An American-British investor group moved aggressively yesterday to gain an advantage in the first hostile takeover bid by foreigners pursuing a Japanese company.
Trafalgar Holdings Ltd., a Los Angeles investment firm headed by Charles W. Knapp, and Glenn International PLC of London, a securities firm, yesterday filed suit in Japan against Minebea Co. and asked the government for authorization to raise their stake in Minebea.
The lawsuit seeks to block Minebea's proposed merger with Kanemori Co. Ltd. Trafalgar said the lawsuit is the first ever by foreigners trying to block the merger of two Japanese companies. Minebea, a giant manufacturer of precision bearings, has a stock market value of about $1.2 billion, according to Knapp.
"The gloves are off, and we will not go away," Trafalgar Chairman Knapp said yesterday. "We are outraged at the way Minebea management has behaved in regard to our offer, and it is time for us to take a more aggressive stand. We have retained very fine counsel in Japan and, from what we understand, they wouldn't take this case if they didn't think we could win."
Trafalgar, which owns about 7 percent of Minebea's shares and has warrants and convertible debt that could be used to increase its stake to more than 25 percent, took other steps in Japan yesterday to support its takeover bid, including its request for authorization to increase its stake in Minebea beyond 10 percent. Knapp said Trafalgar wants to increase its stake in Minebea to two-thirds of the company's outstanding shares.
Trafalgar also asked a Japanese court to nullify a private placement of securities by Minebea that it said is not in the best interests of shareholders and is designed to block its takeover bid.
Japan is not accustomed to U.S.-style takeovers, where lawsuits are plentiful and where bidders aggressively take offers directly to shareholders if the target company's management resists. Japanese mergers and acquisitions have been characterized by friendly deals, with companies often protected by major stockholders who have close ties to management and who are unlikely to sell their shares in response to offers by outsiders.
Knapp, the former chairman of Financial Corp. of America, the nation's largest savings and loan association, said that Minebea "invited" this hostile takeover bid because the company is not well managed and because the company is controversial within Japan due to its own hostile bid to acquire Sankyo Seiko Manufacturing Co.