Hokuetsu favours Mitsubishi bid

TOKYO - Hokuetsu Paper Mills has rejected an unsolicited ¥141 billion ($1.9 million) takeover bid from Oji Paper, Japan's largest paper manufacturer, saying it will pursue a capital alliance with trading company Mitsubishi.

On July 21, Hokuetsu said Mitsubishi would pay ¥607 a share to raise its stake in the paper company to 24.4 per cent from 0.97 per cent. Tokyo-based Oji said it would offer ¥860 a share to acquire at least 50.1 per cent of Hokuetsu, if it cancels the tie-up with Mitsubishi.

Global paper manufacturers are raising prices to contend with rising fuel costs. Nippon Paper in May said it will raise prices by more than 25 per cent. Oji in November agreed to pay Nippon Oil the highest price in 20 years for fuel oil used in factories.

Oji Paper's president and chairman will meet Mitsubishi executives to try to persuade them to drop their plans with Hokuetsu.

- BLOOMBERG