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Cerberus favored for Aozora deal
TOKYO, Japan (Reuters) -- U.S. investment fund Cerberus Capital Management has clinched a deal to buy a 49 percent stake in Japan's unlisted Aozora Bank from Softbank Corp for 100 billion yen ($835 million), a newspaper said Tuesday. The Sankei Shimbun said Japan's Financial Services Agency (FSA) was leaning towards approving the deal, which would give Cerberus a majority stake of some 60 percent in Aozora since it already holds 11.5 percent of the bank. "At this point a deal has not been finalised," said Softbank spokesman Katsumasa Tochihara, adding that he did not know whether Cerberus had submitted a bid. Cerberus officials in New York were not available for comment. Financial Services Minister Heizo Takenaka told a regular news conference he had not heard anything about Aozora Bank. One of Japan's four big banks, Sumitomo Mitsui Financial Group, said in March it had made a bid for Softbank's stake but had to see whether Aozora's other main shareholders would exercise their right of refusal. Cerberus said in March it was working on matching SMFG's bid. If it does, Cerberus would automatically win. An announcement could come as early as April 14 when the deadline for Cerberus to match the bid expires, the paper said. A group led by Softbank bought Aozora -- born from the ashes of Nippon Credit Bank, which failed in December 1998 -- in September 2000 for around 110 billion yen. Softbank has said it paid around 50 billion yen for its 48.88 percent stake. Analysts said Aozora's attraction lies in its extensive networks with regional banks and relatively clean balance sheet, with rapidly shrinking bad assets and fat loan-loss reserves against risky borrowers. For a fund like Cerberus, however, an even bigger attraction is the chance of scoring profits from an initial public offering of Aozora shares. "They are a fund. All they want is to raise the equity value in what they own," said an analyst at a securities firm. Cerberus could follow investment banks such as Goldman Sachs and Merrill Lynch, which have recently invested in bigger Japanese banks that needed to raise capital. Cerberus has said previously it aimed to keep its shareholding in Aozora to below 50 percent. The FSA must approve any stake purchase of more than 20 percent in a bank. Analysts said the FSA had no option but to approve Cerberus' bid if it matches that of its contender. The FSA has said it would approve a bidder when the due process is observed. Internet investor Softbank is keen to sell its stake in Aozora to fund its new strategy focusing on broadband businesses. The two other major Aozora shareholders are leasing firm Orix Corp and Tokio Marine & Fire Insurance Co, which each own 14.99 percent. The rest is owned by a group of local financial institutions. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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