Fuji TV may pay $2.1bn to end takeover

TOKYO - Fuji Television Network, Japan's biggest broadcaster, may pay internet portal Livedoor as much as 160 billion ($2.1 billion) to end a hostile takeover of its radio affiliate.

Livedoor shares rose as much as 9.1 per cent. Fuji TV's offer includes 6300 per share for Livedoor's 50 per cent stake in the radio network, Fuji TV officials said yesterday.

The Tokyo-based TV network also planned to buy a stake of less than 15 per cent in Livedoor, they said. "It's too early to judge who is the winner or loser without assessing terms for transactions and conditions for the alliance," said Hiroshi Kamide, an analyst with KBC Securities Japan in Tokyo.

Fuji TV ended up paying more than it intended for control of affiliate Nippon Broadcasting System, while Livedoor shares would be diluted further, Kamide said.

Livedoor, owned by 32-year-old Takafumi Horie, began a hostile bid for Nippon Broadcasting in February, forcing Fuji TV to take steps to prevent itself from becoming a takeover target because of cross-shareholdings with its radio affiliate. Analysts say Horie's assault has changed companies' attitudes toward shareholders in Japan, a country where there hasn't been a successful hostile takeover in five years.

"It heightened awareness of boards across Japan that complacency can no longer be tolerated," said Kirby Daley, a strategist in Tokyo at Societe Generale Securities' Fimat unit.

"You have to be more responsive to the shareholders. It goes a long way toward helping corporate governance in Japan."

Livedoor shares rose to as high as 359 in Tokyo.

Nippon Broadcasting shares fell as much as 2.5 per cent to 5800. Fuji TV shares fell as much as 3.9 per cent to 221,000.

Fuji TV chairman Hisashi Hieda, Livedoor's Horie and Nippon Broadcasting President Akinobu Kamebuchi plan to announce the purchase shortly, the Nikkei reported.

Fuji TV will buy Livedoor Partners, a company that holds a 32 per cent stake in Nippon Broadcasting, and Livedoor's remaining 18 per cent, according to the Fuji TV officials.

The price per share is about the same as Livedoor's average purchase cost of 6280.

The Nikkei reported that Fuji TV will pay Livedoor just more than 6300 a share for Nippon Broadcasting and that the total purchase price will come to 150 billion.

Both Fuji TV and Nippon Broadcasting are part of Fujisankei Communications Group, Japan's largest media company, with both units holding shares in each other, opening the way for Livedoor to use its control of the radio network to influence Fuji TV.

Livedoor's ability to exercise sway over Fuji TV was blocked last month, however, by Softbank Investment, which became Fuji TV's biggest shareholder.

The Softbank Investment alliance forced Livedoor and Fuji TV to negotiate on control of Nippon Broadcasting and a possible tie-up.

Horie's uninvited overture also spurred other Japanese companies, including Matsushita Electric Industrial, to outline poison-pill defence plans against similar suitors.

Lehman Brothers Holdings, which provided finance for Livedoor's Nippon Broadcasting share purchase, completed the conversion of the entire 80 billion in Livedoor convertible bonds it bought in February into 268.9 million Livedoor shares, the portal said on April 15.

That move increased the number of Livedoor's outstanding shares to 915.3 million as of April 15.

"It looks more favourable for Livedoor than for Fuji TV, but the real winner is Lehman Brothers, which received a big gain with little risk," Katsuhiko Shimokawa, head of the investment advising company Asset-Alive.com in Osaka.

- BLOOMBERG