Tiny Japan Stock Soars—Then Buyout Announced

(Bloomberg) -- The stock of Apple supplier Minebea Mitsumi Inc. soared after its proposed acquisition of a Japanese lock maker, in a deal clouded by controversy over aggressive trading ahead of the buyout.

Tokyo-based Minebea climbed as much as 13 percent after unveiling its deal to acquire U-Shin Ltd., which provides electronic keys and steering locks to automakers. U-Shin shares climbed the most in five years on Wednesday -- just before Minebea announced its acquisition.

Traders flooded social media and messages boards with chatter about who could have known about the deal ahead of time and profited from that knowledge. Minebea agreed to buy the company for 985 yen per share, about 30 percent more than the price before the unusual trading began.

“I can’t remember the last time I saw something so blatant,” Andrew Jackson, head of Japanese equities at Soochow CSSD Capital Markets in Singapore, said in a phone interview. “It has to be investigated. I’d be very surprised if nothing comes out of it.”

Minebea and U-Shin declined to comment on the share move. The Financial Services Agency, which prosecutes insider trading, also declined to comment.

Minebea also reported second-quarter earnings, with operating profit of 19.6 billion yen compared with analyst estimates of 20.9 billion yen.

The purchase is Minebea Mitsumi’s latest move toward cars, which are increasingly connected to the internet and use more electronic components. Buying U-Shin would let Minebea sell more products like keys and locks, and broaden its relationship with automakers.

Market Reaction

• U-Shin shares were flat for most of the morning trading session in Tokyo on Wednesday, which runs until 11:30 a.m. local time. But in the afternoon, the stock began to climb and peaked right around the close.
• The two companies announced the deal just after the market close.

To contact the reporter on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Peter Elstrom, Reed Stevenson

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