Pickens Denies Deal in Japan Is a Hostile Move
T. Boone Pickens Jr., the Texas oilman and corporate raider, made a dramatic but inconclusive debut before the Japanese business world Wednesday, declaring that his not-so-friendly acquisition of a major stake in a Japanese auto parts maker was not a hostile takeover bid or an attempt at “greenmail.”
Japanese financial and corporate circles have been apprehensive since it was disclosed at the beginning of the month that Pickens’ merchant bank, Boone Co., had bought a block of shares from a Japanese stock speculator to obtain a 20.2% stake in Koito Manufacturing.
Koito makes automobile headlamps and is closely affiliated with Toyota Motor, which previously was its largest shareholder, with 19.8% of outstanding shares. More than 60% of Koito’s stock is tightly held by Japanese firms, and the Boone stock purchase, valued at about $800 million, has been viewed with deep suspicion by analysts in Tokyo. They have surmised that Pickens will attempt a greenmail maneuver--dropping a takeover bid in exchange for a premium price for the shares he has acquired.
Offers Cooperation
Pickens, meeting foreign and Japanese reporters in a luncheon and two separate news conferences Wednesday, denied that he had any such intentions. But he left people guessing about the real motives behind the deal, which is widely believed here to be the beginning of the first direct, hostile acquisition of a Japanese company by a foreigner.
Portraying himself as a champion of shareholders’ rights whose aim is to promote U.S.-Japanese economic relations, Pickens said he plans to adopt the role of a “long-term shareholder” and hopes to participate in the management of Koito.
“Koito is an excellent company with a bright future, and we believe we can contribute to that future,” Pickens said. “We are not hostile in any way, and all we want to do is work with Koito management.”
Koito, which is listed on the Tokyo Stock Exchange and had a profit of about $55 million on sales of $803 million for the fiscal year ended March 31, 1988, had initially refused to register Boone Co. as a share owner. It demanded a probe of whether Boone Co. made the proper legal filings with the Finance Ministry when it obtained its shares.
But Koito relented Wednesday, announcing that it would register the stock transfer and agreeing to a meeting this morning between the company’s president, Takao Matsuura, and Pickens, who arrived in Japan on Tuesday. The company remained guarded, however.
“We won’t know what his intentions are until we meet with him and discuss the matter,” said Shinji Hagiwara, a Koito spokesman.
Vice President Junsuke Kato told reporters that he hopes Boone Co. will become a “stable shareholder.”
Pickens declined to elaborate on the business strategy he would unveil to Koito management, but he said he thought Koito should expand its exports to Europe and the United States and diversify out of the automotive industry.
He acknowledged that Boone Co., based in Amarillo, Tex., has yet to assume the role of a long-term shareholder or to participate in the management of any other company, U.S. or foreign, since it was formed in 1986. Pickens has acquired a reputation as an aggressive corporate raider as a principal of Mesa L. P., an oil and gas company that made a bold attempt to take over Gulf Oil in 1983.
Securities analysts say the only other postwar example of a foreign concern attempting to seize control of a major stake in a Japanese company was in 1985, when a joint venture between Trafalgar Holdings of Los Angeles and Britain’s Glen International cashed in warrants, accumulated on the Eurobond market, for equity in Minebea, a leading ball bearing maker. Their takeover bid was deflected when Minebea persuaded friendly companies to buy out the foreigners.
Pickens’ philosophy of shareholder rights and management participation flies in the face of established practices in Japan, whereby companies generally pay minimal dividends and focus on long-term growth strategies.
But Pickens said such practices will soon be outmoded as the world’s stock markets become increasingly linked in global trading. He hinted that there might be political fallout should foreign investors be denied reciprocal opportunities in Japan’s markets.
“This situation is being followed very closely in the United States, not only from an economic standpoint, but from a political standpoint,” he said.
