Japan court battle over poison pill may go to Supreme Court

FILE PHOTO: The logo of Tokyo Kikai Seisakusho Ltd. is displayed at the company headquarters office in Tokyo, Japan October 21, 2021. REUTERS/Issei Kato
FILE PHOTO: The logo of Tokyo Kikai Seisakusho Ltd. is displayed at the company headquarters office in Tokyo, Japan October 21, 2021. REUTERS/Issei Kato

By Makiko Yamazaki

TOKYO (Reuters) -The Tokyo High Court on Tuesday dismissed a request for an injunction against manufacturer Tokyo Kikai Seisakusho Ltd's plan to issue a poison pill, a decision its top shareholder will now appeal to the supreme court.

Asia Development Capital (ADC) is seeking to block Tokyo Kikai from issuing new shares that would dilute its 40% stake and prevent it from mounting a takeover.

The fund plans to appeal to Japan's supreme court, ADC's lawyer told Reuters, after the Tokyo High Court on Tuesday dismissed its appeal of a lower court ruling against it.

The legal battle is likely to spark concern among foreign investors and could cast a shadow over the future of hostile takeover bids in the world's third-largest economy.

ADC built up its 40% stake in the manufacturer of newspaper printing presses in a matter of weeks. Shareholders in Tokyo Kikai, excluding ADC, have approved an issuance of new shares that would dilute the fund's stake.

In a statement, Tokyo Kikai said it believed its plan to issue new shares was "legal and appropriate" and called the court's dismissal of the appeal a "reasonable decision that recognises the company's argument".

ADC's original attempt to block the share issue was rejected by the Tokyo District Court.

A victory for Tokyo Kikai holds the potential to make it much easier for other Japanese companies to use poison pills.

(Reporting by Makiko Yamazaki, writing by Ju-min Park; Editing by Kirsten Donovan and David Dolan)

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