Oji Paper to Launch Hostile Takeover Bid

Pathumwan, Bankgkok, Thailand, 24 July 2006 -- Oji Paper Company, Japan's leading paper producer, said Sunday that it aims to make Hokuetsu Paper Mills Ltd. a wholly owned subsidiary through a takeover bid, beginning in mid-August.

Major Japanese companies rarely make hostile takeover bids against domestic competitors, though paper producers have been conducting mergers and acquisitions to survive in recent years. Analysts said the planned management integration could sharpen Oji Paper's edge against Nippon Paper Group Inc., Japan's second-largest papermaker.

A Hokuetsu Paper Mills spokesman said the announcement is "a bombshell and our president was really surprised by it."

Hokuetsu Paper Mills said Friday that Mitsubishi Corp. will acquire an equity stake in it of 24%, purchasing all of the new shares worth 30 billion yen the papermaker is to issue through a third-party allocation.

Hokuetsu Paper Mills, which was founded in 1907 and is Japan's sixth-largest papermaker, earned 150 billion yen in sales and 7 billion yen in operating profit in fiscal 2005.

The firm is known for its highly efficient operations and high ratio of foreign shareholders.

The 2800-employee firm plans to begin producing high-quality paper for printing by the end of 2008 by introducing advanced equipment to its factory in Niigata.