(Bloomberg) -- Japanese trading house Itochu Corp. will buy back as much as ¥150 billion ($1.1 billion) of its shares, and also made a tender offer for the rest of sportswear company Descente Ltd. it doesn’t already own.
Itochu announced the cash outlays alongside quarterly earning results, which showed that net income for the quarter ending June fell 3.1% from a year earlier, missing analysts’ estimates. The offer for Descente is for ¥4,350 per share, for a total of ¥182.6 billion. Itochu controls a 44% stake in the sports apparel maker via a wholly-owned subsidiary.
In 2019, Itochu boosted its stake in the sportswear company via a hostile bid, a rare occurrence at the time among Japanese companies. The trading house decided on its takeover bid in an effort to put more resources into the company and raise its profitability.
While Descente is considered a premium sportswear brand, “Compared to the competitors that have grown quite a bit or have gone out to overseas, there’s not enough growth,” Itochu Chief Financial Officer Tsuyoshi Hachimura said at a news conference in Tokyo on Monday, adding that Itochu wants to make Descente a core part of its growing textile segment business.
Itochu aims to start the tender offer by early November and said it will make an announcement on the schedule once it is determined. Descente’s board supports the tender offer, and recommends that shareholders sell their shares, the trading house said.
Separately, Itochu also said it would launch a tender offer for CI Takiron Corp., which processes plastic materials, for ¥870 per share.
(Updates story throughout with additional details, background on Itochu and Descente.)
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