“Japanese Banks Show Increased Willingness to Fund Hostile Takeovers, Lobby Chief Reports” – Reuters

“Japanese Banks Show Increased Willingness to Fund Hostile Takeovers, Lobby Chief Reports” – Reuters

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO (Reuters) – Japanese banks have become less reluctant to finance hostile takeovers because the government’s new takeover guidelines have lifted the taboo on such deals, the new head of Japan’s banking lobby said.

The comments by Akihiro Fukutome, president of the Japanese Bankers Association, reflect a radical change in Japan that has helped move it closer to Western-style negotiations.

“Banks previously worried about reputational risks” in participating in unsolicited deals, Fukutome said in an interview. “But I think the new buyback guidelines from the Department of Industry last year helped lower the psychological barriers.”

Hostile bids, once rejected because they were seen as disruptive to Japan Inc’s collaborative philosophy, are still relatively rare, but their frequency is increasing.

The Ministry of Economy, Trade and Industry (METI) issued new M&A guidelines last year aimed at cracking down on excessive defensive tactics, removing a long-standing stigma around unsolicited offers and to stimulate company takeovers.

The non-binding guidelines have already prompted companies such as electric motor maker Nidec and life insurer Dai-ichi Life Holdings to launch hostile takeover bids.

Fukutome, who also heads the core banking arm of Sumitomo Mitsui Financial Group (NYSE:), said banks should consider unsolicited proposals if a deal would benefit the target company and help improve its long-term value.

“The climate for unsolicited offers is changing, and we have seen an increase in these types of deals in our pipeline,” he added.

There have been three hostile takeover proposals in the past 12 months in Japan, including a bid from Brother Industries aimed at thwarting a management buyout of Roland DG, according to LSEG data.

Japanese investment bank Daiwa Securities Group said it was willing to advise a hostile buyer on its merits if the deal would benefit the target company or its industry.

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