Knapp Makes $1.4 Billion Bid for Japan Firm
Oct. 25, 1985
LOS ANGELES (AP) _ In Japan's first hostile takeover fight, financier Charles Knapp and a London partner Friday made an unsolicited bid of $1.4 billion for Minebea Co. Ltd. and pledged to launch an unfriendly tender offer if its proposal is rejected by Minebea's board.
Officials of Minebea, a leading manufacturer of miniature ball bearings and electronics parts, said they would have no formal comment until after the offer is studied thoroughly.
But Minebea Vice President Iwao Ishizuka reaffirmed his company's previous statements that it is ready to resist a hostile takeover.
Outcome of the fight is expected to have an impact on how Japanese businesses behave toward each other and how they deal with overtures from foreign investors.
Traditionally, Japanese businessmen have disdained hostile takeovers, but a growing breed of businessmen in that country - including Minebea President Takami Takahashi - have argued that those rules are old-fashioned and need to be changed.
Currently, Minebea is toying with making an unsolicited takeover offer of its own for Sankyo Seiki, a Japanese producer of precision electronics components.
Knapp's Trafalgar Holdings Ltd. and London-based Glen International, an investment firm, hold about a 30 percent stake in Minebea. More than two- thirds of the holdings are in convertible securities.
Japanese securities law requiring disclosure of holdings and intention is triggered when an investor holds more than 10 percent of a company's outstanding stock.
The $1.4 billion Trafalgar-Glen offer is comprised of cash, convertible debentures and U.S. government bonds.
With 342.44 million Minebea shares outstanding and reserved for future issuance, the offer works out to about $4.14 per share. That is slightly more than a 10 percent premium over the $3.74 value of Minebea's stock at the close of business Thursday.
When Trafalgar announced its intentions about a month ago, Minebea's stock was trading about $1.40 per share.
Trafalgar general counsel Mark Dodge said his group has invested about $125 million in trying to acquire Minebea. He said none of those funds come from Trafalgar Partners, a subsidiary that so far has raised about $1 billion to finance coporate buyouts.
Dodge also said he had been informed by Tokyo securities dealers that the Japanese Finance Ministry had told the nation's stock dealers not to assist Knapp's takeover bid.
Dodge said he is scheduled to meet next week in Tokyo with the director of the foreign capital division of Japan's trade ministry to discuss his company's intentions.
Trafalgar spokesma Don Reynolds said the grou0 is prepared to file suit if Minebea dilutes the company's stock, as Takahashi hxhreatened to do in an effort to make a hostile takeover more expensive.
Dodge said Trafalgar believes Minebea's earnings are too low and that his group would seek to take control of Minebea's board, recapitalize the company, restructure its finances and bring in American management techniques.
He said Trafalgar has no plans at this time to sell Minebea assets. But he said if the Japanese government objects to the deal because about 7 percent of Minebea's sales are to the Japanese Defense Ministry, that portion of its operations could be shed.
He pointed out that Minebea last year received U.S. government approval to purchase New Hampshire Ball Bearing Co. which does defense work in this country, adding, ''We would expect reciprocity.''
Reynolds said Trafalgar has discussed its intentions with Japanese institutions that hold stakes in Minebea, saying some of them share Trafalgar's feeling that Minebea is considering paying too much for Sankyo Seiki.
But he said none of those institutions indicated whom they would support in a hostile tender offer.