Kobe Steel Ltd, Sumitomo Metal Industries Ltd and Nippon Steel will study counter measures in the event that an unsolicited offer is made to one of the three companies, they said in a statement released in Tokyo on Wednesday. The companies, which already own stakes in one another, are not studying a merger, said Nobuyoshi Fujiwara, executive vice president of Nippon Steel.
Lakshmi Mittal, the billionaire owner of Mittal Steel Co, in January made an unsolicited $22.7 billion bid for Arcelor SA, a takeover that would create a steel producer three times larger than any other. Nippon Steel, with a market value of $26.3 billion, said it may sell stock options to block an approach.
Since they hold stakes in each other, it is not a bad thing to deepen their alliance, said Hiroyuki Suzuki, an analyst at Mizuho Investors Securities Co in Tokyo. It is a natural step considering the recent takeover proposal by Mittal Steel.
Governments in France and Spain challenged takeovers this year, eager to shield domestic industries and prevent job losses. Overseas investors owned a record 23.7% of Japans publicly traded stock as of March 2005, increasing concerns some companies will seek takeovers. Our alliance is proceeding very well, Nippon Steel president Akio Mimura told reporters. It would be a big problem if another company tried to take over any member of our alliance because of company secrets and joint plans on reducing costs.
Planned changes to Japans Commercial Law would make it easier starting in May 2007 for overseas companies to use share swaps to fund acquisitions in Japan, the worlds second-largest economy. Sapporo Holdings Ltd, Japans third-largest brewer, said in February it may issue stock options to rebuff any hostile bid that seeks more than 20% of its voting rights.