Self-made rebel takes on $13 billion Japan giant – Salt Lake Tribune

Posted: April 26, 2017 at 6:41 am

The charismatic native of a remote Japanese island, who runs a group of more than 50 small businesses ranging from termite extermination to sales of ATM machines, made headlines in February with an unsolicited offer for Solekia Ltd.

Seeking to buy 36 percent of the chip company, Sasaki claimed its relationship with Fujitsu is ruining profitability. Fujitsu made a counter-bid, triggering a rare public battle in a culture that frowns upon hostile takeovers.

"I have no problem causing friction," Sasaki said in an interview in Tokyo. "Solekia is just the first test case."

According to Sasaki, Fujitsu has been treating Solekia as a de facto subsidiary, despite owning just 2.3 percent of the shares. As Solekia's biggest customer, it has been getting favorable trade terms and leaving Solekia stuck with excess inventory in tough times, he says.

Before Sasaki made his bid, Solekia traded at less than a third of its book value, and its stock had been flat for more than a decade. "That's why I did the tender offer," he said.

Solekia's nine-person board, which includes four former Fujitsu executives, supported Fujitsu's offer and opposed Sasaki's, saying strengthening the company's long relationship with Fujitsu should help increase customers, while Sasaki has a short-term perspective and lacks understanding of the business. A Solekia spokesman, who declined to be identified, said he had no comment beyond the company's public statements.

"Solekia is an important partner," Fujitsu spokesman Shinnosuke Okubo said. "We want to align our business strategy and policies, and we thought making it a subsidiary would speed up decision-making."

After Fujitsu's counter-offer, Sasaki raised his bid three times. It now stands at 5,300 yen, a 173 percent premium to the close on Feb. 2. Fujitsu increased its price twice, to 5,000 yen a share, and said in a statement Friday that it can't justify going any higher. Sasaki is "seriously considering" raising his bid again, he wrote in a letter to shareholders dated Sunday that he provided to Bloomberg. If he does so, he will extend the offer period, he wrote.

Fujitsu's tender offer runs to May 10, while Sasaki's ends April 28. If Sasaki doesn't increase his price, the next stage would be to check if either of them has been successful. Solekia closed at 5,250 yen on Monday, short of Sasaki's latest bid.

"The side the board supports is often in a stronger position in Japan," said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. "It's not just a matter of simple economic logic."

While Japan has sought to improve corporate governance since Prime Minister Shinzo Abe took power in 2012, many businesses still have low returns on equity. Almost half the stocks in the Topix index trade below book value.

Despite the predominance of cheap shares, hostile takeovers have never taken root in Japan, which tends to close ranks to rebuff outsiders. Sasaki, however, disputes that his offer at Solekia is unfriendly, saying he's not seeking control and is acting in shareholders' interests.

"What matters is which side is able to increase profit," said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. in Tokyo. "Brushing aside new shareholders suggests an aversion to change. These kinds of situations may be one reason the Japanese market isn't creating much profit."

Whatever happens, Sasaki, who leads a group of at least 30 employees on a 10 kilometer (6.2 mile) run at 5:45 a.m. every day and competes in three 100 kilometer supermarathons a year, is adamant that Solekia won't be a one-off event.

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Self-made rebel takes on $13 billion Japan giant - Salt Lake Tribune

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