* Regulators asked about plan to get 38 pct J:Com stake-KDDI
* Says $4 bln deal in line with regulations
* Regulators asked KDDI to make public tender offer -media
* KDDI could face fine of more than $882 million -media
(Recasts; adds analyst comment)
By Mayumi Negishi and Taiga Uranaka
TOKYO, Feb 2 Japanese telecoms firm KDDI
(9433.T) said regulators had questioned it about its plans to
buy a stake in Japanese cable TV network J:Com from U.S.-based
cable operator Liberty Global (LBTYA.O) for about $4 billion.
Some legal experts have already raised doubts about the
legality of the deal, which was announced last week, saying KDDI
may need to make a public tender offer for Liberty's 37.8
percent stake in Jupiter Telecommunications Co (J:Com) 4817.Q.
Japanese law stipulates that there must be a public offering
open to all shareholders when a buyer seeks to purchase more
than a one-third stake in another company.
KDDI and its lawyers have maintained that because it plans
to buy three unlisted Liberty units, which together hold 37.8
percent in J:Com, it does not need to make a public tender
The Yomiuri newspaper reported on Tuesday the financial
regulator had asked KDDI to make a tender offer or change the
way in which it plans to buy the stake, or it could face a fine
of more than 80 billion yen ($882 million).
KDDI spokeswoman Kayo Sekine said the firm had been
questioned by Japan's Financial Services Agency (FSA) but
declined to elaborate.
"We will cooperate if the FSA should make a formal request
for information and adhere to any FSA guidance," she said.
Jun Yokoyama, a senior researcher at Daiwa Institute of
Research, said that theoretically Japanese regulation does not
require a tender offer if an acquisition does not directly
target listed companies.
"If you follow the letters of the law, you can read it that
way. But if you follow the spirit of the law, which is to
protect interest of investors, it's not so clear whether it's OK
just because they are not listed firms," Yokoyama said.
KDDI, which is trying to narrow the gap between it and top
phone company Nippon Telegraph and Telephone Corp (9432.T), is
seeking the J:Com stake to gain a stronger foothold in the
country's cable TV industry. [ID:nTOE60O06F]
Sumitomo Corp (8053.T), which holds 27.7 percent of J:Com,
has declined comment on KDDI's plans, while J:Com President
Tomoyuki Moriizumi has said he will accept the deal if the
purchase method is found to be legal.
Shares of KDDI have lost 7 percent since it announced the
deal, while J:Com shares, which initially jumped on the news,
have stayed flat.
(Additional reporting by Nobuhiro Kubo; editing by Chris
Gallagher and Karen Foster)