But Fuji TV gains two big sellers in the takeover battle.

Livedoor Co. on Thursday filed a lawsuit seeking an injunction on Nippon Broadcasting System Inc.'s plan to grant Fuji Television Network Inc. the right to buy new shares in Nippon Broadcasting and make it a subsidiary.

In the suit filed with the Tokyo District Court, Livedoor said Nippon Broadcasting's subscription warrant is an illegal measure designed to stymie Livedoor's takeover bid of the radio broadcaster.

The Internet services provider also claimed Nippon Broadcasting's shareholders would be hurt by the illegal attempt to maintain Fuji TV's control over the radio broadcaster.

Nippon Broadcasting on Wednesday said it would grant Fuji TV a subscription warrant to acquire 47.2 million new shares in the radio broadcaster.

If Fuji TV decides to buy up all the new shares-1.44 times the current number of outstanding stock-Livedoor's stake in Nippon Broadcasting would fall below 20 percent from the current 40 percent.

But Fuji TV received some good news on Thursday.

Tokyo Electric Power Co. (TEPCO) and Kodansha Ltd., two major shareholders in Nippon Broadcasting, intend to accept Fuji TV's offer of 5,950 yen a share in Nippon Broadcasting, sources said.

The two companies are the first outside the Fujisankei media group to accept Fuji TV's offer.

TEPCO owns 159,980 shares of Nippon Broadcasting, or 0.49 percent of all outstanding shares. Kodansha owns about 180,000 shares.

Most of Nippon Broadcasting's other major shareholders have not decided what to do with their shares. Many have said they were waiting for further trends in Nippon Broadcasting's share price as well as the outcome of Livedoor's lawsuit.

Fuji TV also said Thursday it plans to extend the deadline for its takeover bid from March 2 until March 7.

The main point of contention in Livedoor's lawsuit will be the objective of Nippon Broadcasting's subscription warrant.

Livedoor is expected to argue that the issuance of new shares is simply an attempt by Nippon Broadcasting to allow Fuji TV to obtain a controlling interest in the company, a violation of the Commercial Code.

Nippon Broadcasting's defense will likely be that the subscription warrant is necessary to protect its corporate value. Fuji TV will also be asked to explain the appropriateness of the funds it raises to buy the new shares.

The Commercial Code contains provisions that allow shareholders to file lawsuits seeking injunctions against the issuance of new shares if such actions are ``extremely unfair.''

In a 1989 lawsuit, real estate company Shuwa Corp. sought an injunction against the issuance of new shares by supermarket chains Inageya Co. and Chujitsuya Co. The new shares were intended to lower Shuwa's stakes in the companies.

The Tokyo District Court ruled in favor of Shuwa, saying there was no rational use of the funds that could legitimize the issuance of new shares.

But in July last year, the same court ruled against CSK Corp., which was seeking an injunction against a subsidiary, Bellsystem 24 Inc., that had issued new shares in a bid to weaken CSK's influence.

While the court recognized the issuance of new shares as an attempt by Bellsystem 24 to remove CSK from its position as parent company, the court also recognized the rationality of projects that would receive the majority of funds raised through the new shares.(IHT/Asahi: February 25,2005)