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Hankyu may rescind deal with Hanshin if talks with fund drag on+
(Japan Economic Newswire Via Thomson Dialog NewsEdge)OSAKA, May 1_(Kyodo) _ Hankyu Holdings Inc. may take back its basic agreement with Hanshin Electric Railway Co. to integrate their management if negotiations to buy the so-called Murakami Fund's Hanshin stake drag on, sources familiar with the matter said Monday.
Unless Hankyu Holdings and the investment fund led by financier Yoshiaki Murakami reach a deal by Hanshin's general shareholders meeting on June 29, the agreement is likely to be rescinded, the sources said.
Hankyu Holdings plans to buy the Murakami Fund's stake of roughly 45 percent in Hanshin for its management integration with the railway operator. But negotiations on the price for purchasing the stake have been deadlocked, despite Hanshin's support for the buyout.
In late April, the fund presented Hanshin with a proposal in a sealed envelope, which is due to be opened Tuesday.
Although the content of the proposal remains unknown, the fund may have proposed a management reshuffle for Hanshin at the coming general shareholders meeting so as to control a majority of its board members. The fund will be able to achieve its goal at the meeting as it effectively has more than 50 percent of voting rights at Hanshin.
If the fund places Hanshin under its control, it could sell the railway operator's assets, such as real estate in Osaka's Umeda district in which Hankyu Holdings is interested.
Hankyu Holdings owns Hankyu Corp., a railway operator competing with Hanshin in the Kansai area that has Osaka at its center. Hankyu Holdings and Hanshin plan to reinforce the foundation of their businesses by combining railway services and asset holdings.
But there is a possibility of the Murakami Fund making tough demands after placing Hanshin under its control.
A Hankyu Holdings executive said the company should not accept such demands "by crossing the red line."
Another Hankyu Holdings official said that while the second round of negotiations with the Murakami Fund will begin when the sealed envelope is opened, "I don't think there will be a third round after the general meeting."
The envelope may not be opened if Hankyu Holdings and the fund iron out differences over the purchase price by Tuesday's deadline.
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