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TBS shares up 11 pct as Rakuten seeks bigger stake

Fri Apr 20, 2007 3:46am EDT

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TOKYO, April 20 (Reuters) - Shares of Tokyo Broadcasting System Inc. (9401.T) jumped by their daily price limit of 13 percent on Friday after Rakuten Inc. (4755.Q) said it planned to buy additional shares in the broadcaster.

TBS stock jumped 500 yen to 4,340 yen in early trade and was still up 12.8 percent at 4,330 yen at the midday break.

Rakuten, Japan's biggest online shopping mall operator, said late on Thursday it planned to lift its stake in TBS to above 20 percent from the current 19.9 percent in a move that could push the broadcaster to use its "poison pill" defence measures.

An executive at TBS told Reuters that the TV broadcaster considered Rakuten's move "hostile" and that it would prepare to use its anti-takeover steps, which include issuing equity warrants to dilute an acquirer's stake.

Negotiations between the two companies on a possible alliance have dragged on for more than a year since Rakuten's failed takeover bid for TBS in 2005. Rakuten has said it aimed to create new businesses combining Internet and broadcasting.

"This is only a repeat of what happened before," said Haruo Otsuka, a fund manager at Toyota Asset Management. "The two firms will be in a deadlock for a while, creating more uncertainty in the start-up market when its recovery is still weak."

Otsuka added that the Rakuten-TBS deal is only a battle over management rights, and the market isn't quite sure how the proposed business integration will improve the companies' value.

Rakuten shares, which rose as much as 3.8 percent earlier, ended the morning down 1.5 percent at 46,800 yen. The Nikkei benchmark .N225 was up 0.5 percent.

((Reporting by Edwina Gibbs and Yuko Inoue, writing by Aiko Wakao, editing by Hugh Lawson; Reuters messaging: edwina.gibbs.reuters.com@reuters.net; email edwina.gibbs.@reuters.com; +81 3 3432-8720)) Keywords: RAKUTEN TBS/SHARES

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