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Japan's Stance on Hostile Takeovers Undergoes Drastic Shift, Says Bankers Association Chief

Japan is undergoing a significant cultural and strategic shift in its corporate sector, showing increased openness to hostile takeovers.

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Mazhar Abbas
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Japan's Stance on Hostile Takeovers Undergoes Drastic Shift, Says Bankers Association Chief

Shift in Japan: Banks Support Hostile Takeovers Amid New Guidelines, Says Banking Lobby Chief

In a significant turn of events, Japan's stance on hostile takeovers is witnessing a drastic change, according to Akihiro Fukutome, the newly appointed chief of the Japanese Bankers Association. This shift comes as Japanese banks show a growing openness to finance hostile acquisitions, propelled by the government's latest takeover guidelines, aiming to align more closely with Western-style dealmaking.

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Breaking Traditional Taboos

Historically, Japan's corporate culture has been characterized by a strong aversion to hostile takeovers, viewing them as disruptive to the harmony and collaborative ethos of Japan Inc. However, Fukutome reveals that the landscape is evolving. The Ministry of Economy Trade and Industry (METI) introduced new M&A guidelines last year, targeting the reduction of excessive defence tactics and the stigma associated with unsolicited bids. This has not only lowered psychological barriers for banks but also set a precedent, encouraging corporations like Nidec and Dai-ichi Life Holdings to pursue hostile bids.

Changing Attitudes Toward Unsolicted Bids

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Despite the traditional reluctance, the frequency of hostile takeover proposals in Japan is on the rise, with three significant bids occurring over the last 12 months. This includes an attempt by Brother Industries to counter a management buyout at Roland DG, according to LSEG data. Fukutome emphasizes that if a deal promises to benefit the target company and enhance its long-term value, banks should seriously consider supporting unsolicited proposals. This represents a marked change in the banking sector's approach towards financing such deals, signaling a broader shift in corporate Japan's attitude towards hostile takeovers.

Implications for Japan's Business Landscape

The adoption of new M&A guidelines by METI and the banking sector's evolving stance are indicative of a significant cultural shift within Japan's business ecosystem. This move towards embracing practices common in Western dealmaking could herald a new era of corporate dynamics in Japan, characterized by more aggressive growth strategies and an open-minded approach to mergers and acquisitions. While the long-term effects of this shift remain to be seen, it's clear that Japan's business landscape is poised for transformative changes, with banks playing a pivotal role in facilitating this transition.

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