Battle for NBS goes to court

  • Business
  • Friday, 25 Feb 2005

TOKYO: A rare Japanese takeover battle escalated yesterday after Internet services firm Livedoor Co Ltd pledged to go to court in its fight with Fuji Television Network Inc, the country's top TV broadcaster in terms of revenues. 

Livedoor, led by combative 32-year-old president Takafumi Horie, said it would ask a court this week to block a move by Fuji TV’s top shareholder, radio broadcaster Nippon Broadcasting System Inc (NBS), to ward off a takeover bid by Livedoor by becoming a Fuji TV subsidiary. 

Livedoor and Fuji TV are vying to acquire NBS, currently valued at 206 billion yen (US$1.96bil). NBS is an affiliate of Fuji TV and fellow member of the huge Fuji Sankei media conglomerate. 

Livedoor’s hostile bid has been widely seen as a backdoor attempt to gain influence over Fuji Sankei, whose operations include newspapers and music as well as television. 

“We plan to take (legal) action this week,” a Livedoor spokeswoman said, adding that the exact timing had yet to be decided. 

NBS said on Wednesday it would issue share warrants worth 15.9 billion yen to Fuji TV that, if fully exercised, would allow Fuji TV to make NBS a unit by taking up to a 60% stake at a cost of up to 296.7 billion yen. 

With the dispute looking set to drag on, Fuji TV said it would extend the deadline on its tender offer for NBS till March 7 from the original date of March 2. 

The acquisitive Livedoor, reported to have bought a 40% stake in NBS, may argue in court that its holding gives it the right to veto the warrant issue. 

Nobumichi Hattori, a professor at Tokyo’s Hitotsubashi University and a member of a government study panel on mergers and acquisitions (M&A), said Livedoor had a slightly better-than-even chance of winning an injunction. 

“What could happen in the end is that Fuji TV may have to give up NBS, although Fuji itself will remain out of Horie’s reach,” he said. 

Under Japan’s Commercial Code, Fuji TV could block NBS from exercising voting rights arising from its 22.5% share in Fuji by acquiring a one-quarter or greater stake in the radio company. 

The fight for NBS has caused a storm of controversy in Japan, where Western-style takeover battles are rare. 

Investors dumped shares in all three companies yesterday as the prospect of a long and complicated legal battle emerged. Some wondered if shareholders would end up being the losers. Shares in Livedoor closed down 6.5% at 330 yen, while Fuji TV fell 3.9% to 225,000 yen and NBS sank 7.7% to 6,280 yen. – Reuters

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