JAPAN Trends and Developments Contributed by: Shuichi Nishimura, Yasuhiro Kasahara and Yoshitaka Kato, Nagashima Ohno & Tsunematsu
Exit Trends It is reported that the number of exit deals in 2024 remained at the same level as 2023, which had the highest number of exit deals in recent years. In par - ticular, there were nine IPO exits in 2024. Given the high stock price of Japanese listed companies since 2023, it is expected that this exit trend will continue in 2025. Amendments to TOB Rules The amendments to the takeover bid (TOB) rules under the Financial Instruments and Exchange Act will take effect on 1 May 2026. Under the current TOB rules, a tender offer is typically required in the following instances: • a purchase of shares outside of any stock exchange market from more than ten sellers within a 61-day period where, as a result of such purchase, the shareholding ratio of the acquirer exceeds 5%; • a purchase of shares outside of any stock exchange market where, as a result of such purchase, the shareholding ratio of the acquirer exceeds one-third; or • a purchase of shares in excess of 10% of the total voting rights of the target company during a three- month period by way of purchases of shares or by way of the acquisition of newly issued shares (but only if such acquisition is in excess of 10%, which includes purchases of more than 5% of the shares made outside of the stock exchange market or through off-hour trading) where, as a result of such purchase, the shareholding ratio of the acquirer exceeds one-third (the “rapid acquisition” rule). Following the amendments, a purchase of shares through on-market transactions will be subject to a mandatory tender offer, the above-mentioned one- third threshold will be lowered to 30%, and the “rapid acquisition” rule will be eliminated, while a series of transactions aiming to ultimately acquire more than 30% of the voting rights of the target company may be subject to the mandatory tender offer even after the elimination of the “rapid acquisition” rule.
getting approval by the board of directors of the target in the end) has remained at a high level since 2018. In 2024, Nidec Corporation, a global motor manufactur - ing leader, completed the unsolicited offer for Taki - sawa Machine Tool Co., Ltd. (it is notable that Taki - sawa’s board of directors supported the acquisition by Nidec in the end). We are seeing that some private equity funds are making unsolicited offers to listed companies subject to the support of their boards of directors (ie, they were making unsolicited offers at the beginning but expecting friendly deals in the end). At this moment, we are not aware of a deal where private equity funds have made an unsolicited offer to a listed company and completed the deal without obtaining support from such listed company. Hostile takeovers or unsolicited offers have been publicly acknowledged as one of the legitimate methods by which to acquire listed companies in Japan, and given this position was stated in the Guidelines for Corporate Takeovers pub - lished by the Ministry of Economic Trade and Industry on 31 August 2023 (as discussed below), the number of unsolicited offer deals could increase in 2025. In relation to the secondary market, in which private equity firms often sell their portfolio companies to each other, it is reported that there were around 25 deals in 2024, which is approximately twice the num - ber of secondary transactions in 2023. The number of M&A transactions being conducted by private equity firms in Japan is at an historic high, and the secondary market in Japan seems to be more active compared with past years. Looking forward from 2024 While the economy was a bit uncertain due to the continued weak Japanese yen in 2024, M&A activi - ties in Japan continued to be very active. This trend is expected to continue in 2025 despite the uncertainty regarding the global economy due to the confusion surrounding US tariffs. As the market is accepting unsolicited tender offers with high premiums, small to mid-size listed compa - nies will continue to be a target for unsolicited ten - der offers in 2025 and more listed companies may consider going private so that they can focus on the business.
323 CHAMBERS.COM
Powered by FlippingBook