Pentax yields to new Hoya bid

Pentax, Japan’s oldest maker of single-lens reflex cameras, on Thursday agreed to a takeover offer from Hoya, the precision glassmaker, after a month-long battle to maintain its independence.

Takashi Watanuki, Pentax’s president, met Hiroshi Suzuki, his counterpart at Hoya, and “informally accepted” Hoya’s Y770-a-share takeover offer, according to Pentax. This values the group at about Y98bn ($810m).

Details such as timing are to be hammered out at a later date.

Pentax’s board of directors is set formally to approve the move when they meet on May 24.

The acceptance ends weeks of turbulence in which the former head of Pentax, Fumio Urano, was ousted in a management coup because he engineered the original merger plan with Hoya.

That effort failed when the merger ratio was called into question. Under the terms of the initial agreement, announced in December, Hoya was set to exchange 0.158 of a share for each Pentax share.

The proposed move valued the camera maker at Y91bn and represented a premium of 10 per cent. The two companies called the merger off last month.

Sparx Asset Management, Pentax’s biggest shareholder with a 24 per cent stake, was pushing for the return of the ousted chief executive and another board member in an effort to reignite the scuppered merger talks.

But now Pentax has agreed in principle to Hoya’s takeover bid, it remains unclear whether Sparx will continue to push for the return of the two men.

According to people familiar with the situation, investors were less than impressed with management plans released last week.

Pentax said its net profit more than quadrupled over the previous year to Y3.57bn, due to strong demand for its digital single-lens reflex cameras.

The management said it planned to double group operating profit to Y11.2bn for the year ending March 2010 by focusing on cameras and endoscopes.

But observers said the profit targets were unrealistic, due to intense competition in the camera industry.

Pentax’s share price has failed to rise much above Y770 since it announced its new plan.

Although Pentax was a pioneer in inventing new camera technology, it failed to gain a strong early foothold in the digital camera market.

Hoya’s healthcare business is focused on lenses used in cataract operations. The acquisition of Pentax would add a speciality in endoscopes.

Hoya shares closed up 3.2 per cent on Thursday at Y3,900 while Pentax shares were 0.9 per cent lower at Y770.

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