TOKYO, June 26 (Reuters) - Japan’s Hokuetsu Kishu Paper Co Ltd said on Tuesday it will raise its stake scandal-hit rival Daio Paper Corp’s to 19.6 percent from 2.86 percent to join forces to weather dwindling paper demand.
Hokuetsu, Japan’s No.5 paper products maker, said it plans to buy shares held by Daio’s founding family as well as other shareholders. The share purchase will raise Hokuetsu’s stake in terms of voting rights to 22.12 percent, making it the top shareholder in Japan’s No.4 paper maker.
Daio has been struggling to cut ties with its founding family after it discovered that former Chairman Mototaka Ikawa had gambled away billions of yen he borrowed from Daio Paper group companies.
Hokuetsu and Daio would together make Japan’s third-biggest paper manufacturing group by sales, after Oji Paper Co and Nippon Paper Group Inc.
Reporting by Mayumi Negishi; Editing by Michael Watson