Stay informed with free updates
Simply sign up Japanese business and finance myFT Digest – delivered straight to your inbox.
The country has reached a “major turning point” in corporate change, with a critical mass of shareholder activists forcing companies to wake up from decades of slumber, the head of one of Japan's largest associations of corporate leaders said.
The comments by Takeshi Niinami, chairman of Japanese beverage group Suntory and president of the Japan Association of Influential Corporate Directors, come at the end of a year in which a record number of foreign and domestic activist funds bought a record number of shares listed on the Tokyo Stock Exchange. .
Activist funds, e.g Elliott Management ValueAct and ValueAct have also become more aggressive in their selection of targets – a list that now includes Japan's largest real estate developer, Mitsui Fudosan, and carmaker Nissan.
Under pressure created by activist investors, the past year also produced a sharp increase in the value of unsolicited takeover offers – a tactic once considered taboo, but now sanctioned by the government through a change in merger guidelines.
In an interview with the Financial Times, Niinami said that the increase in… Activity Its influence on Japanese CEOs marked the end of decades-long stagnation, deflation and corporate inertia in the country.
The thirty lost years are over, and we are facing a major turning point. “That should be positive,” said Nienami, who expects that activity and deal-making through private equity and local mergers will continue to rise in 2025.
“It is a turning point for Japan to become more efficient, more productive and more profitable,” Nienami said, adding that Japanese management will now be obligated to pay greater attention to metrics that investors care about most, such as the cost of capital. And return on equity.
Nienami said the race is now on for CEOs to reshape their companies before an activist tells them to do so. the Unsolicited offer to Seven & i He said Canadian company Alimentation Couche-Tard had highlighted the risks.
“This message is very vital to get all CEOs to think, ‘What’s wrong with my company? If something is wrong, we have to fix it, otherwise we will have a big warning from activists. Sleeping companies will wake up now,’” Nienami said.
In addition to ACT's unsolicited $38 billion bid for Japan's largest convenience store operator, deals in 2024 included Nidec's attempted $1.6 billion “non-consensual takeover” of Makino Milling and a tug-of-war between private equity giants KKR and Bain on its IT services group. Fuji Soft.
Nicholas Smith, Japan strategist at CLSA Securities, said: Japan It was already the world's second largest market for private equity and activity. He said that Japan represents two-thirds of Asian activist events, and is moving further forward.
“Globally, value investors and event traders are eagerly watching Seven&i trading as a potential turning point for Japan's rapid development into a market for corporate control,” Smith said.
But Japan's stock market turnaround, investment bankers and other deal advisers warn, should be seen as a fragile process. The number of confrontations between shareholders or stories of unsolicited bids may decline in 2025, said Jeremy White, a mergers and acquisitions partner at law firm Morrison Forrester in Tokyo.
“I think this would indicate that there is enough friction in the market to stop what is beginning to look like a trend of travel,” White said. “I think what we have now is that the speed is going in a certain direction: there is no need to go in the opposite direction, just slamming on the brakes will be as bad as it is.” “It's enough.”
