Oji Paper Co. President Kazuhisa Shinoda admitted Tuesday his company's takeover bid for Hokuetsu Paper Mills Ltd. has been thwarted.
The bid "is likely to fail," Shinoda said at a news conference in Tokyo, effectively ending the effort by the country's largest papermaker to merge with a rival.
Oji said it has decided not to change the terms of its tender offer for Hokuetsu shares by raising the purchase price or cutting the number of shares it is trying to acquire. The tender offer is the first hostile bid by a major Japanese company for a domestic rival.
In an effort to strengthen its competitiveness in the wake of the failed takeover, Oji will spend 50 billion yen to 60 billion yen installing advanced papermaking equipment at its factory in Tokushima Prefecture by summer 2008, Oji officials said.
Oji launched a tender offer Aug. 2 aimed at gaining more than 50 percent of Hokuetsu at a price of 800 yen per share. Although the bid runs through next Monday, Hokuetsu shareholders with a majority of the shares have said they have no plans to sell.
Oji privately proposed a merger with Hokuetsu on July 3, but Hokuetsu rejected the proposal and on July 21 announced plans to issue 50 million new shares to Mitsubishi Corp. at 607 yen per share and to form a tieup with the trading house.
Oji publicly proposed a merger with Hokuetsu through a tender offer July 23. Hokuetsu said the following day it would push ahead with the Mitsubishi alliance.
On Aug. 7, Hokuetsu said it had completed a new share issue to Mitsubishi, making the trading house the largest shareholder, with a stake of 24.4 percent.