Hiroshi Mikitani

The panel, which comprises TBS executives and outside experts, is expected to take more than a month to reach a conclusion for presentation to Rakuten as a counterproposal, said sources familiar with the matter.

TBS appears likely to reject Rakuten's proposal for fear that it would be absorbed by the Internet mall operator, which has a much larger stock market value, they said. TBS is expected to propose a business tie-up in which the television broadcaster would primarily offer its programs for Internet distribution by Rakuten.

Tokyo Broadcasting System Inc. in Akasaka, Tokyo

But as Rakuten President Hiroshi Mikitani says he will pursue management integration of the two companies "even if I go broke," Rakuten may acquire more TBS shares if the TV network comes up with unsatisfactory proposals, analysts said. Rakuten is TBS's biggest shareholder, having secured an equity stake of 15.46 percent for ¥88 billion.

Meanwhile, Shogo Hayashi, vice minister for internal affairs and communications, said TBS's possible use of equity purchase warrants as a defense against a hostile takeover.

"I have received no report" that such a step is illegal, Hayashi said at a media conference.

As part of its defensive measures against a possible hostile takeover bid, TBS allocated equity purchase warrants in June to Nikko Principal Investments Japan Ltd., a wholly owned subsidiary of its financial adviser, Nikko Cordial Corp. Nikko Principal can convert the warrants, which are worth up to ¥80 billion, into TBS shares in the event a hostile buyer acquires a stake of more than 20 percent.

The Japan Times Weekly: Oct. 22, 2005
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