Konaka Wins Menswear Merger With Futata, Aoki Loses

Futata Co., a men's suit chain based on Japan's southern island of Kyushu, said it will accept Konaka Co.'s $93 million merger proposal, thwarting rival Aoki Holdings Inc.'s counter bid.

``We decided to refuse Aoki's merger proposal as we seek a merger with Konaka,'' Futata said in a statement released at the Tokyo Stock Exchange. The company said it chose Konaka, Futata's largest shareholder with a 20 percent stake, because of its existing relationship, and called the offer ``profitable for our shareholders.''

Konaka, Japan's fourth-largest menswear chain, offered one share for every 2.3 shares of Futata, valuing the smaller retailer at 726 yen a share, based on Konaka's closing price today and accounting for a stock split effective Sept. 1. Konaka will spend about 10.8 billion yen ($93.2 million) for the remaining 80 percent of Futata shares.

Aoki, Japan's second-largest menswear retailer, offered 700 yen. Aoki President Hironori Aoki holds a 4.79 percent of Futata shares. The company announced that it was withdrawing its bid.

The Futata family holds a 34 percent stake in the retailer, and its management holds a 2.87 percent, according to Bloomberg data. Sumitomo Mitsui Banking Corp. holds 3.35 percent.

Konaka shares rose 7.9 percent to 1,837 yen in Tokyo trading today, while Futata fell 2.2 percent to 720 yen. Shares in Aoki fell 0.7 percent to 2,080 yen.

Sumitomo Mitsui Financial Group Inc., Japan's third-largest lender, is advising Futata. Konaka Executive Managing Director Takashi Numata yesterday said it wouldn't disclose its financial adviser for now.