Hokuetsu Paper Mills Ltd. President Masaaki Miwa

Hokuetsu said it will instead go ahead with a previously planned tie-up with trading company Mitsubishi Corp., a deal that involves issuing shares to Mitsubishi to earn funds for capital investment and expansion.

Oji, Japan's No. 1 paper producer, announced July 23 a plan to conduct a tender offer bid for at least 50.1 percent of Hokuetsu and consolidate their operations, on the condition that Hokuetsu cancels its plan to issue new shares to Mitsubishi Corp.

The proposed takeover would have created the world's fifth-biggest paper maker, with annual sales of around ¥1.36 trillion, the Nihon Keizai Shimbun earlier reported.

Oji proposed to pay ¥860 per Hokuetsu share, about 35 percent above Hokuetsu's closing price July 21.

Oji Paper Co. President Kazuhisa Shinoda

Mitsubishi Corp. said the same day that it would invest ¥30.35 billion in Hokuetsu to help it bolster an existing plant in Niigata Prefecture.

The investment would make Mitsubishi the top shareholder with a 24.44 percent stake, up from 0.97 percent.

An unidentified Mitsubishi spokeswoman said July 24 that the trading company, which imports raw materials and markets final products for paper producers, "isn't changing the original plan" to buy new shares issued by Hokuetsu.

Mitsubishi received no information from Hokuetsu about Oji's merger proposal at the time of their tie-up talks, she added.

The Japan Times Weekly: July 29, 2006
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