ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business deals

Pentel truce scratched as Kokuyo moves toward hostile takeover

Once-friendly discussions back to drawing board after third party emerges

Kokuyo hopes to use the Pentel acquisition to expand its relatively thin pen lineup. (Photo via Kokuyo)

OSAKA -- Kokuyo, Japan's top stationery company, launched Friday an unsolicited tender offer for Pentel after word of negotiations between the pen maker and a third party scuttled a short-lived rapprochement.

Kokuyo plans to spend about 3.84 billion yen ($35.4 million) to take its 37.8% stake above 50%, paying 3,500 yen per share.

Speaking with reporters Friday, Kokuyo President Hidekuni Kuroda cited reports of advanced talks between Pentel and another company on a major capital tie-up as a reason for the bid. The third party is believed to be compatriot Plus, which declined to comment.

Kokuyo indirectly became Pentel's top shareholder in May, when it invested 10.1 billion yen in a fund managed by private equity firm Mercuria Investment, which bought stock from Pentel's founding family in 2018.

Kokuyo acquired the shares from Mercuria this past September, at which point Pentel dropped its initial resistance to a partnership and agreed to talks on "building a collaborative relationship." But the smaller company, seeking to retain its independence, had asked Kokuyo not to raise its stake any further.

After that, "talks on an overseas partnership advanced relatively far, but discussions on domestic operations did not," Kuroda said.

Amid this deadlock, documents outlining the details of Pentel's planned tie-up with Plus were sent anonymously to Kokuyo, eroding its trust in Pentel's good faith.

Pentel issued a response Friday firmly opposing Kokuyo's bid. The statement expressed "outrage" at the sudden attempt to turn Pentel into a subsidiary after "repeated" appeals to Kokuyo not to increase its control.

Pentel also dismissed Kokuyo's complaint about the alleged talks with Plus, asserting that it had no agreement with Kokuyo requiring it to report negotiations with third parties in advance. "It stands to reason that we hold various discussions with other companies as necessary as part of our management," the statement said.

Whether Kokuyo can boost its stake past 50% before the tender offer period ends Dec. 15 remains unclear. Pentel shareholders expressing interest in selling have emerged, according to Kokuyo. But depending on how Pentel's other talks go, Kokuyo could end up facing competition.

Pentel is a privately held company with hundreds of shareholders, including business partners and former employees. Any stock transfers must be approved by the board.

Kokuyo said it would work around this by exercising the voting rights of those who have agreed to sell their stakes as a proxy before the shares are officially transferred. Should Pentel reject the sales, Kokuyo would call a shareholders meeting and propose a new slate of directors more willing to go along with the acquisition.

While Kokuyo is far larger than Pentel, with eight times its annual revenue, Pentel's strength in pens would shore up an area of relative weakness in Kokuyo's lineup. And buying Pentel, which generates more than 60% of its revenue abroad, would help Kokuyo cultivate markets outside Japan.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media