© Reuters. A Shinsei Bank logo is seen in the bank’s lobby in Tokyo on October 22, 2010. REUTERS/Yoriko Nakao/File Photo
Written by Satoshi Sugiyama and Makiko Yamazaki
TOKYO (Reuters) – Japanese online financial firm SBI Holdings Inc said on Saturday it raised its stake in SBI Shinsei Bank to 53.74% by just 3.7 points through a tender offer as a step toward taking the mid-sized bank private.
Friday’s completion of the tender offer helps prepare for Shinsei’s expected writedown, allowing more flexibility in returning the 349 billion yen ($2.43 billion) in public funds the former bank received two decades ago in a bailout from the government, which still owns 22.98%. a class.
SBI Holdings said last month it would launch the tender offer for Shinsei, with plans to pay 2,800 yen per share, for a total of 154.2 billion yen.
Shinsei shares, which closed at 2,807 yen on Friday, have remained above 2,800 yen since the announcement on speculation that some shareholders may bid for a local offer. The share price is still well below the 7,450 yen the government will need to recoup the money that was poured into Shinsei.
The lackluster bid results indicate that the vast majority of minority shareholders have decided the price is unfair, said Travis Lundy, a Quidty Advisors analyst who posts on Smart Karma.
“Since the board ultimately decided to recommend a price they said was not recommended, it appears that many shareholders will seek court to assess a fair price,” Lundy said.
“One can only hope that trying to rewrite the rules of mergers and acquisitions will address such situations of coercive behavior by companies.”
According to Shinsei’s filing, his special committee indicated that the value of the bank was not less than 3,000 yen per share, and an independent director opposed the recommendation of shareholders to offer their shares.
Shinsei will soon begin measures to put pressure on the remaining minority shareholders except for the government. The steps include an extraordinary meeting of shareholders to vote on the consolidation of shares, which is expected to remove the required two-thirds majority, with the approval of the SBI and the government.
SBI aims to become the fourth largest banking group in Japan. It already owns the nation’s largest online brokerage, online bank and asset manager, and is partnering with smaller lenders to create a nationwide network.
($1 = 143.6800 yen)
