An independent Hokuetsu Paper Mills Ltd. panel recommended Tuesday that the company initiate measures to foil a hostile takeover bid by industry leader Oji Paper Co.
Hokuetsu said its board of directors will make the final decision whether the company should carry out the defensive steps.
The three-member committee studied the appropriateness of whether Hokuetsu can invoke a so-called poison pill, issuing equity warrants to all existing shareholders to dilute Oji's voting rights and make it difficult for Oji to take control of the company.
Oji launched a tender offer last Wednesday to acquire a controlling stake in its smaller rival as part of its efforts to cope with intensifying international competition.
The high-profile takeover battle took a surprising turn Thursday when Nippon Paper Group Inc., the holding firm of Japan's second-largest papermaker, said it had an 8.49 percent stake in Hokuetsu and intended to increase its stake to as much as 10 percent.
On Monday, Hokuetsu issued new shares worth about 30 billion yen to Mitsubishi Corp.
Nippon Paper said Tuesday it has built its stake to 8.85 percent in terms of voting rights.