Japanese corporations are faced with a hostile takeover imminent threat due to the rapid dissolution of cross-shareholdings, which began in the 1990s, in particular, between creditor banks and corporate borrowers. As a result, the proportion of separation of stable shareholders, those in long term business relationship with the corporation, was cut in half over the last 10 years. On the other hand, foreign ownership of Japanese companies, which used to account for only a small percentage of all outstanding shares, has increased dramatically. Thus, the proportion of free-floating shares has increased significantly, implying that the purchase of the company by merging rate in Japan has become much easier. Although Japanese corporations, traditionally, hostile takeover bids have little chance of success, Hidemaru Yamada, president of Nireco - a high-tech instrument manufacturer - felt the need to introduce a "poison pill" defense to counter possible hostile takeover bids from foreign investors. Nireco assessment in connection with the introduction of poison pills, taking into account the institutional infrastructure of Japan, its laws, its economic conditions, in March 2005, he announced a "safety plan", which includes the issue of subscription warrants to existing shareholders in case of a hostile takeover bid. "Hide
by Mitsuru Misawa Source: University of Hong Kong, 26 pages. Publication Date: October 26, 2006. Prod. #: HKU593-PDF-ENG
Related Case Solutions & Analyses:
Note on Building the Self-Sustaining Firm
Janis Jerome
Bank Valuation Issues
Financial Impact of U.S. Nuclear Power Plants: FirstEnergy and Davis-Besse
Supply Chain Partners: Virginia Mason and Owens & Minor (A)
Comerica Incorporated: The Valuation Dilemma
HOYA Corporation (A)
Neck & Neck: Leveraging the Club Neck Information
Risk Management at Wellfleet Bank: Deciding about “Megadeals”
Tokyo AFM
