Reported in The Australian.news.com.au(26/7/06)

“HOKUETSU Paper Mills is poised to become the first major Japanese company to use a poison-pill defence after it rejected an unsolicited $US1.2 billion ($1.6 billion) offer from Oji Paper, Japan’s largest paper manufacturer.

Oji Paper threatened to launch a hostile tender offer after Hokuetsu failed to respond by Monday to its offer to merge, which it first presented to the smaller company on July 3.
Hokuetsu instead announced a poison-pill defence and on Friday agreed a Y30 billion ($340 million) share issue and tie-up with Mitsubishi Corporation, which would make the trading company its largest shareholder. “
The move which involves the issue of new shares to dilute a hostile bidder’s stake if it acquired a holding of more than a 20 per cent.
Frightened by such aggression, and by large overseas takeover battles, such as that of Arcelor and Mittal Steel, many Japanese companies last year began implementing poison-pill provisions.

Other noteworthy points about this hostile takeover:

• Oji Paper would start a tender offer in mid-August for at least 50.1 per cent of Hokuetsu;
• Oji is offering Y860 for each Hokuetsu share, a 35 per cent premium over Hokuetsu’s closing stock price on Friday;
• If Oji Paper takes over Hokuetsu, it would create the world’s fifth-largest paper group;
• Earlier, Oji Paper’s tender offer trumps Mitsubishi’s deal to acquire Hokuetsu shares at Y607 per share, which is a 4 per cent discount to Hokuetsu’s closing stock price of Y635 on Friday;
• Hokuetsu’s hastily arranged poison pill has reignited debate on use of the tool in Japan;
• About 50 companies have introduced such measures since last year, when the Ministry of the Economy, Trade and Industry (METI) published its authoritative guidelines, modelled on US takeover defences.

Refer to blatant disregard on corporate governance ,etc in my ieauditblog.com

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