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Friday, June 29, 2007

TBS wins proxy fight to get takeover-defense measures


Staff writer

Tokyo Broadcasting System Inc. scored a victory in a proxy fight Thursday with Rakuten Inc. as its shareholders approved the broadcaster's plan to introduce takeover-defense measures that could foil the Internet mall operator's attempt to increase its stake in TBS to more than 20 percent.

The annual TBS general shareholders' meeting endorsed the management proposal for a poison pill plan that could be invoked with support from a majority of shareholders with voting rights.

The plan was approved by a 77.1 percent majority in terms of voting rights at the meeting, held at a Tokyo hotel. About 427 shareholders attended the meeting.

The win ends a weeks-long battle between TBS and Rakuten to get enough proxy votes to be able to get their plans approved.

The shareholders voted to turn down a proposal by Rakuten, which owns 19.86 percent of TBS, to send its president, Hiroshi Mikitani, to the broadcaster's executive board.

They rejected another Rakuten proposal that would have required TBS management to get the support of two-thirds of the shareholders with voting rights before launching takeover defenses.

Rakuten Deputy President Atsushi Kunishige and Chief Financial Officer Ken Takayama attended the meeting with two lawyers.

Mikitani did not attend the meeting. Rakuten said he was not there as it might have been awkward for shareholders to debate whether to include him in the TBS board in his presence.

Despite shareholder agreement on having a poison pill plan in place, TBS must now go through the process of deciding whether to apply it to counter Rakuten's moves.

The next step is for the broadcaster's advisory panel of experts to debate the legitimacy of invoking the takeover-defenses against the Internet firm.

Rakuten said it is waiting for this next stage of the showdown.

"We believe the discussion of the advisory panel is very important," Kunishige told reporters after the shareholders' meeting. "The panel's members are willing to give us a chance to talk, so it is important on how we carry out the presentation."

The six-member panel, which includes legal experts, is expected to reach a decision around September on whether Rakuten is an aggressive buyer that requires a poison pill to dilute its stake in TBS. If the panel sees Rakuten in this role, TBS will hold an extraordinary shareholders' meeting to get approval to administer the poison pill.

Rakuten's Kunishige said he did not believe TBS shareholders who voted down Rakuten's proposal Thursday were necessarily against the firm's plan to make the broadcaster an affiliate by boosting its stake to more than 20 percent.

"The decisive point is whether Rakuten is a greenmailer," Kunishige said, adding he is confident many TBS shareholders do not see Rakuten as an unfriendly bidder only bent on making money.

A greenmailer buys a large block of shares and then threatens the targeted company with a takeover unless they buy them back at a higher price.

In a news conference later in the day, TBS President Hiroshi Inoue said putting Mikitani on the broadcaster's board would not increase its corporate value because TBS strategy is to cooperate with many partners, not just one.

Inoue also said TBS has no intention of making any offer to reconcile with Rakuten. "If someone were to make the next move, it would be Rakuten," Inoue said.

The TBS-Rakuten feud started in October 2005 when Rakuten pressed TBS to merge with it after acquiring a 15.46 percent stake in the broadcaster. Rakuten says both sides will benefit from combining their TV broadcasting and Internet services.

After more than a year of talks between the two parties yielded little progress, Rakuten announced in April it would increase its stake in TBS to more than 20 percent.

Rakuten said it only wants to make TBS its affiliate, but the broadcaster fears the Internet firm is aiming to take over management.

For more stories related to TBS vs. Rakuten.



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