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7. Burndy-US’s Purchase of 40 Percent of the Stock of
Burndy-Japan in 1993
By 1990, Burndy-US had become dissatisfied with the
electrical part of Burndy-Japan's business. Burndy-US believed
that Furukawa and Sumitomo placed more emphasis on their
electrical businesses than on Burndy-Japan’s electronics
business.
By 1992, Burndy-US wanted to buy more shares of Burndy-Japan
stock. In April 1993, Burndy-US hired KPMG Peat Marwick (KPMG)
to appraise Burndy-Japan stock. KPMG used many different methods
which resulted in 34 different estimates of the value of Burndy-
Japan stock, averaging �7,501 per share.
FCI decided that it, rather than Burndy-US, would buy 40
percent of Burndy-Japan stock from Furukawa and Sumitomo and then
sell it to Burndy-US. On September 22, 1993, Burndy-US,
Furukawa, and Sumitomo signed an amended basic agreement (1993
amended basic agreement) in which Furukawa and Sumitomo each
agreed to sell to FCI 20 percent of the outstanding stock in
Burndy-Japan for �5,208,000,000 (�8,750 per share x 297,600
shares per shareholder x 2 shareholders). FCI agreed to transfer
the 595,200 shares of Burndy-Japan to Burndy-US by December 31,
1993. Immediately before the parties completed the 1993 amended
basic agreement, 1,488,000 shares of common stock of Burndy-Japan
had been issued. Burndy-US owned 744,000 shares, and Furukawa
and Sumitomo each owned 372,000 shares.
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