The corporate melodrama billed as the first American-style takeover attempt in Japan has progressed to Act Two, with the unwanted foreign suitors making a formal offer and flying to Tokyo to press their case.
Japanese analysts suggest that the bid, being followed with intense interest in a country where companies usually are merged only by mutual consent, is a sham aimed only at capital gains.
But Mark S. Dodge, executive vice president of the Los Angeles-based investment concern Trafalgar Holdings Ltd., one of two foreign companies leading the charge, said, "It is a genuine offer and is being pursued with as much enthusiasm and vigor as one can . . . " hope for.
Dodge was in Tokyo with Graham Richards, a corporate consultant for the second firm, Glen International Financial Service Co. of London.
Their target is Minebea Co., a fast-expanding Japanese producer of precision bearings that had about $600 million in sales in the year ending September 1984. Minebea has told Tokyo newspapers that the attempt "treats us as stupid," and has prepared a variety of defenses.
This summer, Trafalgar created a sensation in Tokyo financial circles with an announcement it had acquired 23 percent of Minebea's stock and was interested in acquiring the rest.
Acquisitions here generally come only after long and friendly negotiations. High-stakes takeover battles in the United States are viewed here as a woeful example of the American economy's scorn for employe feelings and addiction to profits through speculation, rather than productivity.
Last week, Glen and Trafalgar took it one step further with an announcement that a special partnership the two companies had formed had made an offer to Minebea's board to buy all outstanding shares at a price they said worked out to 900 yen (about $4.20 at current exchange rates) per share.
Their holdings in Minebea had in the meantime grown to 30 percent, they said.
The offer set off heavy trading in Minebea's shares on the Tokyo Stock Exchange. On Monday, the exchange suspended trading in Minebea shares.
Though it was about 69 cents higher than Minebea shares' market price, the offer was greeted with scorn by Minebea's management and skepticism by many market analysts in Tokyo.
For one thing, the 309 billion yen (about $1.4 billion) offer contains only about $240 million in cash. The rest would be 20-year convertible debentures and 30-year zero-coupon bonds.
"They have no intention to use their own money," said an analyst at Nikko Securities Co., one of the big-four houses of the Tokyo exchange. "They are planning to use other people's money. But who is going to invest in a company whose future is so uncertain?"
Analysts point out that Minebea, like many Japanese companies, has a corps of "stable shareholders," who invest for long-term gain, have close personal ties to management, and are not likely to sell out easily to outside offers. Possible legal problems also have been raised with the Minebea offer.
These considerations have led many analysts here to conclude that the two foreign concerns are engaged in "greenmail," that is, are merely trying to create sufficient trouble that Minebea will arrange for their holdings to be bought out at a premium.
Suspicions also have been fueled by the fact that both foreign companies were unknown in Japan before the Minebea affair.
News that Trafalgar is headed by Charles Knapp, who resigned as chairman of the Financial Corp. of America last year under pressure from federal regulators, did not boost its reputation here.
At a press conference here, Dodge said he had made calls this week in connection with the deal at the Ministry of Finance, which oversees the Japanese securities market, and at Daiwa Securities Co. and Nomura Securities Co.
Japanese he met were "extremely cordial," he said, adding that their attitude has not been hostile. "It's been one of curiosity and interest."
But many analysts feel officials here view the bid as a disruptive precedent that does not fit into Japan's way of doing things.
"The government still has options at its disposal to block the takeover," noted Aaron Cohen, senior financial economist at Daiwa.
However, private-sector resistance could do the trick by itself. Dodge said he had asked Daiwa to help in the transaction and was refused.
"For cultural reasons, they did not feel it would be possible for them to act in that capacity," he said.
Minebea, meanwhile, has bolstered its defenses. Last month, its board approved a plan to issue 16 billion yen (about $75 million) in new convertible debentures to dilute the foreigners' holdings. This week, it approved a plan to merge with an affiliate to further complicate any takeover.
Glen and Trafalgar, meanwhile, maintain that their proposal is a perfectly legitimate and legal attempt to consolidate an already sizeable investment in Minebea. The company has good growth potential, they suggested, but is being mismanaged by its current president, Takami Takahashi, who is leading the defense effort.
"Hostile takeovers are usually only hostile to one person," Dodge said.
Dodge said his group is considering legal action to block the new debenture issue, which he said was "not in the best interests of Minebea's shareholders."
Commenting on claims that Minebea's entire work force would resign if the company changed hands, Dodge said the partnershp intends to make the transition as smooth as possible, but does foresee a few changes in senior management.
To counter charges that the two companies are not using their own money, they say they have spent about $125 million on their current stake in Minebea, are offering $240 million in cash and would spend another $300 million on U.S. government bonds to secure their own zero-coupon bonds.
Their target, ironically, is a company that, under Takahashi's leadership, has built a reputation for aggressive acquisitions of its own. Just before the foreigners entered the scene, Minebea had made headlines with what seemed to be shaping up as a hostile takeover bid by it for Sankyo Seiki Manufacturing Co., another precision-electronics firm.
Trafalgar and Glen have given the Minebea board until Nov. 4 to start discussing the offer. If the board refuses -- as Takahashi has said it will -- the two foreign firms will then proceed with a direct offer to shareholders, Dodge said.