Shiseido Co. will withdraw from a series of tenders for Kanebo Ltd. and Kanebo Cosmetics Inc. soon to be held by the Industrial Revitalization Corp. of Japan, company sources said Wednesday.

Japan's largest cosmetics maker has decided that acquiring its one-time archrival would not provide much synergy, the sources said.

The cosmetics giant will stay away from the first of the tenders Monday, they said.

The sale of Kanebo firms is expected to be one of the biggest merger and acquisition cases in Japan, with analysts estimating the acquisition cost at the 400 billion yen level.

Analysts have been watching Shiseido to see if it would participate in the tenders because the balance of power in the cosmetics industry could tip depending on who eventually acquires the nation's second-largest cosmetics maker.

Established in 1887, the textile maker aggressively expanded its businesses during the 1970s and '80s.

But in March 2004, it turned to the public corporate bailout agency with losses accumulating in many of its operations outside cosmetics.

Kanebo Cosmetics was spun off from Kanebo in May 2004 as the more profitable segment of the Kanebo group. Kanebo and the spinoff are now undergoing rehabilitation with IRCJ support.

IRCJ sources have said it will pick a sponsor or sponsors for the two Kanebo firms by the end of this year through a series of tenders.