Rakuten to increase stakes in TBS

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TOKYO -- Japanese Internet mall operator Rakuten has increased the possibility of a bitter battle over control of Tokyo Broadcasting System, announcing plans to increase its stake in the company to more than 20% and effectively turn it into an affiliate.

Rakuten also has requested that TBS permit Rakuten president Hiroshi Mikitani and another senior official to become external directors.

At present, Rakuten owns 19.86% of TBS and has announced that one of its subsidiaries will purchase additional shares to surpass the 20% threshold. That would enable Rakuten to incorporate TBS's earnings in proportion to its equity investment.

In an effort to alleviate investor fear, Rakuten said in a statement that it "aims, on a mid- and long-term basis, to leverage the respective strengths of TBS and Rakuten in order to realize the full benefit of providing services that combine the resources of both broadcast media and the Internet service industry."

Rakuten added that it "fully understands and respects the importance of broadcast media and the Internet service industry in our society, and intends to further ensure and enrich the public nature of broadcasting through its relationship with TBS."

Officials of TBS were not available to comment on the latest maneuver, but the company has expressed its opposition to a hostile takeover approach in the past.

Rakuten had proposed integrating the management of the two companies in October 2005, after acquiring an initial stake in TBS. The broadcaster deflected the initial approach, with the two agreeing on areas of cooperation and that Rakuten would put its stake in the company into trust and freeze its voting rights.

That arrangement came to an end in February, leaving TBS open to unwanted approaches.
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