Trading house Itochu has said it will spend ?220 billion ($1.5 billion) to take full control of two units, including apparel company Descente, and buy back ?150 billion worth of its own shares.
The deals are part of a trend among Japanese companies to dissolve dual listings of parent and subsidiary companies to enhance corporate governance and improve operational efficiency.
Itochu, which owns 44.44% of Descente, said Monday that it will invest ?182.6 billion to buy the remaining stake through a tender offer of ?4,350 per share, a 16.6% premium to Friday¡¯s closing price.
It will also spend ?37.6 billion to buy the 44.31% it does not own in chemicals company CI Takiron via a tender offer of ?870 per share, a 9.7% premium to Friday¡¯s closing price.
Itochu aims to start the tender offer for Descente by early November, following sign-off from competition authorities in Japan and China, while the tender for CI Takiron will be conducted from Tuesday to Sept. 18.
¡°We want to make Descente the core of our textile business,¡± Itochu finance chief Tsuyoshi Hachimura told a news conference, highlighting its growth potential as a sports apparel brand in Japan and overseas.
The spending is part of Itochu¡¯s record ?1 trillion investment plan in growth areas for the current financial year, announced in April.
The company also said it would conduct a ?150 billion share buyback program announced in April from Tuesday through March 31, as part of a goal to achieve a 50% total shareholder return ratio this year.
Net profit at Itochu, in which U.S. investor Warren Buffett holds a stake, fell 3.1% to ?206.6 billion in the April to June quarter due to lower profits at its energy and chemicals business and its metals business, but the company stuck to its full-year profit forecast of ?880 billion.
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