JAPAN Law and Practice Contributed by: Hajime Tanahashi, Takayuki Kihira, Kenichi Sekiguchi and Akira Matsushita, Mori Hamada
respect to M&A transactions. Activists also exercise their appraisal rights as dissenting shareholders with respect to M&A transactions and file a petition to the court for a determination of the fair price for the rel - evant shares after the completion of the transaction. 11.3 Interference With Completion The amount of bumpitrage has recently increased in Japan. After an announcement of a tender offer or business integration such as a merger or share exchange (especially a transaction where PBR calcu - lated using the purchase price is lower than 1.0), activ - ists occasionally acquire shares in the target company and advocate, through a press release or other media, that the purchase price is lower than fair value and/ or indicate the possibility of a counter tender offer. It should be noted that it is not easy under Japanese law for activists to obtain injunctive relief from a court prior to the completion of a transaction.
If the market price of target company shares hovers at a level higher than the offer price as a result of the involvement of shareholder activists, uncertainty as to the completion of a transaction may increase, and an acquirer may be required to pay more than it had planned to consummate the transaction and, in the worst case, the transaction may fail. There has recently been an increase in tender offers that failed because the market price was continuously higher than the tender offer price until the end of the tender offer period.
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