Japan's NEC says JAE stake sale 'reasonable' from economic perspective

NEC

29/02/2024 07:36

By Makiko Yamazaki
       TOKYO, Feb 29 (Reuters) - NEC  6701.T  on Thursday said
selling part of its stake in Japan Aviation Electronics (JAE)
 6807.T  back to the listed subsidiary was "reasonable", in a
defence of its decision after criticism from some shareholders.
    The Japanese conglomerate in a statement said it "determined
that it is reasonable to accept JAE's tender offer (to buy back
its shares) from an economic perspective," taking into account
tax benefits among other factors.
    Some investors called for NEC and JAE to cancel the deal and
consider alternatives, following reports that multiple global
funds had offered to pay large premiums to buy out the aviation
components and equipment supplier.
    JAE in a separate statement on Thursday said its tender
offer ended in success on Wednesday, buying back half of
NEC-owned shares. After the deal and share cancellation, NEC's
stake in JAE will fall to around 33% from a little over 50%.
    NEC said it expects to book about 44 billion yen ($293.84
million) in profit from the sale at parent level for the year
ending March.
    The existence of alternative offers raised questions as to
whether the companies acted in the best interest of all
shareholders.
    Hong Kong-based Oasis Management this month filed an
injunction to block the deal, but that was dismissed by the
Tokyo District Court.
    Chicago-based Curi RMB Capital said it plans to seek the
companies' board minutes under court permission to evaluate the
decision-making process.

($1 = 149.7400 yen)

 (Reporting by Makiko Yamazaki; Editing by Christopher Cushing)
 ((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))