February 5, 2007 / 8:18 AM / 12 years ago

UPDATE 2-Japan's M'bishi Chem says may cancel treasury stock

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TOKYO, Feb 5 (Reuters) - Mitsubishi Chemical Holdings (4188.T), Japan’s largest petrochemical maker, said on Monday it may cancel “a fair amount” of its treasury stock after it arranged a takeover of drug maker Tanabe Seiyaku (4508.T) without needing to use it.

With treasury stock equivalent to about 24 percent of its outstanding stock, Mitsubishi Chemical had previously said it had wanted to use the shares in a takeover or merger in the pharmaceutical sector. Mitsubishi Chemical, which owns Mitsubishi Pharma, will take over Tanabe Seiyaku (4508.T) in a $4.3 billion deal, creating the nation’s fifth-biggest drug maker, the companies announced on Friday.

“We have announced a major pharmaceutical alliance without using the treasury stock, so now we are looking to cancel a fair amount of that,” Shotaro Yoshimura, managing executive officer, told a news conference.

Yoshimura declined to comment further on the potential size of the cancellation but said it may hold onto some treasury stock for other mergers and acquisitions.

He said it had decided not to use its treasury stock in the deal with Tanabe, as the deal was negotiated from the view of both drug firms being on an equal footing. Yoshimura said that while the company did not rule out further acquisitions in the pharmaceuticals sector, it had always said it did not plan to hold onto its treasury stock long-term.

“We don’t need to hold on to it just in case we happen to do another one,” he said.

Last April Mitsubishi Chemical Holdings, which was formed in October 2005 through the integration of Mitsubishi Chemical Corp. and Mitsubishi Pharma, bought back 24 percent of its shares that the two units had owned in the holding company.

On Monday, Mitsubishi Chemical reported a 12.5 percent fall in its operating profit for the first nine months of the business year to 98.9 billion yen ($819 million) on higher naphtha prices and kept its forecast for a profit of 127 billion yen for the full year to March.

Its shares ended the day up 0.7 percent at 861 yen compared with a 0.60 percent decline in the chemicals index .ICHEM.T.

((Reporting by Edwina Gibbs, editing by Michael Watson; Reuters messaging: edwina.gibbs.reuters.com@reuters.net; email edwina.gibbs.@reuters.com; +81 3 3432-8720))

($1=120.74 Yen) Keywords: MITSUBISHI CHEMICAL/

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