Source disclosure: January 30, 2026
SUMITOMO DENSETSU CO.,LTD. [1949.T]
TOKYO (Reuters) – Sumitomo Densetsu Co., Ltd. announced on Monday that its board has approved and recommended to shareholders a tender offer involving the issuance of preferred shares to Daido Steel Co., Ltd., as well as reductions in capital and reserve funds.
The company's board meeting held today decided on the third-party allocation issuance of A-type preferred shares to Daido Steel Co., Ltd. The transaction is contingent upon several conditions including the valid execution of an underwriting agreement between Sumitomo Densetsu and Daido Steel, approval by the extraordinary general meeting scheduled for February 9, 2026, and shareholder resolutions regarding the share consolidation and preferred stock issuance.
Key details of the proposed issuance include a payment date set for March 24, 2026, with one new A-type preferred share being issued per subscriber at a price of ¥123,033,219,326 per share. This issuance aims to raise a total amount of ¥123,033,219,326, which will be used entirely for acquiring treasury shares from Sumitomo Electric Industries, Ltd., and ensuring distributable reserves post-consolidation.
Sumitomo Densetsu’s decision follows its previously disclosed support for Daido Steel’s tender offer for its common shares, which concluded on December 15, 2025. As part of this broader strategic move, Sumitomo Densetsu plans to consolidate its outstanding shares from 1,048,714 to 1, thereby reducing the number of shareholders to only Daido Steel and Sumitomo Electric Industries. This restructuring is aimed at facilitating the complete acquisition of Sumitomo Densetsu by Daido Steel through subsequent treasury share repurchase and reduction in capital and reserve funds.
In addition to these measures, Sumitomo Densetsu expects to secure sufficient funds and distributable reserves to execute the planned treasury share repurchase. The issuance costs associated with this plan are estimated at ¥433 million, excluding consumption taxes. These expenses will cover registration fees and legal counsel fees.
Overall, the rationale behind this issuance strategy is deemed reasonable given its alignment with the overall business objectives and the need to ensure fair treatment among shareholders while maximizing the value of the deal. However, due to the complexity involved in valuing non-traded special class shares, the company requires shareholder approval before proceeding with the issuance. This approval process involves resolutions based on Article 319 of Japan's Companies Act, with voting rights exercisable solely by Daido Steel and Sumitomo Electric Industries after the effective date of the share consolidation on March 5, 2026.
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