An investment banker in Tokyo advises Japanese CEOs to develop audacious plans, such as asset sales or breakups, and keep them as an emergency option. This advice stems from a rapidly changing corporate environment in Japan, where governance issues, capital allocation problems, and shareholder disregard are increasingly difficult to conceal. The market is becoming more hostile for Japanese listed companies, with rising shareholder activism, private equity involvement, and even state-sanctioned 'takeover without consent.'
The best advice for a Japanese chief executive right now, confides an investment banking head in Tokyo, is to plot out a move so radical that nobody imagines you would ever consider it: the sale of seemingly indispensable assets, a full break-up, a transformative deal — something that goes way beyond anything you’ve already said you will do to raise corporate value. Then put that idea in the company safe, mark it “emergency use” and keep the combination handy.
The $47bn takeover approach by Canada’s Alimentation Couche-Tard for Japan’s biggest convenience store operator, Seven & i Holdings, has proved that no Japanese company is off limits unless national security is threatened. Nissan’s preliminary merger talks with Honda may well have been accelerated by the perception that a delay would have given time for a foreign buyer to pounce.
Japanese Economy Corporate Governance Shareholder Activism Private Equity Takeover
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