Activist fund Strategic Capital extends hostile bid for Japan's Keihanshin Building (updated)

Keihanshin Building

17/12/2020 08:41

(Adds comments from the fund, background)
    By Junko Fujita
    TOKYO, Dec 17 (Reuters) - Activist fund Strategic Capital
said it has extended its hostile bid for Japanese property firm
Keihanshin Building  8818.T  without sweetening the terms as the
shares fell to the level of the bidding price. 
    Strategic Capital, set up by Tsuyoshi Maruki, who used to
work with Japanese prominent activist investor Yoshiaki
Murakami, said recent gains in Keihanshin's stock price were
only driven by the expectation for a higher bid.
    Last month it launched a 1,900 yen ($18.42) per share bid to
boost its stake to 30% in Keihanshin, which owns office and
retail buildings as well as data centres mainly in the Osaka
region.  urn:newsml:reuters.com:*:nL4N2I52SW
    The bid will now run until Jan. 12.
    Shares in Keihanshin, which rose as much as 17% to 2,200 yen
after the bid was launched, have been trading above the offer
price until Wednesday. They closed down at 1,900 yen on
Thursday. 
    "Keihanshin shares rose on expectation the developer would
find a white-knight that would offer a higher bid," Strategic
Capital said. "Or on the expectation we might raise the offer
price." 
    The activist fund has been pushing Keihanshin to withdraw
from low-profit margin leasing business, sell all the rental
properties and transform into a management of the real estate
trust.
    Although some analysts say the proposal is too drastic, its
bid highlights Japan's corporate practice of cross-shareholdings
among many companies. Companies typically argue cross
shareholders are needed to cement business ties but critics say
it often functions to fend off hostile proposals.  
    Keihanshin’s top shareholder is Ginsen Co, a privately-held
insurance agent whose top shareholder is Sumitomo Mitsui Banking
Corp, the main banking unit of Sumitomo Mitsui Financial Group
 8316.T . 
    Sumitomo Mitsui Banking is one of the shareholders of
Keihanshin. Air conditioning maker Daikin Industries  6367.T 
and contractor Kajima Corp  1812.T , both of which are partially
owned by Sumitomo Mitsui Banking, are also Keihanshin's
shareholders, according to Refinitiv's Eikon.   
    The tender offer is conducted by Strategic Capital and
another fund, which together own a 9.7% stake in the company.
They are seeking to acquire a roughly 20% stake. 
    ($1 = 103.1500 yen)

 (Reporting by Junko Fujita; Editing by Himani Sarkar and Elaine
Hardcastle)
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