JAPAN Trends and Developments Contributed by: Takeshi Iitani, Reid Monroe-Sheridan, Takahito Fujii and Akira Kawashiro, southgate
ing through an MBO – is likely to remain an attractive option for corporate survival, and the upward trend in MBO activity is therefore expected to continue. Increased M&A Activity METI Guidelines for Corporate Takeovers; hostile takeover bids on the rise In 2023, the Ministry of Economy, Trade and Industry (METI) published the “Guidelines for Corporate Takeo - vers” (the “Guidelines”). The Guidelines aim to provide increased clarity on the code of conduct for a compa - ny’s board of directors when receiving an unsolicited takeover bid. Specifically, the Guidelines state that: • company management should promptly report an acquisition proposal to the board upon receipt; • the board should give “sincere consideration” to any “bona fide” offer; and • if the board agrees to the bid, it should reasonably attempt to secure terms aligned with shareholder interests and determine whether the acquisition enhances the company’s corporate value. In addition, the Guidelines organise information on anti-takeover policies and countermeasures, such as “poison pills”. By clarifying regulations and establishing require - ments for boards to give due consideration to acqui - sition proposals, the Guidelines have emboldened strategic buyers, including private equity funds, to make takeover bids for other companies. As a result, the number of takeover bids increased from 79 in 2023 to 90 in 2024 and is reported to have contin - ued rising to record levels in 2025. One emblematic example is Nidec Corporation’s hostile takeover bid for Makino Milling Machine in December 2024 (fol - lowing on the heels of acquisitions of three other machine tool makers in the past four years: Mitsubishi Heavy Industries Machine Tool, OKK, and Takisawa). In an initial press release announcing the bid on 27 December 2024, Nidec emphasised its compliance with the Guidelines and expressed its expectation that Makino would comply as well, highlighting the influence of the Guidelines in shaping the takeover process. Makino, too, referred heavily to the Guide - lines in a press release responding to Nidec’s tender offer. The company stated that it was “carefully evalu -
ating” the bid according to the criteria established in the Guidelines, such as whether the acquisition would “enhance the corporate value of the Company” and provide adequate benefits to shareholders. However, Makino’s board announced the introduction of a form of poison pill, ostensibly to secure time to evaluate competing proposals, and, following a legal battle, Nidec ultimately withdrew its unsolicited tender offer in May 2025. Subsequently, MBK Partners, an Asia- based investment fund, stepped in with its own tender offer and received the support of the Makino board. Taiwan-based Yageo Corporation’s unsolicited tender offer for Shibaura Electronics in 2025 is another recent example where the acquiror emphasised the Guide - lines in its tender offer notice. The tender offer was successfully completed in October 2025. In February 2026, METI announced a review of the Guidelines’ implementation and potential updates, with further materials expected to be released around May 2026. Bain Capital’s announced hostile takeover bid for IT company Fuji Soft also illuminates the increasing assertiveness of foreign private equity firms in the Japanese M&A market. Although the board at Fuji Soft rejected Bain’s bid, Bain persisted in its bidding war with KKR until it was quashed by KKR’s second-stage tender offer in February 2025. In another recent exam - ple, KKR submitted a binding letter of intent in January 2026 in connection with the management-led MBO of Mandom Corporation sponsored by CVC Capital Partners, indicating that KKR may seek to launch a competing tender offer. Although not a traditional hos - tile bid, KKR’s offer illustrates the increasing willing - ness of foreign PE sponsors to intervene in ongoing Growing pressure on listed companies from a variety of stakeholders has contributed to the record-high number of MBO transactions. Both activist sharehold - ers and the Tokyo Stock Exchange are calling for list - ed companies to improve corporate governance and use capital more efficiently. Combined with the surge in takeover proposals propelled by the introduction of the Guidelines, the burdens on listed companies are mounting. take-private processes in Japan. A changing environment for MBOs
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