NTT to Buy Out Docomo in Japan's Biggest Tender Offer

Tokyo, Sept. 29 (Jiji Press)--Nippon Telegraph and Telephone Corp. <9432> announced Tuesday that it will take full control of mobile phone subsidiary NTT Docomo Inc. <9437> in what will be the largest-ever tender offer for a Japanese company. NTT aims to acquire about 34 pct of Docomo shares held by general and other investors for 3,900 yen each in a deal estimated to be worth about 4.3 trillion yen in total. Docomo is a publicly traded unit of NTT and the largest mobile carrier in Japan. With the buyout, NTT hopes to strengthen the group's operations to prepare for mobile communications fee cuts and expand its overseas businesses. NTT, which owns about 66 pct of all outstanding Docomo shares, will seek to acquire the remaining stake in the tender offer, slated to run from Wednesday through Nov. 16. If the offer is successful, Docomo will be delisted from the first section of the Tokyo Stock Exchange. To fund the share purchases, NTT will borrow up to 4.3 trillion yen from six banks including MUFG Bank. NTT President and CEO Jun Sawada and Docomo President and CEO Kazuhiro Yoshizawa announced the acquisition plan in an online press conference. "We need to respond as a group to global and dynamic changes in the business environment," Sawada said. He also expressed readiness to cut mobile communication rates, saying that the acquisition will give the group the capacity to do so. Prime Minister Yoshihide Suga has repeatedly said that major mobile carriers in Japan should lower their rates. NTT started considering the full acquisition in April after Docomo's profitability fell, according to Sawada. The two companies agreed on the acquisition in June, he said. After the acquisition, the group will boost development related to the 5G next-generation superfast wireless network and the 6G network, which it hopes to put to practical use in 2030. NTT will also ramp up its financial and health care operations and other new businesses outside of telecommunications. NTT will consider transferring the businesses of two group companies to Docomo. They are NTT Comware Corp., a telecoms system developer, and NTT Communications Corp., NTT's long-distance and international communication arm. "We can't win in a bigger field unless we raise our capacity to create services," Docomo's Yoshizawa said at the press conference, highlighting the purpose of the reorganization. NTT has formed capital alliances with Toyota Motor Corp. <7203> and NEC Corp. <6701> to explore new business opportunities related to the digitalization of society. Centered around the telecoms industry, there are expected to be more mergers and acquisitions beyond the borders of corporate groups and business sectors at a time when companies are vying to show initiative in digital transformation. <8306> END