Bloomberg News

OSE Declines Comment on Report Shareholders Want New Deal Terms

February 13, 2012

Feb. 13 (Bloomberg) -- An Osaka Securities Exchange Co. spokesman declined to comment on a report shareholders want management to demand better terms for Tokyo Stock Exchange Group Inc.’s takeover bid.

“The opinions of the shareholders aren’t public and I can’t comment on anything beyond what’s in the public record,” said bourse spokesman Masahiro Yada. Shareholders are pushing for better terms in the deal announced Nov. 22, the Financial Times reported today, citing investors it didn’t name. The price is set and won’t be revised, Osaka bourse President Michio Yoneda, said in an interview with Bloomberg News on Feb. 8.

If the deal’s terms aren’t revised, investors said they may vote for the removal of OSE directors at the annual meeting of shareholders in June, a move which might derail the deal, according to the FT.

Tokyo offered 480,000 yen a share for its smaller rival, representing a value of 21.6 times estimated earnings, according to calculations by Bloomberg. That’s below the valuation for Singapore Exchange Ltd., which trades at 25.6 times estimated earnings, and above ASX Ltd., valued at 15.1 times estimated earnings.

“Depending on where you stand, there are different ways to look at this, but I don’t think the terms are going to change too much,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “The price of the takeover bid was set based on publicly available valuations set by deal advisors, so it’s probably an appropriate price.”

Osaka Shares

Shares of the Osaka Securities Exchange rose 0.4 percent to 454,000 yen as of 1:10 p.m. in Tokyo. The benchmark Nikkei 225 Stock Average advanced 0.8 percent.

“The terms are what the two companies agreed on,” said Kazuhiko Yoshimatsu, a spokesman at the Tokyo Stock Exchange.

Fidelity Investments Japan Ltd., London-based Jo Hambro Capital Management, and Chicago-based Northern Trust Corporation are among the bourse’s top shareholders, according to data compiled by Bloomberg News.

“The price was set when the financial markets were at their worst, but there are no other parties interested in Osaka,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “The market has improved from its bottom, but Japan’s potential growth is still slowing.”

Japan’s Fair Trade Commission this month started the second phase of its review into the merger between Osaka and the 133- year-old Tokyo Stock Exchange. Deals worth $37 billion have been proposed between global exchanges in the past 15 months, with cross-border plans meeting resistance from regulators.

--Editors: Jason Clenfield, Nick Gentle.

To contact the reporter on this story: Toshiro Hasegawa in Tokyo at

To contact the editor responsible for this story: Nick Gentle at

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