Trading house Itochu Corp. said Friday it has increased its stake in major sportswear-maker Descente Ltd. to 40 percent, succeeding in what, for Japan, was a rare hostile takeover bid.
The two firms with over 50 years of business ties were drawn into a takeover battle last month when Descente opposed the tender offer by its top shareholder Itochu to raise the company’s equity stake from around 30 percent to up to 40 percent, a level giving the trading house veto power over crucial management decisions.
Unlike in the United States and Europe, hostile takeovers are unusual in Japan and rarely successful. A hostile takeover, as opposed to a friendly one based on a mutual agreement to deepen ties, is accomplished without the consent or cooperation of the target company’s management.
Through the tender offer between Jan. 31 and Thursday, Itochu offered ¥2,800 per share, which represented a 50 percent premium on the closing price on Jan. 30.
The feud arose partly from differences in views over the overseas strategy of Descente, which sells brands such as Le Coq Sportif, Munsingwear and Umbro, with Itochu objecting to its heavy reliance on its South Korean businesses that generate most of its revenue.
The trading house has urged the affiliate to seek revenue growth at home and in China. It has indicated that if the sportswear-maker shows no signs of responding to its request, Itochu will propose ousting Descente President Masatoshi Ishimoto at a general shareholders meeting.
But Descente has argued that Itochu’s proposed overseas strategy “is not significantly different from the measures we have already taken” and that it is opposed to any change in top management.
Descente, which provides training wear to Los Angeles Angels two-way star Shohei Ohtani, was founded in 1935 in Osaka, and its ties with Itochu date back to the 1960s.
Itochu helped Descente out of trouble in 1984, when it struggled with excessive inventories at Munsingwear, and in 1998 when its rights to sell Adidas clothes in Japan ended. The Adidas lineup made significant contributions to its sales at the time.
But as differences in business practices surfaced, Descente in 2013 appointed Ishimoto as president, marking the first time in 19 years that the sportswear company’s founding family had taken the helm instead of an Itochu-appointed chief.
Itochu said the appointment was made “without giving any prior notice to the directors who had been dispatched from Itochu.”