Japanese trading house Itochu Corporation (8001.T) announced on Monday that it will invest 220 billion yen ($1.5 billion) to gain full control of two subsidiaries, including the apparel company Descente (8114.T), and initiate a share buyback worth 150 billion yen starting Tuesday.
This move aligns with a broader trend among Japanese firms to eliminate dual listings of parent and subsidiary companies, aiming to enhance corporate governance and operational efficiency.
Itochu currently holds a 44.44% stake in Descente and will invest 182.6 billion yen to acquire the remaining shares through a tender offer priced at 4,350 yen per share, which represents a 16.6% premium over Friday’s closing price. Additionally, the company plans to spend 37.6 billion yen to buy the 44.31% stake it does not own in chemicals company CI Takiron (4215.T) at a tender offer price of 870 yen per share, a 9.7% premium to Friday’s closing price.
The tender offer for Descente is expected to commence by early November, pending approval from competition authorities in Japan and China, while the tender for CI Takiron will run from August 6 to September 18.
Itochu’s finance chief, Tsuyoshi Hachimura, emphasized the strategic importance of Descente as the core of its textile business, highlighting its growth potential in the sports apparel market both in Japan and internationally.
This expenditure is part of Itochu’s record 1 trillion yen investment plan aimed at growth areas for the current financial year, which was announced in April. The company also reiterated its commitment to a 150 billion yen share buyback program, which runs from August 6 to March 31, as part of its goal to achieve a 50% total shareholder return ratio this year.
Despite a 3.1% decline in net profit to 206.6 billion yen in the April-June quarter due to lower profits in its energy, chemicals, and metals sectors, Itochu maintained its full-year profit forecast at 880 billion yen.