Market rumors keep 'K' Line takeover talk in the headlines

Market rumors keep 'K' Line takeover talk in the headlines

An investment fund's positioning within "K" Line has sparked wild rumors as to the fate of one of Japan's Big Three container lines.

An apparent “K” Line stock-buying spree by investment fund Effissimo Capital that has made it the container line's largest shareholder is behind market rumors that the fund is preparing to take over the Japanese shipping company.

Although a spokesperson for the Japanese ocean carrier confirmed that Effissimo was one of the company’s shareholders, it would not confirm reports that the fund had bought 37 percent of “K” Line or comment on its intentions.

“We are engaged in constant dialogue with our shareholders, including Effissimo Capital Investment,” the spokesperson said. “The dialogues are to explain the mid-term management plans to increase our corporate values and its progress."

“For further inquiries with regards to the contents of conversation belonging to a particular shareholder's matter, we are not in a position to reveal them and would like to refrain from making additional comments.”

However, a source at the container line that declined to be identified said, “No one is attempting to acquire our company. However, the company’s stock price has fallen with the shipping cycle, and Effissimo is one of a number of investors that are betting on the share price to recover eventually. That’s how we see it.”

“K” Line’s stock is now trading at 260 Japanese yen ($2.54), having fallen from 281 yen a year ago. Led by Eizo Murakami, the container line incurred a 26.79 billion yen ($262.15 million) loss for the three months-ended June 30, reversing a 10.19 billion yen profit in the year-ago period, amid weak earnings across many sectors.

Effissimo Capital Management was established in Singapore by ex-colleagues of fund manager Yoshiaki Murakami, and is known to have become a major shareholder in other major Japanese firms, such as office equipment maker Ricoh and Japan Display Inc., a liquid crystal display-focused joint venture between Sony, Toshiba, and Hitachi.

Murakami, known as Japan’s most prominent corporate raider, was the founder and former president of M&A Consulting Inc., which is also known as the “Murakami fund.” Pursuant to building up substantial interest in listed companies, Murakami would then pressure those companies to return more to shareholders.

After being jailed for insider trading in 2007, Murakami is now making a comeback, having built a stake in Kuroda Electric Co., with his daughter.

Media reports have also suggested that Maersk Line was interested in acquiring “K” Line’s container shipping business through Effissimo. A spokesman for Maersk Line said the company did not comment on rumors.

Contact Xiaolin Zeng at arachelle0@gmail.com

A version of this story originally appeared on IHS Fairplay, a sister product of JOC.com within IHS Markit.