U.S.-British Group Seeks Japan Firm : Minebea May Face Hostile Takeover Battle With Knapp

In what is turning into a clash of two very different corporate cultures, a group of American and British investors led by Los Angeles financier Charles W. Knapp announced a bid Friday to acquire Minebea Co., a Japanese ball-bearing manufacturer, for $1.43 billion in cash and securities.

A Minebea executive in Toyko immediately brushed aside the bid, setting the stage for what may become the first hostile takeover battle between a Japanese company and a foreign one.

The offer was made jointly by Los Angeles-based Trafalgar Holdings, of which Knapp is chairman, and London-based Glen International, an investment company chaired by financier Terrence Ramsden.

Trafalgar officials, speaking at a press conference in Los Angeles, said Minebea’s board has about 10 days to evaluate the proposal. If the offer isn’t accepted, they indicated, a hostile offer may be made.

Iwao Ishizuka, a Minebea executive vice president and board member, told the Kyodo News Service that the offer had “no consistency” and contained provisions that were “legally impossible.” He didn’t elaborate.

Unprecedented Situation

The freewheeling, American style of buying and selling publicly traded companies, either through hostile or friendly takeovers, is almost unheard of in Japan. That the unwanted suitor in this case is not Japanese makes the situation unprecedented.

“The feeling in Japan is the company belongs to the employees (not the shareholders),” said Jiro Tokuyama, dean of the Nomura School of Advanced Management in Tokyo, who was in Los Angeles for a conference. “Therefore, buying and selling companies is considered immoral.”

Trafalgar officials are already promising to bring American-style business methods to Minebea, including the prospect of larger dividends for shareholders and generous stock options for employees. If the buy-out succeeds, Knapp probably would become chairman of the board, but the company would continue to be operated by the Japanese, said Mark S. Dodge, Trafalgar executive vice president and general counsel.

Trafalgar first indicated an interest in Minebea two months ago, and just last week it indicated that it was planning a firm offer. These expressions of interest, however, have gotten nowhere with Minebea President Takami Takahashi, who has vowed to “use all necessary measures” to fend off the offer.

In Another Battle

Ironically, Minebea under Takahashi’s leadership has been very acquisitive and is now involved in a rare takeover battle with Sankyo Seiki Manufacturing, a precision-equipment maker. Colorful and outspoken, Takahashi has frequently criticized what he considers the old-fashioned business methods of his countrymen.

Knapp is an equally colorful figure in the United States. He was chairman of Financial Corp. of America, the nation’s largest savings and loan holding company, until August, 1984. He was forced to resign by banking regulators who felt that FCA’s lending practices were reckless.

Knapp’s motives remain somewhat unclear. He did not attend the press conference Friday. Trafalgar officials termed the proposed purchase a good business opportunity as well as an attractive entree into the Japanese market.

But others suggest that Knapp is merely looking for a way to bring “greenmail” to Japan, something Trafalgar officials deny. Perfected by wealthy American financiers, greenmail is the highly controversial practice of paying a premium to dissident corporate shareholders to repurchase their shares.

Terms of the offer call for Minebea shareholders to receive, in yen, cash worth about $240 million, convertible debentures worth $875 million and zero coupon bonds worth $320 million.

The Trafalgar and Glen International investors say they have more than $125 million tied up in Minebea equity. That includes ownership of more than 30% of Minebea’s equity, including convertible debentures and warrants, but less than 10% of the common stock outstanding, they say.

Minebea, which has revenue of about $600 million last year, owns a ball-bearing company in New Hampshire, and Trafalgar officials are clearly counting on the fairness issue to gain Japanese government approval for any deal.

“If (Minebea) has the right to invest in companies in the United States,” Knapp said recently, “why shouldn’t we have the same right to invest in Japan?”