Things Getting Interesting for Takefuji: Will Investors Profit?

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 |  About: Takefuji Corp Ord (TAKAF)
by: John Bethel

Things may be getting interesting with Takefuji Corp. (OTC:TAKAF). Bloomberg reports the company is considering share buy-backs and selling securities that offer holders the right to buy new shares.

These steps would be an effort to prevent hostile takeovers:

"Mergers and acquisitions, including management buyouts are likely in the consumer finance industry,'' said Yasuto Tsuruta, a managing director at Credit Suisse Group in Tokyo.

Japan's consumer finance companies are considered bid targets after their stocks plunged as the courts pared back interest rates as high as 29 percent and the nation's ruling party drafted a bill to cut charges. The non-bank financial group of the Topix index is down 24 percent this year, making it the worst performer.

I don't know about the selling securities/rights thing. (Details, you know.) But stock repurchases was one of the steps mentioned in my original rationale for buying the stock last April.

I wouldn't mind seeing Takefuji distribute some of its cash hoard to shareholders, among other things. I also wouldn't mind seeing the company get bought for a fair price:

Two years ago, Takefuji attracted bidders such as Goldman Sachs Group Inc. (NYSE:GS), the second-biggest U.S. securities firm by market value, and Newbridge, an investment arm of Texas-based buyout firm Texas Pacific Group, when the founder complied with a court order to divest to less than 25 percent his family-held stake. Takei was handed a suspended jail sentence in 2004 for ordering illegal wiretaps of journalists.

Takei's death on Aug. 10 at the age of 76 frees the family from the 25 percent limit.

Canadian financier Peter Cundill in June increased his holding in Takefuji for the second time this year to 8.53 percent, making him the largest single shareholder in the lender, regulatory filings showed. The purchases raised investor speculation that Takefuji may become a takeover target again.

Look for Cundill, among others, to pressure Takefuji to take shareholder-friendly action. As long as investors in the company get rewarded, it doesn't matter whether a takeover happens or not.

TAKAF.PK 1-yr chart:

TAKAF.PK 1-yr chart

Disclosure: The author is long Takefuji.

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