Internet mall operator Rakuten Inc. is planning to ratchet up the pressure on Tokyo Broadcasting System Inc. by increasing its equity stake in the broadcaster above the 20 percent level while their business alliance talks remain stalled, sources said Friday.
Rakuten President Hiroshi Mikitani indicated the plan at a meeting with TBS President Hiroshi Inoue on March 12, the sources said.
If Rakuten were to increase its stake in TBS beyond 20 percent, tensions would grow between the two companies, industry sources said.
But it would be difficult for Rakuten to substantially boost its TBS ownership since stable shareholders control some 60 percent of all outstanding TBS shares, they said.
Rakuten issued a statement that it is considering various options to maximize its value, while remaining undecided on any specific action.
While confirming the meeting between the presidents, TBS said Rakuten has never notified the broadcaster of such a plan.
After acquiring an equity stake close to 19 percent in TBS, Rakuten started business alliance negotiations with the broadcaster in November 2005 on condition that Rakuten put a majority of its TBS shareholdings in a trust bank and freeze its voting rights on the TBS shares.
When the trust contract expired at the end of February without progress at the alliance talks, however, Rakuten ended the freeze in an apparent bid to increase pressure on TBS.
In response, TBS announced a plan to introduce a poison pill system at a general meeting of its shareholders in June to discourage Rakuten or any other unsolicited investor from acquiring more than 20 percent of TBS shares in a hostile manner.
The poison pill would allow TBS to issue equity warrants to existing shareholders to dilute an unsolicited investor's voting rights.
Mikitani told Thursday's general meeting of Rakuten shareholders that he would like to develop strong relations with TBS.
