Hoya waits for a clear picture on Pentax bid
Pentax is indecisively chewing over a sweetened takeover bid from Hoya in a gamble that could risk sinking the deal if the profitable high-tech glass maker walks away.
By Agencies |
TOKYO: Pentax is indecisively chewing over a sweetened takeover bid from Hoya in a gamble that could risk sinking the deal if the profitable high-tech glass maker walks away.
Hoya chief executive Hiroshi Suzuki, known to global investors for his vow to implement western-style corporate governance, is waiting to meet with Pentax’s new management, which last week rejected without clear explanation a planned share-swap merger the two firms had agreed in December.
“You’re playing a game of chicken with Hoya at this point, because they’re trying to work out how essential Pentax is to their business,” a Tokyo-based fund manager said. “If Mr Suzuki decides this is too much of a hassle, he’ll go somewhere else.”
Since investors have been buying Pentax on hope for a merger with Hoya, Pentax’s stock price could tumble if the firm decides to remain independent, Nomura Securities analyst Tetsuya Wadaki said. Pentax stock has risen about 20% since December 20, the day before the companies announced the merger.
Pentax’s new president Takashi Watanuki is facing tough inquires from top investors such as Sparx Asset Management and Fidelity Investments on how he aims to boost shareholder returns.
ADVERTISEMENT
“If Pentax management is to tear up the merger plan with Hoya, they have the obligation to present to investors a plan that is worth as much or more in terms of boosting corporate value as speedily as Hoya’s plan,” Sparx, which owns a leading 23.98% stake in Pentax, said in a statement on Monday.The Hoya-Pentax deal has heralded a new era in the history of corporate Japan, where firms have traditionally been averse to M&A and free from shareholder activism. The sweetened cash deal proposed by Hoya this month indeed came as a result of pressure from Pentax investors who felt the swap ratio undervalued the firm.
Shares of Pentax closed down 1.6% at yen 760 on Monday, while Hoya’s new cash offer values it at yen 770 a share, up from an initial price of about yen 650 per share. Hoya stock rose 0.8% to yen 3,920. The shares have declined 20% over the past three months.
Other analysts say abandoning the Pentax deal could be positive for Hoya stock and help lift its valuation, since the market has expected that the merger would squeeze Hoya’s overall profit margins in the short run. Even without Pentax, Hoya could seek new ways to spend its ample cash pile, which stood at yen 106 billion at the end of last year, analysts said.
ADVERTISEMENT
But Hoya is also under some pressure to expand into new businesses as profit margins were weighed down in the recent quarter by higher costs to boost production and fierce pricing competition on photomasks used to make LCDs.Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
