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Stockholder seeks court order to stop Nireco's poison pill scheme.

TOKYO, May 11 Kyodo

A large stockholder of Nireco Corp. has filed for a court injunction to halt the high-tech measuring devices maker from invoking its poison pill scheme which was introduced to fend off hostile takeover bids, informed sources said Tuesday.

The SFP Value Realization Master Fund Ltd., a Cayman Islands-based investment fund holding a 6.8 percent equity stake in Nireco, filed the petition with the Tokyo District Court to prevent the Japanese firm from issuing free stock subscription warrants for shareholders in the event of a takeover bid undesired by the company, they said.

The investment company asserts that the scheme poses a downward risk for Nireco's share price for the long- and medium-term, while questioning the company's capability of making an appropriate decision in invoking such a scheme, the sources said.

On March 14, Nireco said its board approved the scheme calling for giving all of its stockholders as of March 31 free stock subscription warrants, or the right to buy new shares.

Its stock is traded on the Jasdaq over-the-counter market.

Under the scheme, the firm will first give existing shareholders the free warrants, which could be converted into shares at the ratio of two new shares to one existing share if a hostile acquirer obtains a stake of more than 20 percent. One new share would cost only 1 yen.

Converting the stock warrants into new shares would dilute the acquirer's equity stake. The term poison pill refers to a range of strategic moves by a takeover-target firm to make its stock less attractive to an acquirer.

Nireco introduced the scheme amid a high-profile takeover bid for a radio broadcaster between Internet portal operator Livedoor Co. and Fuji Television Network Inc.

Livedoor surprised Japanese business circle in February by suddenly emerging as a large stockholder in the radio broadcaster, Nippon Broadcasting System Inc.

In a bid to be taken over by Fuji TV, Nippon Broadcasting announced a plan to issue a massive number of stock warrants to the TV broadcaster. But it later abandoned the plan as the Tokyo District Court judged it unfair to other existing stockholders.
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Publication:Japan Weekly Monitor
Date:May 16, 2005
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