getting a 45 percent stake and shareholders in the two firms give their approval at general meetings to be held June 29, Hankyu will make Hanshin a wholly owned subsidiary through a stock swap on Oct. 1 and Hankyu will be renamed Hankyu Hanshin Holdings, the statement says.
Under the planned swap, a single Hanshin share will be exchanged for 1.4 Hankyu shares.
“We strongly want Mr. Yoshiaki Murakami to apply for our tender offer, as it will lead to the first postwar reconfiguration of capital ties of private railway companies,” Hankyu Holdings President Kazuo Sumi told a news conference. Former bureaucrat Murakami heads the Murakami fund, which holds about a 47 percent stake.
“We commend the fact that the two companies are moving in the direction of management integration,” the Murakami fund said in a statement.
Shares of Hanshin Electric Railway and Hankyu Holdings rose Monday on the news as hopes were fueled that its earnings will improve.
On the Tokyo Stock Exchange’s first section, Hanshin shares rose for the first time in three trading sessions to end at 948 yen, up 9 yen, or 0.95 percent, from its Friday close. Hankyu Holdings closed at 600 yen, up 20 yen, or 3.44 percent.
Moody’s Investors Service said it put Hankyu Holdings on review for possible upgrade in view of the announcement that it is seek to take over Hanshin Electric Railway.
The acquisition may strengthen the post-combination Hankyu group’s competitiveness in the Kansai area, partly due to joint development of properties, particularly in Osaka’s Umeda district, it said.
Hankyu has been in intense negotiations with the Murakami fund over the purchase price for the 47 percent stake.
Although last-ditch attempts over the weekend to agree on a price were unsuccessful, Hankyu officials said the company will try to persuade the fund to apply for the public tender offer.
The gap between the initial price Hankyu offered for the fund’s Hanshin shares and what the fund wanted has been reduced to tens of yen from several hundred yen after intense negotiations, according to sources.
However, the Murakami fund might refuse to sell all of its Hanshin holdings to Hankyu.
The sources said the fund told Hankyu in talks Sunday that it would only sell Hankyu a 33 percent stake and keep the rest.
The sources did not elaborate on whether that decision was firm or part of price negotiations.
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