Japan’s Descente In Hostile Takeover Battle as Itochu Bids Larger Stake
Descente Ltd., A major Japanese sportswear-maker, said on Thursday that it is against the bid of its top shareholder, Itochu Corp, to acquire a larger stake. The two companies face a hostile takeover battle for control of the company. The sportswear-maker is known to produce licensed brands including Le Coq Sportif, Munsingwear, and Umbro.
Members of the board of Descent united to oppose the bi during a meeting. Itochu, a trading house, has long been a business partner of the sportswear-maker.
The top shareholder made the offer on Jan. 31 as it aims to increase its equity in the company from its current 30 percent ownership to 40 percent. The increase in shares will give the company the power to veto crucial management decisions. Itochu, however, said that they will continue with the takeover bid despite the opposition of Descente.
The shareholders are in disagreement in other things including the overseas strategy of the sportswear maker. Itochu opposes the heavy reliance of the company to South Korean Interests despite that it generates most of the company's revenue.
Itochu promotes affiliation to other markets like Japan and China to increase its revenue growth. The trading house threatened that if the company disregards their demand, it will ask the resignation of the company's President Masatoshi Ishimoto during a general shareholders meeting.
Descente, in response, released a document on Thursday that argues Itochu's proposals regarding the overseas strategy as insignificantly different from the measures that they have already taken. The document also said that they are against any changes in the top management of the company.
The document said that they don't think that there is any business or economic rationality or necessity in seeking a change in management through such a high-handed manner when the current management has produced certain results.
Descente started its operation in 1935 in Osaka and it currently provides training wear to the baseball sensation playing with the Los Angeles Angles. The partnership between the two company started in the 1960s.
In 1984, Itochu helped the company as they struggle with their excessive inventories at Munsingwear. In 2009, the trading house owned 25 percent of the company's stake and became the major shareholder.
Itochu, however, was disappointed in 2013 after Descente appointed Ishimoto as president. The president is a family member of the company's founding family. Itochu claims that the appointment was made without giving any prior notice to the directors dispatched from Itochu.