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The Financial Services Agency has started a probe into KDDI Corp.’s possibly illegal plan to buy a major stake in cable television operator Jupiter Telecommunications Co., according to sources.

The financial watchdog is concerned the mobile phone carrier’s planned share purchase method could violate the financial instruments and exchange law, they said.

KDDI announced last month it is planning to acquire a 37.8 percent stake in the cable TV operator known as J:COM for ¥361.7 billion from a U.S. investment company in mid-February by buying three subsidiaries of the U.S. firm that hold J:Com shares.

The law requires that a tender offer be made when acquiring more than one-third of the shares in a publicly traded company on an off-exchange basis. A tender offer could boost KDDI’s acquisition costs by encouraging other shareholders to sell J:COM shares.

Although KDDI is planning to buy holders of J:COM shares rather than the shares themselves, it is suspected that the plan effectively runs counter to the law.

The FSA has been conferring with KDDI about the plan, the sources said.

If KDDI goes ahead, it could face a fine of around ¥90 billion, or 25 percent of the acquisition value. The FSA is expected to ask KDDI to switch to a tender offer, the sources said.

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