Self-made rebel takes on RM59 billion Japan giant in M&A fight
BEJI Sasaki, a maverick businessman who first challenged Tokyo’s status quo four decades ago, says his bidding war with the US$ 13 billion ( RM59 billion) computer giant Fujitsu Ltd. is just the start of his plan to use take- overs to change Japan Inc.
Sasaki, a 61-year- old entrepreneur, fashion designer and super-marathon runner, says he’s setting up a fund backed by Taiwanese money to help ambitious Japanese executives and employees buy out their companies and expand into China and Southeast Asia. His logic is that many firms are under-valued because their owners or senior managers lack incentives to take risks and boost profits.
But before helping others do buyouts, he’s trying an acquisition of his own. The charismatic native of a remote Japanese island, who runs a group of more than 50 small businesses ranging from termite extermination to sales of ATM machines, made headlines in February with an unsolicited offer for Solekia Ltd.
Seeking to buy 36 per cent of the chip company, Sasaki claimed its relationship with Fujitsu is ruining profitability. Fujitsu made a counter-bid, triggering a rare public battle in a culture that frowns upon hostile take- overs.
“I have no problem causing friction,” Sasaki said in an interview in Tokyo. “Solekia is just the first test case.”
According to Sasaki, Fujitsu has been treating Solekia as a de facto subsidiary, despite owning just 2.3 per cent of the shares. As Solekia’s biggest customer, it has been getting favorable trade terms and leaving Solekia stuck with excess inventory in tough times, he says.
Before Sasaki made his bid, Solekia traded at less than a third of its book value, and its stock had been flat for more than a decade. “That’s why I did the tender offer,” he said.
Solekia’s nine-person board, which includes four former Fujitsu executives, supported Fujitsu’s offer and opposed Sasaki’s, saying strengthening the company’s long relationship with Fujitsu should help increase customers, while Sasaki has a short-term perspective and lacks understanding of the business. A Solekia spokesman, who declined to be identified, said he had no comment beyond the company’s public statements.
“Solekia is an important partner,” Fujitsu spokesman Shinnosuke Okubo said. “We want to align our business strategy and policies, and we thought making it a subsidiary would speed up decisionmaking.”
After Fujitsu’s counter- offer, Sasaki raised his bid three times. It now stands at 5,300 yen, a 173 percent premium to the close on Feb 2. Fujitsu increased its price twice, to 5,000 yen a share, and said in a statement Friday that it can’t justify going any higher. Sasaki is “seriously considering” raising his bid again, he wrote in a letter to shareholders dated Sunday that he provided to Bloomberg. If he does so, he will extend the offer period, he wrote.
Fujitsu’s tender offer runs to May 10, while Sasaki’s ends Apr
Solekia is an important partner...We want to align our business strategy and policies, and we thought making it a subsidiary would speed up decision-making. Shinnosuke Okubo, Fujitsu spokesman
28. If Sasaki doesn’t increase his price, the next stage would be to check if either of them has been successful.
Solekia closed at 5,250 yen last Monday, short of Sasaki’s latest bid.
“The side the board supports is often in a stronger position in Japan,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “It’s not just a matter of simple economic logic.”
While Japan has sought to improve corporate governance since Prime Minister Shinzo Abe took power in 2012, many businesses still have low returns on equity.
Almost half the stocks in the Topix index trade below book value.
Despite the predominance of cheap shares, hostile takeovers have never taken root in Japan, which tends to close ranks to rebuff outsiders. Sasaki, however, disputes that his offer at Solekia is unfriendly, saying he’s not seeking control and is acting in shareholders’ interests.
“What matters is which side is able to increase profit,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. in Tokyo.
“Brushing aside new shareholders suggests an aversion to change. These kinds of situations may be one reason the Japanese market isn’t creating much profit.” — WPBloomberg