Japan Tobacco and Nissin to Buy Katokichi 

22/11/07 Japan Tobacco Inc., Nissin Food Products Co. and Katokichi Cohave agreed to integrate their frozen food operations, the three companies said Thursday.

Japan Tobacco will first take full control of Katokichi through a tender offer set for Wednesday through Dec. 26, and it will then sell 49 pct of the Katokichi shares to Nissin Food, a major instant noodle maker.

Finally, Japan Tobacco and Nissin Food will hand over their frozen food operations to Katokichi, creating one of Japan's biggest frozen food companies with annual sales of some 260 billion yen.

Japan Tobacco, which now owns 5 pct of Katokichi, will offer 710 yen per share, a 66.7 pct premium over Katokichi's closing price of 426 yen on the Tokyo Stock Exchange Monday.

Acquiring all Katokichi shares will cost Japan Tobacco 109,190 million yen. After the move, Katokichi will be delisted from the TSE and the Osaka Securities Exchange.

With the acquisition, Japan Tobacco aims to make its food operations the second biggest revenue source after the mainstay tobacco operations, while Nissin Food wants to beef up its frozen food operations.

Katokichi swung into a record group net loss of 9,874 million yen in the year ended in March due mainly to an accounting scandal.

The three companies will set up a joint committee to consider ways to help Katokichi streamline operations and boost competitiveness after the integration.

The merged company will aim to expand operations to foreign countries and pursue tie-ups with other companies.