Oji Paper Co. does not plan to apply for a court order to block a capital increase plan by Hokuetsu Paper Mills Ltd., which is an obstacle to Oji’s hostile takeover bid for Hokuetsu, according to sources.
With only a week left before Hokuetsu’s planned Aug. 7 issuance of new shares to Mitsubishi Corp., Oji has judged it would be difficult to the complete necessary procedures for an injunction in time, the sources said.
Oji also fears legal action would serve to toughen Hokuetsu’s stance, they said.
Oji privately made a business integration proposal to Hokuetsu on July 3. But Hokuetsu announced July 21 it would issue 50 million new shares to major trading house Mitsubishi for some 30 billion yen, or 607 yen per share, and form a business tieup with the trading house.
Oji then announced July 23 it would conduct a tender offer for about a month beginning in mid-August to purchase a 50.1 percent stake in Hokuetsu in terms of voting rights for 70 billion yen, or 860 yen per share. Following the tender offer, Oji would seek to acquire the remaining Hokuetsu shares through a share swap to turn it into a wholly owned subsidiary.
Hokuetsu has strongly opposed this offer and said it will stick to the planned capital and business tieup with Mitsubishi. Mitsubishi has also said it will go ahead with the new share purchase plan.
As a compromise proposal, Oji told Hokuetsu at a top-level meeting Friday that it would freeze an unsolicited public tender offer if Hokuetsu withdrew the capital increase plan.
Analysts say the domestic paper industry is too crowded and isn’t competitive globally.
Oji is desperate to reorganize its aging production facilities to fight cheap paper imports from China and Indonesia.
Hokuetsu is known for its efficient production.
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