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Thursday, Nov. 16, 2006
Nissin's Myojo tender may stir instant-ramen bidding battle
Nissin Food Products Co. announced Wednesday it will launch a public tender offer for Myojo Foods Co. to help the rival instant-noodle maker stop a hostile takeover by a U.S. investment fund.
Myojo had been looking for a white knight after Steel Partners Japan Strategic Fund announced last month it would launch a public tender offer of 700 yen per share for all of Myojo's outstanding shares. Myojo's board of directors approved Nissin's takeover bid earlier in the day.
The focus is now on how Steel Partners will react -- whether it will raise the current offering price of 700 yen or accept the public tender offer by industry leader Nissin.
Nissin declined comment on what it would do if Steel Partners ups the ante.
Steel Partners' move is the latest of several high-profile hostile takeover attempts in Japan this year -- all of which have failed.
Myojo, the fourth-ranking instant noodle maker, opposes Steel Partners' takeover bid on grounds that the fund is only looking to make short-term profits and the takeover would be of no benefit to Myojo shareholders. The investment fund currently holds 23.1 percent of Myojo shares.
Myojo's stock price has surged sharply since the Steel Partners' announcement. It rose to close Wednesday at 776 yen, from 609 yen on Oct. 27.
Nissin's tender offer will run from Thursday through Dec. 14. Myojo's one-time rival is offering 870 yen per share, which is 12.1 percent higher than Myojo's closing share price Wednesday. The public tender offer is expected to cost Nissin about 12.7 billion yen.
The market leader wants to acquire a minimum of 33.4 percent, or 14.2 million of Myojo's outstanding shares. If the number of shares offered is below that amount, Nissan will not buy anything.
Although both Myojo and Nissin stressed that their agreement was based on their potential for synergy, Myojo President Hironobu Nagano indicated the decision was more an emotional one.
"(Steel Partners) said that it wouldn't launch a takeover bid if we weren't for it, but then it suddenly launched the takeover bid, which was disappointing," Nagano said. "Now that we don't have to worry about 'gaiatsu' (foreign pressure), we can focus on research and development."
Nagano also said the main reason for going with Nissin as its partner was because Nissin promised not to interfere with its management and business strategy.
Nagano and his management team will stay on board if the tieup succeeds.
Meanwhile, Nissin President Koki Ando said he accepted Myojo's offer because the board of directors agreed to the takeover, making Nissin's attempt a friendly one.
He also said he was not considering a merger.
Asked about the possibility that the alliance will be viewed as a monopoly, Ando said that was unlikely and noted Nissin had already spoken with the Fair Trade Commission.
"When most of the makers are trying to cut down the price (of noodles), it is difficult to raise prices or put up a monopolistic price," he said.
Nissin's takeover will increase its share of the domestic instant-noodle market to 50 percent from the current 40 percent.