Restructuring Of Japanese Industry Is Throwing Off M & A Opportunities, Says Study

Change seems to occur at a glacial pace in Japan. In fact, it turns out that takeovers, restructurings and share buybacks for Japanese companies hit a record level in 2003. According to an analysis by RECOF, an independent M&A boutique

By None

Change seems to occur at a glacial pace in Japan. In fact, it turns out that takeovers, restructurings and share buybacks for Japanese companies hit a record level in 2003. According to an analysis by RECOF, an independent M&A boutique in Japan, the number of tender offers increased from 19 in 2002 to 52 last year. In terms of value, the sums at stake soared nearly ten-fold to Yen 1,073.8 billion, from Yen 113.7 billion.

Of the 52 deals in 2003, 25 were M&A transactions, including hostile bids such as the US fund Steel Partners Japan Strategic Fund bids for Yushiro Chemical Industry and Sotoh, a small textile firm. Friendly deals included the acquisitions of Nippon Conlux by Mars Electronics International, a unit of the US confectionery company, and C2 Network, a retailer, by Tesco, the UK supermarket chain.

Matsushita Electric Industrial Company, the enterprise behind the Panasonic brand, and Aeon Group, the retailer, used share tenders to restructure. Toshiba Tungaloy management carried out a MBO with Nomura Principal Finance to spin off from Toshiba Group.

“Although the surge in deals last year was partly attributable to exploitation of favorable tax scheme by issuing companies, epitomized by NTT DoCoMo share buyback, M&As by domestic and overseas funds and management buyouts (MBO) were also noticeable,” says a spokesman for Bank of Tokyo Mitsubishi in Tokyo.

Analysts in Tokyo expect the trend to continue. The revised Commercial Code which came into effect on 25 September 2003 has enabled companies to buy back shares by board rather than shareholder decision, provided they secure blanket approval from shareholders in advance.

«