Murakami fund to shed its entire stake in Hanshin

The Murakami fund is expected to sell all of its shares in Hanshin Electric Railway Co., making it certain that Hankyu Holdings Inc. will successfully conclude its tender offer for the railway operator, according to sources.

The Murakami fund, which holds some 47 percent of outstanding Hanshin shares, will likely decide to sell the stake Monday, the last day of the tender offer, the sources said Friday.

The takeover bid, if successful, will represent the first integration of management between major private railroad operations in the postwar period. Hankyu holds Hankyu Corp., a railway company that competes with Hanshin in the Kansai region.

Before his arrest earlier this month for suspected insider trading, fund founder Yoshiaki Murakami said it fund would sell its Hanshin shareholdings but without revealing how much of the stake it would tender.

The fund intends to sell its entire stake to prepare for cash requirements expected to increase as client investors withdraw their money in the wake of Murakami's arrest, analysts said.

In addition, the fund considers it advantageous to sell its holdings now because the price of Hanshin stock has fallen below 930 yen per share, the purchase price set by Hankyu for its takeover bid.

The Murakami fund will receive some 180 billion yen by selling its entire holding of Hanshin shares at 930 yen per share. As it purchased them at an estimated average price of nearly 700 yen, it will earn more than 45 billion yen in net profit.

Hankyu, which aims to acquire more than 45 percent of outstanding Hanshin shares through the tender offer, will announce its final outcome Tuesday, including shares tendered by holders other than the Murakami fund.

If the tender offer proves successful, Hanshin will seek approval for its management integration with Hankyu from shareholders at their general meeting June 29.