Japanese banks less reluctant to finance hostile takeovers, lobby chief says

Apr 1, 2024 12:51 am | News

By Makiko Yamazaki and Ritsuko Shimizu

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

The comments from Akihiro Fukutome, the head of the Japanese Bankers Association, offer evidence of a sea change in Japan that has helped bring it closer to Western-style dealmaking.

“Banks were previously worried about reputational risks” in helping unsolicited bids, Fukutome said in an interview. “But I believe new takeover guidelines from the industry ministry last year have helped lower psychological hurdles.”

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

The Ministry of Economy Trade and Industry (METI) last year released new M&A guidelines aimed at cracking down on excessive defence tactics, removing a long-held stigma around unsolicited bids and spurring corporate takeovers.

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

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

“The atmosphere for unsolicited bids is changing, and we’ve seen a rise in such deals in our pipeline,” he added.

There have been three hostile takeover proposals over the last 12 months in Japan, including a bid by Brother Industries to thwart a management buyout at Roland DG, LSEG data shows.

Japanese investment bank Daiwa Securities Group has said it is open to advising a hostile acquirer on merit if the deal would benefit the target company or its industry.

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