Pentax Stock Drops on News It May Reject Hoya's Takeover Bid

Shares of Pentax dropped sharply on Wednesday after local press reported that the Japanese camera and medical equipment maker's board would reject Hoya's takeover bid.

According to Kyodo news agency, Pentax's board of directors planned to meet
on Wednesday to vote against the offer from Hoya because they thought the
high-tech glass maker did not seek to merge the two companies in an "equal
spirit".

But whether Pentax will actually rebuff Hoya's tender offer is unknown, after a company executive told Reuters on Wednesday morning that the firm had cancelled the board meeting.

Pentax's management has a meeting later in the day with Hoya.

Hoya said earlier this month it would pay about 770 yen per Pentax share in a possible tender bid, one-fifth more than Pentax's implied price based on an earlier equity swap ratio the two companies had agreed in December.

The sweetened tender offer was offered as an alternative to the share-swap deal, which had caused a split among Pentax board members, and upset some shareholders who said the swap ratio undervalued the firm.

If Pentax were to reject Hoya's offer, Hoya could walk away from the deal or launch a hostile bid -- a rare move in Japan.

Pentax management met with its biggest investor Sparx Asset Management on Tuesday and said it aims to put together a proposal that would help boost returns to shareholders, without giving details.

Sparx, which holds close to 24% of Pentax, said earlier this week that the tender offer bid from Hoya would be a fair way for shareholders to decide on a merger between the two technology companies.