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Shinsei Bank decides to launch defense against SBI's takeover

This May 2019 file photo shows the building in which Shinsei Bank is headquartered in Tokyo. (Kyodo)

TOKYO (Kyodo) -- Shinsei Bank said Friday it will launch defensive measures against an unsolicited takeover bid by Japanese online financial firm SBI Holdings Inc. and hold an extraordinary shareholders meeting to seek approval for the plan.

    In a further flare-up of tensions, the decision by the Shinsei board effectively makes SBI's tender offer, launched a week ago, hostile. SBI immediately hit back, saying Shinsei's move is meaningless and only intended to "buy time."

    A focal point is what the government, which currently owns about 20 percent of Shinsei, will do, though people familiar with the matter said it is unlikely to tender its shares at SBI's offer price.

    As part of its defense, Shinsei unveiled a plan to issue new shares to existing shareholders to dilute SBI's shareholdings, a tactic known as a poison pill to foil the online financial firm's abrupt takeover attempt.

    Shinsei said its board will set a date for the extraordinary shareholders' meeting while asking SBI to extend the tender offer period to Dec. 8 from Oct.25.

    SBI seeks to increase its stake in Shinsei to as high as 48 percent from the current 20 percent. It is offering 2,000 yen ($18) per share, meaning that the takeover could reach 116.4 billion yen. Shinsei shares ended at 1,896 yen on Friday.

    Shinsei said it is waiting for SBI's response to questions regarding the purpose of the proposed takeover and ways to boost the value of the bank's shares.

    In response, however, SBI said Friday that shareholders considering tendering their shares in Shinsei have already been given enough information to make up their minds.

    The latest defensive move by Shinsei "is nothing but an attempt to buy time for no use and would significantly undermine the benefits of shareholders concerned," SBI said in a statement. "It is extremely regrettable."

    SBI, led by CEO Yoshitaka Kitao, has blamed Shinsei's current management for failing to improve profitability and repay public funds. Shinsei shares need to trade much higher than they are now, so the government-held shares' value can match that of the public funds injected into Shinsei's predecessor bank.

    Shinsei, meanwhile, has taken issue with the bid, which was made without prior consultation, and pointed out that SBI gave inaccurate or insufficient explanations. It has argued that SBI suddenly launched the bid to raise its stake in the bank, contrary to previous assurances that the financial group did not intend to step up share buying.

    Shinsei has also sounded out Sony Group Corp. about the possibility of making a counteroffer, people close to the matter said earlier.

    Shinsei is known in Japan for its consumer loans and credit card businesses. It received around 370 billion yen in public funds after its predecessor's collapse in 1998, and repaying it remains a challenge.

    SBI's envisaged takeover comes as Prime Minister Yoshihide Suga, who has underlined the need to reorganize regional banks, is stepping down as his term ends later this month.

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