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Last updated: February 15, 2010 5:44 pm
Sumitomo Corp on Monday launched a Y122bn ($1.4bn) tender offer for shares in Japan’s largest cable television operator in an apparent challenge to telecom operator KDDI’s bid to become its largest shareholder.
The Japanese trading house said it would offer Y139,500 a share to buy up to a further 12.6 per cent of Jupiter Telecommunications, which would take Sumitomo’s total stake in JCom up to 40 per cent.
The offer is effectively creating a rare public battle between two blue-chip Japanese corporations over control of a third, although Sumitomo and KDDI might yet negotiate a partnership.
Sumitomo is currently JCom’s second-largest shareholder and holds its shares through a joint venture with Liberty Global, the US cable TV group led by John Malone, that will be dissolved on Thursday.
Last month Liberty Global agreed to sell its 37.8 per cent stake in JCom to KDDI, Japan’s second-largest telecoms company, for Y140,000 a share. Under the terms of that deal it would have made it hard for Sumitomo to assert any control over JCom. Sumitomo’s tender offer, if taken up, would make it the largest shareholder in JCom.
Yoshio Osawa, director of Sumitomo and head of its media, network and lifestyle unit, said on Monday that the group wanted JCom to remain one of its core businesses.
Sumitomo has supported JCom since its foundation – supplying capital, management and even its current president – and wants to remain its leading shareholder.
Sumitomo is helped by the fact that KDDI’s purchase fell foul of Japan’s tender offer rules, which forbid the purchase of more than a third of a company in an off-market deal not open to other shareholders. Under Japanese corporate law, a one-third stake is needed to block many resolutions at a general meeting.
KDDI last week agreed to place 6.7 per cent of the stake it is buying in a trust bank, leaving it with voting control of only 31.1 per cent of JCom.
Sumitomo’s offer is at a 55 per cent premium to the closing price of JCom’s shares in Tokyo on Monday.
KDDI on Monday declined to comment, while JCom said it would study Sumitomo’s proposal in detail and then give its view.
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